Democrats don’t want anything so pedestrian as the free market to decide the allocation of resources, they want the government to “invest in the future”. But how well does the government do in picking the companies of the future?
President Obama faces political catastrophe in the form of Solyndra — a San Francisco Bay area solar company that he touted as a gleaming example of green technology. It has announced it will declare Chapter 11 bankruptcy. More than 1,100 people will lose their jobs. . .
During a visit to the Fremont facility in spring of 2010, the President said the factory “is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. “
That “testament to American ingenuity and dynamism” went belly-up after spending $527 million of $535 million in federal loan guarantees.
Moreover, a lot of people were skeptical of Solyndra all along:
While Energy Department officials steadfastly vouched for Solyndra — even after an earlier round of layoffs raised eyebrows — other federal agencies and industry analysts for months questioned the viability of the company. Peter Lynch, a longtime solar industry analyst, told ABC News the company’s fate should have been obvious from the start.
“Here’s the bottom line,” Lynch said. “It costs them $6 to make a unit. They’re selling it for $3. In order to be competitive today, they have to sell it for between $1.5 and $2. That is not a viable business plan.”
Worse still, the Obama administration rushed to “invest” in Solyndra without even doing due diligence:
Other flags have been raised about how the Energy Department pushed the deal forward. The Center for Public Integrity’s iWatch News and ABC disclosed that Energy Department officials announced the support for Solyndra even before final marketing and legal reviews were in. To government auditors, that move raised questions about just how fully the department vetted the deal — and assessed its risk to taxpayers — before signing off.
Why so eager? Perhaps it wasn’t mere incompetence: One of the biggest stakeholders in Solyndra was George Kaiser, a major fundraiser for President Obama, and House investigators say they have uncovered evidence that the White House involved itself in the process.
POSTSCRIPT: Solyndra is being called Obama’s Enron, but that’s not really fair. President Bush’s connection to Enron was much more tenuous than Obama’s connection to Solyndra.
UPDATE: Joe Biden: “One role of government is to go where venture capital won’t.” Venture capitalists wouldn’t have sunk half a billion dollars in Solyndra without a viable business plan, that’s for sure.