The Republicans have gone after Solyndra with a vengeance, but fail to realize that that company personifies the very best of gov’t intervention rather than its worst. A greater irony is that both Democrats and Republicans missed the advantages represented by Solyndra. Here’s the answer to this $20 billion dollar riddle.
Solyndra was a USA solar panel manufacturer that was awarded a federally guaranteed, $500 million loan as part of Pres. Obama’s Green Energy initiative. They went bankrupt costing US tax payers a half billion dollars. There is the added political caveat that the owners happened to also be big Obama donors giving the appearance of massive corruption. This was further topped by a number of other solar panel manufacturers also going bankrupt while the rest are struggling today.
Republicans hold this up as an example how gov’t involvement waste money, distorts markets, breeds corruption and even loses jobs rather than creating them. It would seem they have a point, but for one important detail. Democrats have overlooked this same point and so it’s with added pleasure to show both sides the great benefits of gov’t involvement in general and of these green energy initiatives in particular.
The obvious question would seem why these solar panel manufacturers were struggling so. Were they incompetent? Was there simply no market for these panels? Were these businesses jsut a front for rewarding donors? Maybe most amusing of all is that most people familiar with the issue even know why they went bankrupt.
The price of solar paneling collapsed by over 70% in hardly a couple year’s time.
Because the gov’t’s raw might of ‘the purse’ threw in about $20 billion dollars to jump start the industry. This rapidly expanded the market, dramatically reduced the price with such advantages as economies of scale, created a lot more competition and in turn, flooded the market. This drove down the price of production as well as retail profits. It failed to create the millions of jobs as Democrats intended, but it did provide a renewable resource at greatly reduced costs. The country now has billions more in added alternative energy sourcing.
Did the tax payers get a great deal out of it?
Absolutely, but only, if they now take advantage and follow up with all the savings to be had by installing these panels in mass.
Republican’s proudly hold up the price drop in natural gas as an example of how unfettered free markets can reduce the cost of such supplies. What they fail to account for is that natural gas, like all commodities, is a finite resource and as such, it is only a question of time before we begin to bump up against its limits. Prices will then rise. Yes, natural gas maybe cheaper today, but in the years ahead, that will change as China, India and others grow their own consumption. These countries will hike the price of our natural gas and oil not matter how much more we ramp up production. It’s a finite resource.
Solar energy is the opposite for it is a technology. The price of technology will fall as it expands which is the inverse of commodities.
Did solar panel manufactures make those of millions of jobs as Democrats promised?
Did it expand our energy resources while reducing prices?
Gov’t allowed us to get whole lot more of this energy, far cheaper, more efficiently and -as a final bonus – cleaner too.
Because it’s a technology.
This would not be as true of gov’t involvement in oil production per say because it’s a commodity versus a technology. In time, that commodity would begin to find its limits. The broader issue then is not about gov’t involvement per say, but one of technology. Gov’t can help move it along more quickly at times. Solyndra maybe one of the best example of this for it was a victim of its own success. Hopefully, green energy will have more success like this wherein the price collapses so dramatically that we no longer need them. That’s the ultimate progress.