Ever heard of the Solyndra solar-cell plant in Fremont, Calif.? Most people haven't. That's a shame, considering how much taxpayer money has been poured into it.
Solyndra is in serious financial trouble. Despite getting a $535 million bailout - part of the taxpayer-funded "stimulus" - the company subsequently announced it would lay off more than 17 percent of its work force. It also had to close one of its manufacturing plants about a year after it got the money. The House Energy and Commerce Committee is launching an investigation.
That's understandable. After all, it wasn't supposed to turn out this way for Solyndra and other solar-cell producers. President Obama and Sen. Barbara Boxer both campaigned at the plant, touting the "green jobs" that would flow from government investment in companies that produce renewable energy.
How that bit of economic magic was supposed to occur is a mystery. Solyndra's production costs are more than six times those of other producers. Even with strong backing from Washington, the company had to cancel a $300 million initial public offering after a bad audit from PricewaterhouseCoopers. As the New York Times noted in an article on Solyndra, "the project spotlights the risks of government intervention in a dynamic market."
No kidding. The main problem isn't renewable energy per se; it's the folly of having government pick winners and losers in the energy market - or any market, for that matter.
When politicians spend our money, they aren't thinking about what makes sense from a business perspective. They're engaging in wishful thinking. They want to be able to say things like "green jobs are the wave of the future," so they go out and sink millions of our dollars into companies that may or may not be wise investments. They get a photo op, a sound bite, some votes - and we get stuck with the bill.
You can think solar panels are the most wonderful thing in the world, but that doesn't necessarily mean you should fund them. Consider this November headline from the San Jose Business Journal: "Solar Panel Glut Projected in 2011." Supplies of the panels, the article predicts, will be nearly three times higher than demand this year.
Faced with a forecast like that, nobody with any business sense would invest in solar panels. But government would - with our money.
The same thing happened with a previous energy boondoggle: ethanol. The Energy Independence and Security Act of 2007 poured taxpayer money into the corn-based alternative fuel. Production rose from 4.3 billion gallons annually in 2006 to 12.5 billion gallons in 2009. Unfortunately, demand for ethanol that year was just 8.4 billion. Oops.
Believe it or not, though, some in Washington still won't relent even when faced with facts like these. Efficiency doesn't matter, they claim - government spending helps stimulate the economy, regardless.
Those who make this argument prove only one thing: They don't understand basic economics. Every single dollar government spends on anything came from somewhere else. It had to be taxed - taken away from some other use by private persons - before being redistributed to others. Money that likely would have been invested more productively is taken out of circulation before being reallocated.
You can call that a lot of things, but "stimulus" isn't one of them.
So what made Solyndra an attractive choice for government largesse? As Heritage Foundation energy expert David Kreutzer points out, it has more to do with political rates of return than economic ones: The company spent $140,000 on lobbyists in the first quarter of 2010.
In the end, though, it didn't help. Maybe the government should have invested its money in a viable source of energy.
The rest of us, however, would benefit from more sunshine - shined, preferably, on special interests that waste our tax dollars, and the politicians who play along.
Ed Feulner is president of the Heritage Foundation (heritage.org).
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