With A Government-Funded "Success" Like This, What Does A Government-Funded Failure Look Like?

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The president admires government subsidized solar panels at Solyndra.

Back in May, 2010, President Barack Obama, who appears to have a fetish for solar panels, visited the new Solyndra factory in California to praise it as a successful example of his administration's clean energy industrial policy. Among other things, the president noted in his speech [YouTube] at Solyndra: 

….we invested … in clean energy because not only would this spur hiring by businesses but it creates jobs in sectors with incredible potential to propel our economy for years, for decades to come. There's no better example than energy.  … Our competitors are waging an historic effort to lead in new energy technologies.  There are factories like this being built in China. Factories like this being built in Germany.  Nobody is playing for second place. These countries recognize that the nations that lead the clean energy economy are likely to lead the global economy. And if we fail to recognize that same imperative, we risk falling behind. 

Fifteen years ago, the United States produced 40 percent of the world's solar panels. By 2008, our share had fallen to just over five percent.  I don't know about you, but I'm not prepared to cede American leadership in this industry, because I'm not prepared to cede America's leadership in the global economy. So that's why we placed a big emphasis on clean energy. It's the right thing to do for our environment, it's the right thing to do for our national security, but it's also the right thing to do for our economy.  

And we can see the positive impacts right here at Solyndra. Less than a year ago, we were standing on what was an empty lot, but through the Recovery Act, this company received a loan to expand its operations. This new factory is the result of those loans. Since ground was broken last fall, more than 3,000 construction workers have been employed building this plant. … When it's completed in a few months, Solyndra expects to hire a thousand workers to manufacture solar panels and sell them across the country and around the world. And this in turn will generate business around our country who will create jobs supplying this factory with parts and materials.

The president's vision for Solyndra was backed by taxpayer guarantees to the tune of $535 million. The New York Times reports that $527 million of the guaranteed loan has already been spent. Solyndra is now filing for Chapter 11 bankruptcy. So much for propelling our economy. I was particularly struck by a quotation in the New York Times from a Department of Energy bureaucrat justifying the Solyndra loans: 

"The project that we supported succeeded," insisted Damien LaVera, a spokesman for the Department of Energy.

"The facility was producing the product it said it would produce, and consumers were buying the product," he said. "The company struggled because the market has changed dramatically."

The project "succeeded?" As Saturday Night Live's Seth Meyers might say, "Really!?!" 

Solar-industry analyst Peter Lynch explained to the Associated Press the chief problem faced by government-funded Solyndra: 

"You make something in a factory and it costs $6, you sell it for $3, but you really, really need to sell it for $1.50 to be competitive," Lynch said of Solyndra. "It was an insane business model. The numbers just don't work, and they never did."

For more background, see my article, "It's Alive: Alternative energy subsidies make their biggest comeback since Jimmy Carter," detailing the sad failed history of government energy RD&D subsidies. 

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  1. Agriculture’s Diseases of Civilization are another resounding “success” story, on the order of Obama’s fetish.

      1. It’s kind of fun watching my incif file grow.

        One click of the mouse, and our racist woman-hating friend vanishes into the ether, his typing wasted. 🙂

        1. I have to edit the file manually to add names. How do you set it up for a click-interface?

  2. Our competitors are waging an historic effort to lead in new energy technologies. There are factories like this being built in China. Factories like this being built in Germany. Nobody is playing for second place. These countries recognize that the nations that lead the clean energy economy are likely to lead the global economy.

    I don’t know, my instinct when told that everybody else is making the same investment and same business strategy is to consider looking somewhere else. The more that China and Germany subsidize it, the more it makes sense for us to avoid subsidizing it.

  3. You make something in a factory and it costs $6, you sell it for $3, but you really, really need to sell it for $1.50 to be competitive

    There are no words. Well, I do have some words: Obama is a fucking cretin retard. He really is monumentally stupid. Congratulations, Obama supporters and voters: your savior is a moron. What does that make you?

    Don’t answer, we already know.

    1. If he really wanted this to work at all, the better approach would be to work on the demand side, not the supply side. Keep beating the green drum, spread grant money to advocacy groups, that sort of thing.

      I don’t think that would work, either, but it would have a better chance than having people manufacture products that no one wants, or, if they do want them, not at that price.

    2. Re: Episiarch,

      There are no words. Well, I do have some words: Obama is a fucking cretin retard. He really is monumentally stupid.

      To be fair to Obama, I do not believe he had anything to do with Solyndra’s business model and could not know that it was destined to fail.

      Although I do believe that the outcome would have been the same if he had involved himself in creating the business model, precisely because he’s a cretin.

      1. If he had a brain capable of 3 seconds of economic logic, he would have thought “I can’t stop every hare-brained subsidy we dream up here, but I sure as shit am not going to make a speech about how great this particular one is.”

      2. To be fair to Obama, I do not believe he had anything to do with Solyndra’s business model and could not know that it was destined to fail.

        They blow through a half-billion dollars of government money and declare bankruptcy, and you’re telling me that a wonky White House staffer could not possibly have looked at their books and thought, “Wow, these guys are gonna fail”?

        Or are you implying that Obama is not capable of detecting big time fail looming, but someone else could have?

        1. Re: prolefeed,

          You missed the punchline….

          Although I do believe that the outcome would have been the same if he had involved himself in creating the business model, precisely because he’s a cretin.

    3. You make something in a factory and it costs $6, you sell it for $3, but you really, really need to sell it for $1.50 to be competitive

      Don’t be so quick to diss the model — sure they get negative $3 to $4.50 on each item, but, hey, … they make it up in volume!

      1. Didn’t Lucy and Ethel try that with salad dressing ?

    4. I like to watch.

    5. But, but, the environment is so important that it is beyond the question of affordability. We must act at ANY cost, lest Gaia exert her wrath on us all.

    1. The answer is…a cunt?

      1. No, dumbass, the answer is a Count. PhilosoRaptor is clearly pondering the absurdity of modern political etymology.

        If you can’t keep up with a simple meme like that, I’m afraid you can’t participate in the Internet anymore.

        1. You’re a towel!

  4. obviously the wealthy [JOBZ] creators will create other [JOBZ]

    1. Re: Double Asshole,

      obviously the wealthy [JOBZ] creators will create other [JOBZ]

      Obviously, because those government [JOBZ] don’t pay for themselves…

      1. wait what about my govt [JOBZ] paid w stim monies?

        1. Re: Double Asshole,

          wait what about my govt [JOBZ] paid w stim monies?

          What about it? And how does this make the case for more gobernment JOBZ, you stupid cunt?

    2. Well how else are the rich supposed to get richer?

    3. Maybe they’ll create actual jobs, rather than welfare with bullshit attached.

  5. Wow, it’s almost as if China, where all the rare earths needed to make solar panels come from, has a competitive advantage in this market.

    1. And the Chinese are willing to turn huge swaths of their country into toxic wastelands to mine and process these rare earths.

      What’s not to like.

    2. It gets even better. Check this out

      http://www.strategypage.com/qn…..10829.aspx

      Complaints from the Congo are growing about the U.S. legislation intended to stop illegal mineral sales. The Dodd-Frank bill (also called the Obama Law) has a clause that prohibits the sale of so-called conflict minerals may have been well-intentioned but it was not well-thought out. Rather than run the risk of buying any minerals that might have been smuggled from the Congo, many major mining companies are simply refusing to buy minerals from central Africa. The result is a de facto embargo. There are few buyers for Congo’s valuable minerals, especially tantalum and tungsten which have many hi-tech uses. This has damaged the Congo’s economy, because the nation relies on mineral exports. According to some sources, China, which does not have to meet Dodd-Frank standards, is snapping up many minerals at very cheap prices.

      1. Knee-jerk intervention… as usual.

        1. We have good intentions! Who could imagine that legitimate trade could get caught in conflict?

      2. but it was not well-thought out

        You don’t say.

    3. China doesn’t have all the rare earths, they just offer it at such a low price that no one bothers to look for it. That is, until the recent Japan China spat. Japan recently found a huge stash of rare earths in the middle of the pacific. Funny thing about monopolies, they usually fuck themselves over.

  6. RACIST!

    CB

  7. “The company struggled because the market has changed dramatically.”

    I’m curious what market change occurred in the last 15 months that was so dramatic that it drove this company out of business? Obamacare? New regulations? Just curious…

    CB

    1. Unicorn farts are trading at $150/cm3, up from $60 when Obama took office.

    2. I’m curious what market change occurred in the last 15 months that was so dramatic that it drove this company out of business?

      Well, the price of oil went way up.

      Which should have helped them. A lot.

    3. http://www.reuters.com/article…..K420110901

      In a press release on Wednesday, Solyndra said it could not compete with bigger overseas rivals. Earlier this year, cuts to generous solar subsidies in No. 2 market Italy stalled development of solar projects and led to a global glut of solar panels that sparked a 25 percent drop in prices.

      Even industry heavyweights such as China’s Suntech Power Holdings Co Ltd and U.S.-based First Solar Inc are struggling with dwindling profits, while small, up-and-coming solar companies are finding it increasingly difficult to stay afloat.

      A company using government-backed loans makes products for sale government-subsidized projects goes tits up when the government pulls the susidies on consumer side. Shocking!

  8. More B/O (Bush/Obama)failed policies, we need a new direction. 1/2 billion dollars down the drain. A rounding error in today’s government spending tsunami.

    1. Krugnuts would approve!

  9. “The project that we supported succeeded,” insisted Damien LaVera, a spokesman for the Department of Energy. Someone should fire that guy, even in the Obama administration you can’t be that stupid.

    1. The strategy used by the DOE rates as a success in some people’s eyes. Seriously! This loan was stimulus. I may be wrong but I don’t think Keynesian economics requires an outcome, good or bad. It does not matter whether Solyndra’ s business plan was a success. What is very important is that some cash was thrown around.

    2. Checks were written against the U.S. Treasury. Checks were cashed. Success.

      It’s a simple model, try to keep up.

      1. Money sloshes through the pipes and the sluices.
        Revitalizing the economy’s juices.
        It’s just like an engine that’s stalled and gone dark.
        To bring it to life we need a quick spark.
        Spending’s the life blood that gets the flow going.
        Were it goes doesn’t matter. Just Get Spending Flowing.

  10. Nobody is playing for second place.

    What the fuck does this even mean? Other than that Obama is a clueless cunt, I mean.

    1. Race to the bottom, of course!

  11. It succeeded just fine. People who think it is a failure believe that the purpose was to build and sell solar panels. The real purpose was to buy continued support from greens, and it worked rather well.

    1. + 1

      Who said advertisement jobs are not real jobs?

  12. This project:

    1. Employed union construction workers

    2. Gave “environmental science” douches jobs for a while, to tide them over until they can bag similarly subsidized jobs

    3. Allowed insiders to write themselves big checks

    The Department of Energy guy wasn’t lying. This is exactly what a “success” looks like in the Democrat party’s economic vision.

    If someone had made a profit, that would have ruined it. This way it’s pure.

    1. If someone had made a profit, that would have ruined it. This way it’s pure.

      Jesus, that’s truly Randian. Now I need a drink.

  13. To be fair, historically, nobody has ever made money selling energy or electricity.

    1. I don’t know about that. I know quite a few farmers out in my neck of the woods that run turbines on their farms and sell the power to Edison and PG&E for a pretty tidy sum.

      1. I think Tim was being sarcastic.

        1. I think you’re right. I’m not too bright, am I?

          1. You’re like a CFL then?

    2. The Energy company I work for made $800 million last year in earnings.

      1. shh… don’t tell anyone.

      2. How did their competitors do?

        What’s that? Oh, never mind then.

        1. Point not found.

  14. Nobody is playing for second place.

    What the fuck does this even mean? Other than that Obama is a clueless cunt, I mean.

    It means that Obama doesn’t realize that the initial entrants to a new manufacturing or transportation field often end up losing in the long run, because they blow their capital on developing new processes with a huge loss-rate.

    France led the world in the development of railroads.

    England led the world in the development of industrial textiles and steel.

    We then strolled up and cashed in on these industries ourselves.

    1. But to understand that Fluffy, you would have to understand a bit of history and a bit of how markets actually work. And we don’t teach those things in school anymore. I guarantee you that your post would be news to Obama and pretty much everyone around him.

      Yeah, they really are that fucking ignorant. They are not stupid. They are way too clever to be called stupid. But they really don’t know much and what they do know rarely corresponds to the real world.

      1. Yeah, they really are that fucking ignorant. They are not stupid. They are way too clever to be called stupid. But they really don’t know much and what they do know rarely corresponds to the real world.

        When you spend the vast majority of your adult life locked up in the ivory tower while you look down on the little people, this is what tends to happen. Academics NEVER have to deal with the real world or the consequences of their policy prescriptions because their interactions with the outside world happen while reading a book.

        They are anything but representatives of a real world community.

    2. It’s like he thinks of business as an election. Come to think of it, that’s probably the only way he can conceive of it.

    3. It also shows how they view economics as a “zero sum game”. I suppose if you look at it Apple was second place to Microsoft in the computer operating system business. Toyota was second place to Honda in the car making business in the 90s and 00s. More than one person wins. Second place isn’t a bad thing to be most times.

      1. They think of it as a monopoly game, because government is a forcible monopoly, and so they think everything else works that way.

        They really are that clueless.

      2. Sorry, John, but in politics and in Highlander, there can be only One.

      3. Second place isn’t a bad thing to be most times.

        Beats the hell out of third place.

      4. Especially now considering that Apple, despite its relative low market share in their higher margin items (computers – which are selling like hotcakes) is the most valuable tech company in the world. In fact, it has been switching back and forth with Exxon-Mobil (I think) over the last couple of weeks as most valuable company in the world.

    4. It means that Obama doesn’t realize that the initial entrants to a new manufacturing or transportation field often end up losing in the long run…

      Unpossible. Early adapters always win.

  15. “The project that we supported succeeded,” insisted Damien LaVera, a spokesman for the Department of Energy.

    “The facility was producing the product it said it would produce, and consumers were buying the product,” he said. “The company struggled because the market has changed dramatically.”

    No, economic reallity hit them straight in the face like a brick wall hits a speeding car with a drunk driver at the wheel.

    Stupid government critters.

  16. The project succeeded. Millions of tax dollars were diverted to the coffers of the Democratic Party campaign war chest.

  17. How does Damien LaVera even have a job after such an idiotic comment?

  18. Solyndra’s demise is just the latest in a pattern we keep seeing in the green-energy sector: people who look for profits on loans won’t lend them any money, because their technologies either don’t work or are prohibitively costly. So they have to look for money from people who don’t care about making a profit (e.g., government). But that doesn’t really change the fact that they don’t have plans for becoming successful or profitable.

    1. Green bubble.

    2. If I had an idea that had a legitimate shot of producing cheap, clean energy, I wouldn’t have a hard time finding someone to invest. And the last thing I would do is go to the government. I only go to the government because no one else is buying.

      1. Why don’t they just throw everything into fusion research? Might be a complete waste of time, but, unlike most of these “investments”, it could actually work. And change the world.

        1. I agree. If Obama were throwing money at say the super conducting super collider or fusion research and other low probability high ceiling projects, I wouldn’t have as much of a problem.

          But he will never do that for two reasons. First, a big reason behind these projects is for the opportunity for graft and corruption. Funding fusion doesn’t allow you to award political cronies and punish enemies the way “green jobs” does. And second, a lot of this really is just emotional superstition. Liberals have told themselves that “green jobs” were the future for so long, they can’t help but believe it no matter what the market or reality tells them. They really have become that ridiculous. Try explaining to a hard core liberal sometime the economics of this. They won’t hear a word of what you say.

          1. What’s funny is that advanced energy and technology would be cleaner and “greener.” After all, we’re still quite primitively burning stuff we find laying around.

            I agree that the principal motivation is paying off certain constituencies, but I also think there’s a serious Luddite thread in the left these days. Many don’t really want advanced technology so much as they want less technology.

            1. it could actually work. And change the world.
              Ah. There’s yer problem.

              1. Now, if I were a power-hungry dude with pretensions of godhood, I’d focus on fusion and other game-changing technologies. Doesn’t work, fine, back where you started. Does work, then you become a living god. You’d think that would appeal to Obama.

                1. The funny thing is you could do it so cheaply. Our government is so big that a hundred billion dollars isn’t much money to it. But can you imagine the research projects you could fun for even half of that? You could literally hire every high energy and solid state physicist in the world and have them working in your super villain cave you hollowed out in the Rocky Mountains.

            2. the Navy is still funding the Polywell, and keeping it hush-hush, which has my hopes up.

        2. Why don’t they just throw everything into fusion research? Might be a complete waste of time, but, unlike most of these “investments”, it could actually work. And change the world.

          You chump. Don’t you realise these aren’t energy programs. They’re jobs programs. And narrowly-designed jobs programs to placate the greens, lest Nader decides to run again.

          1. I was being a little disingenuous in my remarks, I confess.

          2. A super-collider fusion plant built by local union thugs and political hacks? Not in my neighborhood.

        3. But but but fusion is nuclear! Nuclear bad!

          1. It’s natural. Like the life-giving sun.

    3. Government does care about making a profit. Rather, the individuals in government do, but if they dumped taxpayer money straight into their own accounts, it would be much harder to get away with. So, you give it away in no-bid military contracts, bailouts, green subsidies, union-favoring work rules, and so on, and then watch as the groups you helped kick it back to you.

  19. The Supreme Court has ruled that Soylndra Green is people.

  20. “we invested in clean energy because…”

    … because we believed in central planning, and because we didn’t believe in markets and freedom?

    1. Because crop-dusting the area with cash would be less wasteful but more obvious.

  21. and I’m sure all that 500+ million dollars was actually spent on R&D, production, sales, etc. And not a penny towards new iPads, computers, leather chairs, etc.

    I’ve found when our company is flush with cash, there is a tendency to buy stupid, worthless shit. When times are tight, we suddenly worry about every penny.

    1. I can say they didn’t skimp on space: Solyndra’s office and lab facility is absolutely monstrous, and sits on expensive land right next to the 880 freeway.

      1. Because they couldn’t have put it in an empty building in Detroit for 1/100th of that amount. I’m sure they figured, “fuck it. Let’s just spend it all on really expensive cool shit because the government won’t let us fail anyway.”

        What startup builds a brand new high tech facility andnoffice from scratch when there is just a shitton of that type of property littering America that landlords are desperate to rent and cities are willing to bend over backward to retrofit tax-free?

        I’ll tell you who does that: someone who is gifted to money to start and couldn’t care
        less whether their business is a success or a failure.

        1. Their startup reminds me of the scene in “Back To School” where Rodney attends his first Economics course and explains the real world to the academic nitwit, Dr. Philip Bombay.

    2. But since the health of the economy is judged solely by gross spending, all that cash spent on ipads, chairs, and computers was good for all of us, so the project was worth it.

      1. iPad= built in China
        Chair=built in Bangladesh
        Computer=built in South Korea

        Keynesians are retarded.

  22. The government shouldn’t have made the loan. It was silly. But I have trouble getting too upset about it. $535m is a third of the monthly air conditioning costs for troops in Afghanistan. We’ve got bigger fish to fry.

    1. So does Obama. He’s planning a new federal bank to fund all sorts of $535M projects, especially for green energy.

    2. $535m is a third of the monthly air conditioning costs for troops in Afghanistan.

      That’s a reason to get out of Afghanistan, not a reason to ignore stupid subsidies like this.

    3. It just rubs me the wrong way that an entity that is essentially bankrupt can be making loans to other people.

  23. I’d really appreciate it if Reason H&R would stop reading Atlas Shrugged and then making up these ficitional stories that appear to be ripped from AS’ pages. The Obama has TOP MEN working on our country’s problems and
    doesn’t need libertarians trying to point out the nakedness of those in the procession of TOP MEN.

  24. Given that they spent the entire loan in about 18 months and are now bankrupt, I’d really have to question how anybody could have thought this was a good investment. These guys burned cash at a rate exceeding $28 million per MONTH.

    Solyndra isn’t a public company, so I can’t find compensation data for executives, but I’d sure like to know how much they ended up siphoning off before the company sank.

    1. But all that spending was multiplied, when the executives bought stuff.

      1. In that case, I hope all the money went to executive salaries. We should be giving them more, in fact, so they can go multiply it for us! We certainly wouldn’t want them to be unemployed. Perhaps we can just make it their job to shop all day. That would stimulate better.

      2. Why not just give all the money to rabbits?

        They’re good at multiplying.

    2. It’s actually worse than that: in addition to the loan, Solyndra burned through $1.1B in private venture capital.

  25. I’s not clear that photovoltaic cells are the best use of solar energy. Solar power plants usually have arrays of mirrors that heat boilers. It might be more cost-effective to make oil from bio-engineered organisms. Who knows what nanotech will do?

    1. Nanotechnology is to small to succeed.

  26. “The project that we supported succeeded,” insisted Damien LaVera, a spokesman for the Department of Energy.

    Yeah – in the same way that the Titanic didn’t “really” sink after hitting an iceberg.

  27. Awesome. Can’t say I surprised sadly.

  28. Our competitors are waging an historic effort to lead in new energy technologies.

    This idiot actually thinks Chinese subsidies are economically viable. If the Chinese want to lead the world in economic stupidity, why would we want to stop them? The Japanese were dumping in the 80’s and now those Japanese companies are building their stuff in China, too.

    We don’t NEED jobs if the Chinese are going to enslave their own people – we can do practically nothing and they gladly give us their stuff in exchange for pieces of paper with green ink.

    We might as well start a trial balloon of tariffs on Chinese products, as bad as it sounds. What are the Chinese going to do, let their economy crash? They’ll grumble but they’ll pay and not let up the subsidies one bit until they reach their economically logical conclusion. Maybe a tariff will speed up that logical conclusion, but I don’t see how that is a bad thing for mankind; mutually assured destruction of subsidies vs. tariffs is a good thing for current and future generations to learn.

    1. China is simply going the same route the Japanese did in the 80s with their export based economy, and what we did in the 00s with real estate. Just you wait, in a decade or two we will have politicians expounding on the need to prop up the chinese government after their system comes crashing down.

  29. The problem from a libertarian standpoint isn’t so much that we backed a dog to the tune of $535 mil but that corporate laws and bankruptcy laws allow those to blame without personal penalty. If each of the stock holders were to be held personally liable for their portion at least we’d have recourse and it would severely deter this kind of irresponsibilty to take place in the first place.

  30. The problem from a libertarian standpoint isn’t so much that we backed a dog to the tune of $535 mil but that corporate laws and bankruptcy laws allow those to blame without personal penalty. If each of the stock holders were to be held personally liable for their portion at least we’d have recourse and it would severely deter this kind of irresponsibilty to take place in the first place.

  31. When I hear of “RD&D subsidies” I think of attempts to harness dragon power for alternative energy or dungeon-expansion infrastructure projects.

  32. You don’t need a business model to get that kind of federal loans, you need a team of lobbist.

    http://campaign2012.washington…..-lobbyists

    “”In July, Solyndra retained the powerful Glover Park Group, where the company’s lobbyists include top Max Baucus aide and Environment & Public Works Committee staffer Catherine Ransom, longtime Republican aide Alex Mistri, and Energy and Commerce staffer (and former John Kerry Legislative Director) Gregg Rothschild.

    The company’s in-house lobbyists are former top Republican Hill aides Joe Pasetti and Victoria Sanville.

    Solyndra’s biggest lobbying contract is with McAllister & Quinn, co-founded by Steny Hoyer’s chief of staff Andy Quinn. Steve Ham, another former Hoyer staffer at McA&Q, is on the Solyndra account, as is Al D’Amato aide Chris Fish, and former American writer Kyle Winslow. Gotta love it when young cub writer jump from liberal magazines to K Street.””

    1. I should have known the Rothschilds were behind this. Lazarus was right all along.

  33. I drive by Solyndra’s campus every time I go or come home from visiting my son. From what I know of their tech and their basic “change the world” idea, I like it. But I was always worried about their business model, especially the part that seemed to require government subsidy or loan guarantees for “success.” I was similarly worried when Solyndra’s neighbor down the road, Tesla, sought and obtained government financial favor toward producing its imminent Model-S. So I hope that Solyndra isn’t merely the latest domino to fall and Tesla the next. I suppose that, if China comes forth with cheap, reliable, and dare I say, stylish EVs in the near future, Tesla could very well be Solyndra-style toast not long afterward. I am crossing my fingers that this doesn’t happen.

    1. Toyota has been contemplating a buyout of Tesla.

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