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It's not easy funding green

Commentator David Frum.

Kai Ryssdal: Congress held the first of what could turn out to be many hearings on the now defunct solar firm Solyndra today. The company declared bankruptcy last week, laid off more than a thousand people. Solyndra's now being investigated over how it got -- and how it used -- government-backed loans. At the time, the company was celebrated as the way forward in green technology and in innovation.

Commentator David Frum says Solyndra's failure tells a different story -- about the role of the federal government in private business.


David Frum: So, you're working in an administration and you discover a company with a genius new green technology. The company promises: with just a little start-up cash, we can produce a new product -- and generate hundreds of high-paying new green jobs.

Excellent. Congratulations.

Quit your administration job, join a venture capital firm, and find investors to back your discovery. If you're right, they and you will all get rich together.

But here's what not to do: delude yourself that government can play venture capital investor. It just can't.

The debacle at the Solyndra solar panel company is only the latest example of a problem that dates back to the 1970s and U.S. support for synthetic fuels.

Government can contribute enormously to economic innovation by supporting basic scientific research. Government can support schools and universities to train future innovators. Government can mitigate recessions, suppress inflation, and otherwise keep the macro-economy humming. There's lots of things government can do. Playing venture capitalist is the thing it cannot do.

A real venture capitalist has a single mission: earn a return. That mission is challenging enough, and venture capitalists often fail.

A government venture capitalist faces multiple and often contradictory missions. Yes, government wants a positive return on its investment. It also wants to generate good jobs. It also wants to help depressed regions. And it wants to do all this on a timeline tied to the election calendar.

If the U.S. government wants to discourage the use of oil, there is one powerful mechanism at hand: tax the stuff. Private actors will respond to the incentive. They will conserve and substitute and innovate all on their own.

But when it comes time for investments in individual firms? Back off and let Mr. Market do the job that he does best.


Ryssdal: David Frum was a speechwriter for President George W. Bush. Today he's the editor of FrumForum. Next week, Robert Reich. Your views, whenever you like -- leave a comment.

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"But here's what not to do: delude yourself that government can play venture capital investor. It just can't."
Really?: That IS precisely how China's Solar Industry is out-competing American manufacturers, Solyndra and all.
That's ideologues for you: can't see reality for their precious theories*.

*which The People will hang from.

I am shocked that I find myself agreeing with Mr. Frum, which does not happen often, to the extent that there should not have been any direct investment into this company, though that is also not what happened. Government's most effective tool is the power of taxation, and through taxation to coerce the market towards enterprises that may be more beneficial for society as a whole, such as green energy. However, in this case, the government provided loan guarantees to Solyndra. But, putting the tax payer on the hook for one company without demonstrable results is not a great strategy.

And, that makes this deal look quite suspicious. If the Obama Administration were interested in spurring solar energy development, it should have mandated that all federal buildings have solar panels, that there be some preferential tax incentive and credit for solar energy generation and consumption, and a corresponding tax increase for not using or generating solar energy.

I was surprised that Frum didn't dis the fact that Solyndre represents renewable energy. He would then have to justify the ~$billions spent trying to invent clean coal.
Talk about throwing good money after bad....

Using a tube to collect sunlight is a bad idea. Only a tiny fraction of the cylinder is being struck by the sun at any given time.
Solyndra was a bad product from the beginning.
Not all solar products are bad. In fact, many solar companies are earning big returns.
Don't lump in the companies that are making return with Solydra.

Another reason that govt. should not try to pick the winner is that someone else is a loser. That choice must be made by the marketplace.

Surely you're joking about the oil tax, right? Clinton attempted a relatively BTU tax when oil was $12/bbl. He lost control of Congress the following year.

The only thing it tells us is that you are doing a hit job. Not all the facts are yet known about this, but you are de facto contributing to an assault on an issue about which very little is known. How about discussing News Corp hacking scandal instead? How about discussing the fact that Darrell Issa is not investigating it because apparently "We don't pick on the media", how does that idea reconcile with Republicans picking on NPR? Nice hit job Frummy.

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