Friday, September 16, 2011

The Solyndra debacle

Recently in the news, the collapse of the Solyndra firm may offer some lessons. Solyndra was a manufacturer of cylindrical panels of CIGS thin-film solar cells based in Fremont, California. The company suspended all operations as of August 2011, leaving behind the United States government as its largest creditor of uncollected debt obligations.

In May 2010 the company was hailed by President Obama in his visit as a model for government investment in green technology. His administration approved a $535 million loan guarantee to Solyndra, claiming that it would create 4,000 new jobs. However, due to overseas price pressure coming from China in the period of constructing the new plant, the Fab 2, the company was forced to shut-down the original plant, Fab 1, ultimately reducing staff to approximately 1,000 employees at the time of declaring bankruptcy.

In fact there is a good deal of comparative evidence concerning the fate of government efforts to select and back winners in the field of technology. For a number of years this policy was associated with MITI, a branch of the Japanese government (a ministry in fact) founded in 1949. At first MITI's efforts had some success, though most observers believe that it was the tenacity and determination of Japanese business itself that were responsible for the remarkable rise of the economy in that country. Eventually, in fact, it became clear that MITI was backing more losers than winners. Today, the ministry is defunct.

From this evidence it is clear that we should be wary of these efforts to pick winners in the realm of technology, as they are repeatedly distorted by politics, cronyism, and ideology. In the Solyndra case the ideology is Green. If one slaps the label green on something it automatically becomes wonderful.

In this spirit I hereby declare Dyneslines a quintessentially green site!

POSTSCRIPT. David Frum is one of the few reasonable Republicans left. Here is what he says about green jobs at the Frum Forum.

"[T]he hope expressed by President Obama that the transition to a new energy future can double as a way to preserve the mass production workforce of the mid-20th century seems at best delusive, at worst a cruel hoax – and actually most of the time a distraction from other more immediate and relevant economic problems.

"The president’s talk of green jobs reminds me of how the “Atari Democrats” of the 1980s used to muse that the industrial workforce displaced by the economic changes of the 1970s could find work making semiconductors. The computer industry created millions of new jobs, yes, including some very exciting and well-paid new jobs. But instead of rescuing the embattled blue-collar middle class, the new jobs heaped additional rewards of higher pay and lower prices on the educated and the qualified.

"No predictions from me about the economic and social effects of green energy. But here’s what I would predict: we’re rapidly going to discover that new energy forms will destroy many more energy-sector jobs than they create.

"And we’ll (re)discover for the umpteenth time that the reason government fails as a venture capitalist is that government faces too many and too contradictory goals. Government effort to subsidize “green jobs” will emerge – not as a benefit from the spread of green energy – but as one of the greatest obstacles impeding the spread of green energy.?



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