by Mitch Kokai
Senior Political Analyst, John Locke Foundation
A new Bloomberg Businessweek editorial starts well enough:
In a cringeworthy failure, California solar panel maker Solyndra collapsed on Aug. 31 and filed for bankruptcy, just two years after winning $535 million of federal loan guarantees. Solyndra’s rapid rise and fall should have played out entirely in the private sector. Silicon Valley is thick with venture capitalists willing to finance risky, iconoclastic startups. Ever since its founding in 2005, Solyndra had no trouble finding such supporters.
All told, Solyndra raised $1.1 billion from private sources. The extra federal support ended up having the well-intended but unfortunate effect of letting Solyndra ramp up manufacturing in a hurry, even as evidence was emerging that the company had badly misread the changing economics of the solar panel market.
After a nice start, though, the editorial writer heads in another direction:
A day after Solyndra’s failure, it was heartening to see the Energy Dept. award a total of $145 million to 69 solar energy projects taking place in universities, government research labs, and major corporations. Many of those grants are for as little as $750,000 apiece. Each batch of grants targets a current impediment to cheaper solar power—then provides initial support for a dozen or more different ideas that might lead to energy breakthroughs.
Steering small amounts of money to many early stage researchers is a far better way for government to operate.
Want to know an even better way for government to operate? Stay out of the market process entirely, and stop trying to pick economic winners and losers through economic development policies that are bound to fail.