Out of Control Policy Blog

No Magic Wand in Making the Green Economy

Solyndra, the Green technology company President Obama touted just last year as a model of American ingenuity and entrepreneurship, is heading to bankruptcy court. Although it's just filing Chapter 11 (reorganization, not liquidation), more than one thousand people will lose their jobs when the Freemont, California plant is idled. As the Daily Caller (September 1, 2011) notes:

"In a statement, Solyndra wrote “global economic and solar industry market conditions” forced it to close its Fremont, Calif., factory and lay off 1,100 employees.

“Regulatory and policy uncertainties in recent months created significant near-term excess supply and price erosion,” Solyndra president and CEO Brian Harrison said. “Raising incremental capital in this environment was not possible. This was an unexpected outcome and is most unfortunate.”

"Obama cited the company as a model of success for his highly touted green-energy industry initiative. In fact, the Obama administration fast-tracked the solar startup’s $535 million loan application to the Department of Energy — a move later criticized by the Government Accountability Office. Solyndra and the administration originally projected the loan would help Solyndra create 4,000 jobs."

Many have already jumped on the news noting the close political support the company has received, including half billion dollars in financial support through the US Department of Energy, as well as the freely flowing contributions to the Obama Campaign.

While those political elements will surely play well in an election year, the real issue is that the economy can not be transformed by fiat, not matter how much politicians want it to. New industries don't pop up just because taxpayer dollars are available to subsidize the technology although pockets of of activity might exist (like ethanol). Just because we want a Green industry, doesn't mean the economy is ripe for it. There are no magic wands in shaping the economy.

The New York Times has also noted the spectacularly low job productivity of Green technology and industry despite subsidies. The Brookings Institution puts some paltry numbers on the industry and noted it grew more slowly than the national economy before the Great Recession (and Brookings still supports government subsidies to prop up demand to further subsidize the industry). The paper "Green Jobs Myths" by Andy Morris, William T. Bogart, Andrew Dorchak and Roger E. Meiners should be required reading.

Samuel Staley is Research Fellow


« Heritage Foundation Weighs in on… | Main | Your Happy Labor Day Graph »




Out of Control Policy Archives