The triumph of ideology over experience.
Click here to listen to the broadcast of You Tell Me on KTBB AM & FM, Friday, Sept. 2, 2011.
The countdown has begun toward President Obama’s much-anticipated “major policy statement” on jobs. The date is set for Thursday, September 8 before a joint session of Congress.
The president’s acolytes are no doubt expecting a bold, sweeping and stirring set of initiatives that will re-energize a struggling economy while breathing fresh life back into a flagging administration. (It’s also possible that the speech is nothing more than a 2012 campaign kick-off event but that’s a separate editorial.)
My expectations are somewhat less. I don’t think there’s a chance in the world that Obama can or will change his stripes. Therefore, I’m expecting a repackaging of the same tired, discredited thinking that brought us the “stimulus.” Call me a cynic if you want.
I’m expecting to hear about the need for job-creating “investments” in bridges and roads and infrastructure. I won’t be surprised to hear about bullet trains again. I expect to hear about “investments” in training and education.
And as sure as I’m talking to you now, the president will talk about bold new federal “investments” in “green energy” technology that will create a new wave of exciting new “green” jobs.
It’s when he trots out the green jobs again that I’d like you to think of a company called Solyndra.
Solyndra, headquartered in Fremont, California, was started in 2005. It manufactured rooftop solar panels and became a darling of the Obama administration.
In 2009, Solyndra received $535 million in federal loan guarantees from a program intended to minimize the risk to venture capital investors that backed “green energy” businesses
Solyndra’s bright future and its symbolic importance in leading the country forward in a new age of Earth-saving, job-creating energy technology was heralded by President Obama himself during a visit to the plant on May 26 of last year.
Fast-forward 15 months. That halcyon future, together with more than a half billion of your dollars, is now gone. This week Solyndra ceased operations, dismissed its 1,100 employees and filed for bankruptcy protection.
There are all kinds of lessons to be learned from Solyndra. Let’s focus on two.
First, if in order to exist it requires federal loan guarantees, it’s not a business. If rooftop solar panels truly represented a clean, economical and functional source of energy for a meaningful segment of the market, entrepreneurs would put up or raise the money on their own.
When were the taxpayers ever on the hook for the seed capital in Microsoft? Was it federal loan guarantees that put a computer on your desk or in your lap? Good ideas attract capital. Always have, always will. If it takes the federal government guaranteeing the money to get your idea off the ground, it’s probably not a good idea.
Second, and related to the first, most good ideas that attract private capital turn out to be not quite good enough. That is to say, most ventures upon which capital is freely put at risk don’t pay off. Most investment capital is lost.
This may shatter your view of the fat-cat investment banker but it is absolutely true. Think of capitalism like baseball. Most investments strike out. It’s the home runs that make it all worthwhile.
Except for those investing the money, no one is hurt when an investment fails. Therefore, while not desired, loss is nonetheless acceptable. The enterprise is free to fail. Thus liberated, it is free to succeed.
But socialize the risk by using the taxpayers’ money and failure becomes unacceptable. You get posturing politicians and bureaucratic oversight. The enterprise becomes sclerotic and unable to adapt and pivot in response to challenge or opportunity.
If Apple’s financing depended on federal loan guarantees arising from some politically-driven desire to advance computer manufacturing, it is unlikely that Apple would have ever started making music players and cell phones.
I still don’t own a Mac. But in my home are three iPods, two iPhones and an iPad. Apple was free to fail with these devices. Thus freed, they succeeded wildly.
Obama in particular, and liberals in general, understand none of this.
Which is why I recommend on Thursday that rather than watching President Obama starring in “Stimulus II – The Campaign Speech”, you watch the Packers and the Saints on NBC.
It should be a darned good game