Click here from the rest of the article and a crucial infographic
Giving large, established companies extra-cheap loans to build power plants, run transmission lines, and fix up the roofs of their warehouses is, in the immortal words of P.J. O'Rourke, like paying a Dairy Queen owner to keep his ice cream freezers on.Technorati tags:
This has implications for the default rates. The genuine startups seem to be shaky--it's not just Solyndra, but also Nevada Geothermal and Brightsource. In other words, the firms that actually need the money are likely to experience a far higher default rate than the overall portfolio.
Why does that matter? Because it skews our perceptions of the usefulness of the program. If we loan a bunch of money to firms that could easily get the money elsewhere, and a little bit of money to firms that are very risky, we can claim a high "success" rate even if all the risky firms fail. But we won't have actually added much value, because the government wasn't addressing a genuine market failure. It was just giving Ford and Nissan some extra-cheap money.
But if we're not really filling a gap in the capital market, this is a terrible way to go about subsidizing clean energy. We should be subsidizing the outcome we want: more solar panels installed, more clean vehicles purchased. If the demand is there, companies will be able to go out onto the market and borrow to fill it. It doesn't do us much good to have a bunch of shiny new electric cars--that sit on dealer lots. Or solar panels in the Solyndra warehouse. We should be paying for performance. Otherwise, we're not winning the future. We're just sticking a green smiley face on the same old corporate welfare--and the government's less like a VC [venture capitalist] than a farmer slopping the pigs at the trough.
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