Behold, The Circle Of Government Life

Mark Perry Carpe Diem September 19, 2011

Professor Mark J. Perry's Blog for Economics and Finance

Investor's Business Daily -- "Ex-employees of the failed solar panel company Solyndra have applied for aid under the federal government's Trade Adjustment Assistance program, the Labor Department has confirmed. If approved, the employees of what was once touted as a leading exemplar of the White House's green jobs program will be eligible for more federal funds to enable them to be retrained for other jobs. It would be an ironic coda to the saga of Solyndra, which manufactured solar panels and received $527 million in loan guarantees from the Energy Department and praise from President Obama during visits to the firm's California headquarters. Now those green workers will be seeking the government's help to find work again and not necessarily in the conservation jobs sector." Scott Lincicome summarizes this "Circle of Government Life": "So to recap: massive government subsidies created 1,100 "green jobs" that never would've existed but for those massive government subsidies. And when those fake jobs disappeared because the subsidized employer company couldn't compete in the market, the workers blamed China (instead of what's easily one of the worst business plans ever drafted) in order to receive... wait for it... more government subsidies. Behold, the Circle of Government Life."

Also, federal and state rebates and tax credits, in California, which reduced solar panel installation costs 50%, couldn't get enough consumers to buy.

I'm guessing there's going to be some more of that circling before to long: Government Races to Close Billions in Renewable Energy Loan Guarantees

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While there was nothing correct about Solyndra, or the whole "green jobs", blaming China for a business problem is never wrong. China (and similar) supposed cheapness comes with the cost of selective freedom - something reserved for favored Party apparatus or multinationals, but never the commoners that do the work.

Solyndra had an interesting technology, but there was just no way to get the cost/watt down to where the game is played (their cost/watt was about 8 times First Solar's current $0.74/watt.)The DOE told him Solyndra wasn't ready for 'prime time.' The O'Man screwed the pooch.BTW, when it comes to Photovoltaic Panels the U.S. runs a $5 Billion Trade "Surplus" with the rest of the World, Including a sizable Trade Surplus with China.For States South of the 35th Parallel, Solar is rapidly becoming the cheapest "peaking" power available, sans any subsidies.

It does not surprise me that Solyndra's business plan was terrible.I want to learn one thing, and it is the one thing we are never going to learn; why did Obama like Solyndra in spite of its childish plan?The argument for government R&D is that it can step in to more risky situations (and therefore accept lower ROIs and more failure) where private equity is too risk averse. That will advance innovation faster.Except where is the example in reality? Solyndra was using rejected technology, in a spectacularly poor business plan. That isn't cutting edge; it is stupid.Arguably the best that government can do is the shuttle program, where it chooses a much costlier alternative, with astronomically increasing costs of iterations, with virtually no innovative variation, and learns almost nothing.

What are some of the benefits for Solyndra workers under the Trade Assistance Act?Job Search allowances of $1250 per worker.Re-location allowances up to 90% of the cost.104 weeks of training with unemployment comp. in addition to 26 weeks of remedial training if necessary.65% of health coverage during training and/or job search.I am for some unemployment benefits but this is absurd.

I agree, Buddy, we've gone a little "nuts" on this unemployment thing.

The question I want answered is where to clowns like Obama, Chu, et al get off playing venture capitalist with extorted tax dollars?

Meanwhile, Obama wants to raise taxes on people who actually have successful business plans to transfer the wealth they created to these worthless disasters.Seems silly to make money the old fashioned way. Rubbing shoulders with the powerful and getting handouts is much simpler.What could go wrong?

The problem with Solyndra is that they should have applied for permanent USDA subsidies to "harvest" sunlight. These guys were amateurs at milking the government. A one-shot deal. One shot that cost about the same as one day of our ongoing Iraqistan follies.

"I want to learn one thing, and it is the one thing we are never going to learn; why did Obama like Solyndra in spite of its childish plan?" -- JimSolyndra was the first company to be awarded a federal loan guarantee under the stimulus, worth $535 million. Taxpayers are likely to end up on the hook for much if not all of that amount, a highly embarrassing development for President Obama because he was among the company's biggest cheerleaders. He visited its Fremont plant in May 2010 even though PricewaterhouseCoopers had weeks earlier raised doubts about its plans for an initial public offering by questioning whether it could continue as a going concern ... That's especially troubling because Solyndra is backed by one of Obama's key fundraisers, George Kaiser of Tulsa. -- LATimesWASHINGTON "” The Obama administration restructured a half-billion dollar federal loan to a troubled solar energy company in such a way that private investors "” including a fundraiser for President Barack Obama "” moved ahead of taxpayers for repayment in case of a default, government records show. -- AJCThe White House faced mounting political complications as a second top fundraiser for President Barack Obama was linked to a federal loan guarantee program that backed a now-bankrupt Silicon Valley solar energy company, and as two California lawmakers called for investigations of a state tax break granted to the firm. -- BostonHeraldJon Stewarts take: Fox News call your doctor ...

@Che is deadI understand the donor connection.Still, I am not cynical enough to believe he did it merely as payback or, after being found out, that he would not have some ratitonalization for the project.The question still stands. What made him think the blatant donor association was a good idea? They actually put his donor's money ahead of the taxpayer in event of default.But clearly he thought this would work, or he wouldn't have made himself look like a sadsack only a year later. No one does that. So what was the rationalization?Because what really makes me fearful, more even than the cycnicism of party politics, is that he thought it WOULD work; he visited the factory and clearly thought he had a winner. And if he we hear that reasoning, we will hear the frightful reasoning of a person with no understanding of business at all.No one other than earlier investors who's money was sunk would touch Solyndra. But Obama did. The DOE did, against their better judgment. Why? I fear the simple reason is that he's an idiot.I was told a story by the CEO of a health care company who hired a consultant who had done nuts and bolts work on Obamacare. The guy had never seen an Income statement.The very practical reality is that these are lawyers and professional politicians and academics spending trillions of dollars, and hundreds of billions in stimulus, who have absolutely no idea how value is added, and where the pitfalls are, and how the world works. And you can get all the degrees in the world, and learn all the Marx you want, but if you don't understand a business, why are you screwing around in markets? You have to have an arrogrant chip on your shoulder the size of a tree. With $447 billion, we could give $30,000+ to every person under-employed to negotiate with their dream company for temp employment (that is twice the population of Greece or LA), and track the results and learn from them. But somehow, it is a better idea to cast the money out in the economy like seeds on the ground. Only academics and politicians can be so stupid.

With $447 billion, we could give $30,000+ to every person under-employed to negotiate with their dream company for temp employmentTemporary employment == still underemployed. Thanks for advocating de-facto slavery via the lopsided negotiation power; while a few can make it work, the many do not get that kind of luxury.Do the complete job, and calculate funding for full-time, direct employment.

I am angry that a comapny like Solyndra can steal from our government. We should have given the subsidies to the defense contractors they would never take advantage of the government. Our money was well spent in Iraq and Afghanistan back when Bush and Cheney were in control.

@sethstormI am not advocating spending such money. I am merely illustrating the incredible amounts they are spending, and how to do it in a measurable way.Sure, many of those temp contracts may not turn into permanent positions for any number of reasons, some being that the employee does not add enough value. But then we would know that, wouldn't we? Part of the problem with macroeconomics and public policy is that it can not be measured, and so we do the same stupid thing over and over.

At $527 million, Solyndra is small potatoes. The Federal Reserve has doled out $16,000,000 million ($16 trillion) to failed banks around the world since the 2008 bailouts began, without oversight from any elected representative of the people.

I am not advocating spending such money. I am merely illustrating the incredible amounts they are spending, and how to do it in a measurable way.No problem there. Sure, many of those temp contracts may not turn into permanent positions for any number of reasons, some being that the employee does not add enough value. But then we would know that, wouldn't we? The way that temporary labor works, there is too much incentive to set an unreachable goal and churn hard.It makes the incorrect presumption that giving the worker anything but a large disadvantage is wrong. While there are those that can make it work, they usually have the luxury of choice between conventional full-time and temporary. Most people who encounter temporary labor are those that do not have such choice.

"Our money was well spent in Iraq and Afghanistan back when Bush and Cheney were in control"...Gee! Really?You mean this Iraq that Slick Willie and the Dems talked about?This Iraq the Dems publically condemned?

Behold, The Circle Of Government Life

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