The bankruptcy of solar panel manufacturer Solyndra has raised interesting questions concerning government loan guarantees, the picking of winners and losers and of course the possibility of scandal. First off the Department of Energy's loan guarantee program for renewable technology was enacted in 2005 with wide majorities. The senate vote was 85 ayes, 12 nays and 3 present. The House vote was 249 ayes, 183 nays and 3 present. DOE was authorized to guarantee $38 billion in loans. This means the bill received support from both republicans and democrats. That the republicans basically supported this bill shows that precious few seek market solutions to our problems.. Remember one of Harold Black's laws is that if it is subsidized it is bad. Some have said that this demonstrates that the government is picking winners and losers. Wrong or else Solyndra would be a winner. That it is a loser means that the market still picks the winners and losers. In order for the government to guarantee that Solyndra is a winner, it would have to do more than just guarantee its loans. It would have to buy its soar panels and then put them on all government buildings, or put them in a warehouse somewhere or perhaps even mandate that we must buy them (health care anyone) all put them on our homes. Regardless, the discussion has not been about repealing or not renewing (pun) the guarantee program but rather looking into only Solyndra. What about the other loans guarantees? By the way, it turns out that the biggest single loan has ironically been an $8 billion guarantee for a nuclear power plant in Georgia! Personally, I think that the renewable energy industry is in its infant stage and that its costs will go down over time as the technology advances. The mistake the president and all the greenies are making is to try to make it replace fossil fuels. Wrong. It won't. It will always at best complement fossil fuels rather than replace it. It will be a niche product serving the demands of those who desire it and are willing to pay a premium for it. To try to use it to replace fossil fuels is a mistake, a big mistake that only the government can afford to make.
Harold A. Black is professor emeritus in the Department of Finance, University of Tennessee, Knoxville having retired after 24 years of service. He has served on the faculties of American University, Howard University, the University of North Carolina - Chapel Hill and the University of Florida. His government service includes the Office of the Comptroller of the Currency and as a Board Member of the National Credit Union Administration. He also has served on the boards of directors Home Savings of America and its parent company, H. F. Ahmanson & Co., Irwindale, California prior to its merger with Washington Mutual Savings Bank, on the board of New Century Financial Corporation, Irvine, California, then the nation’s largest real estate investment trust and as director and later chairman of the Nashville Branch of the Federal Reserve Bank of Atlanta. He writes an occasional article for the Knoxville News-Sentinel at http://www.knoxnews.com/staff/dr-harold-black/. His web page is haroldablackphd.com