There has been a lot of talk about the Solyndra scandal and the Obama administration. The big deal seems to be the push by the Obama administration to give the failed company $535 million in loan guarantees. Why is this a big deal?
In the grand scheme of things it isn’t. A $535 million dollar investment in the form of a loan, which would be paid back, is miniscule in terms of the US budget. Putting money into various green technology companies is a good idea, assuming one takes off. The fact is, most will not and most will fail. That’s the way research and development works. Sometimes the money is ‘wasted’, but in the long-term, money put into R&D is a huge benefit.
The other argument is that $535 million was ‘spent’ (I wouldn’t call a loan spending) to develop 1,100 jobs which equates to $486,364 per job. Sounds insane! Why would anyone spend $486,364 per job? Well again, it doesn’t exactly work that way, but it makes for a great headline. Start-up, capital, and R&D costs are big in many fields. Looking at those total costs and then comparing that to jobs created to determine what a job cost doesn’t make sense. It doesn’t work that way, but again it makes for a great headline.
The real deal behind this fiasco is that the right doesn’t like green technology. They believe it is a waste of time and think we should instead focus on tried and true technologies (coal, oil, nuclear). If this was really about wasting money of failed technologies and firms then I would suggest the same people railing against this $535 million to Solyndra should be railing against the Defense Advanced Research Projects Agency (DARPA).
DARPA has an annual budget of $3.2 billion and employees 240 people. Using the same logic as above, that is $13.33 million per employee. Many of DARPA’s projects have been failures, costing us millions of dollars in R&D money. Yet DARPA continues getting an absurd amount of money without anyone raising any issues. Why? Well, the right likes defense spending. If DARPA was primarily focused on green projects however things might be different.
Am I suggesting we shouldn’t fund DARPA? Absolutely not! I believe we should put more money into DARPA, and more money into R&D across the board. Sure, a lot of that money ends up being ‘wasted’, meaning it provides no results, but in the long-run money spent on R&D leads to eureka moments, which can spur development and technology to a new realm. This is exactly why R&D spending is so important! The way I look at Solyndra, it was a R&D loan guarantee gone wrong.
Maybe there was some crony capitalism involved, but its not isolated to Solyndra. Rick Perry has been accused of crony capitalism involving his executive order to put the HPV vaccine on the vaccination schedule for school children. It wouldn’t surprise me if that was part of his rationale behind the decision. Crony capitalism is a part of politics. When you control the purse strings, money put into your campaign has a strong impact on how decisions are made. Solyndra is nothing new. It’s just another example of politics as usual.