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There are some additional negative consequences that are neither readily apparent nor easy to measure. Think about if you were trying to run a competitor to So

There are some additional negative consequences that are neither readily apparent nor easy to measure. Think about if you were trying to run a competitor to Solyndra. You would not be able to hire qualified engineers, because your subsidized competitor does not need to care about what the market will bear. You could say that the solar market worldwide has been a boondoggle because of these government subsidy price wars, as you note yourself. All that has resulted is a lot of junk equipment that can only be manufactured at a loss when you factor in all the layers of production. Accounting performs a business function that many modern people like to ignore. Perhaps because math is scary, or accounting as a concept has become politically unpopular in America. Accounting matters even in technology research and development. It tells you whether or not the underlying market and societal conditions can actually support a particular project or not. Extended losses on a process inform managers that that process must either be reformed or eliminated. Government does not operate based on profit-loss accounting, but on the dead-reckoning decisions made by political leaders and bureaucrats. Voters are not relevant to this because almost none of them know what a solar panel is, how it works, or anything else relevant to energy issues. Almost no voters make decisions based on such issues. Almost no voters are even vaguely informed of the issues in general. Projects that do not use accounting to improve the decision-making process fall prey to corruption and cost over-runs in a systematically predictable way. This is what happened to Solyndra. I don't blame the people in charge. I don't even blame the politicians who commissioned the project. Our intellectual culture has decayed in such a systematic way so that no one with social status even recognizes that it has.

mikeyouse 13y ago
I largely agree that government influence is a market distorting, but a few points; * Solyndra received ARRA money which only existed because the economy blew up. The 'crowding out' effect of government money is greatly limited in recessions caused by low aggregate-demand. (The unemployment rate for those over 25 years old with bachelors degrees tripled from spring 2007 to spring 2009 when Solyndra received the loan[1]) * The type of accounting you're describing is nearly impossible for these extreme tech projects. Many of these types of companies are unprofitable until they aren't any more. Solazyme and Tesla are good examples. The 'straight accounting' said they were horrible investments for the government, but both have found success after a decade of struggling and both could be world-changing.[2][3] * Politicians didn't 'commission' Solyndra, it was founded by ex-Intel employees in 2005, all of the initial R&D and pilot work was paid for by VC/PE and debt, and they only used the DOE loans to scale-up after four years of groundwork. * It wasn't some ignorant bureaucrat running the DOE program, it was Nobel Prize winning physicist, Steven Chu.[4] [1] - http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=xqm http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=x... [2] - http://www.altenergystocks.com/archives/2014/03/solazyme_launches_biodegradable_encapsulated_lubricant_for_drilling_market.html http://www.altenergystocks.com/archives/2014/03/solazyme_lau... [3] - http://www.usnews.com/opinion/blogs/economic-intelligence/2013/06/03/teslas-success-is-the-result-of-political-favoritism http://www.usnews.com/opinion/blogs/economic-intelligence/20... [4] - http://energy.gov/contributors/dr-steven-chu http://energy.gov/contributors/dr-steven-chu
- hagbardgroup 13y ago
  Thank you for the added detail and for correcting gaps in my knowledge about the company. It's been a while since I thought about it. >The type of accounting you're describing is nearly impossible for these extreme tech projects. I thought I had made myself clearer. Obviously the company's losses are what did it in, so of course it matters regardless of how ambitious the company is. Investors can provide entrepreneurs with more time to discover a sustainable business model. Governments do not have a great track record for producing profitable enterprises that sustain themselves, to say the least. The position that I subscribe to is that those sorts of stimulus methods make it harder for companies to discover a business model rather than easier, because it pushes the incentive towards politicking rather than building a successful private company. It was not my intention to impugn the original investors or even the people who work there. I don't agree with your first point, but would rather not get bogged down in it on HN. There is probably a substantial gap there between what I have read, what you have read, and what our values are. We don't have the time to bridge that difference in a discussion like this.

mikeyouse 13y ago

I largely agree that government influence is a market distorting, but a few points; * Solyndra received ARRA money which only existed because the economy blew up. The 'crowding out' effect of government money is greatly limited in recessions caused by low aggregate-demand. (The unemployment rate for those over 25 years old with bachelors degrees tripled from spring 2007 to spring 2009 when Solyndra received the loan[1]) * The type of accounting you're describing is nearly impossible for these extreme tech projects. Many of these types of companies are unprofitable until they aren't any more. Solazyme and Tesla are good examples. The 'straight accounting' said they were horrible investments for the government, but both have found success after a decade of struggling and both could be world-changing.[2][3] * Politicians didn't 'commission' Solyndra, it was founded by ex-Intel employees in 2005, all of the initial R&D and pilot work was paid for by VC/PE and debt, and they only used the DOE loans to scale-up after four years of groundwork. * It wasn't some ignorant bureaucrat running the DOE program, it was Nobel Prize winning physicist, Steven Chu.[4] [1] - http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=xqm http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=x... [2] - http://www.altenergystocks.com/archives/2014/03/solazyme_launches_biodegradable_encapsulated_lubricant_for_drilling_market.html http://www.altenergystocks.com/archives/2014/03/solazyme_lau... [3] - http://www.usnews.com/opinion/blogs/economic-intelligence/2013/06/03/teslas-success-is-the-result-of-political-favoritism http://www.usnews.com/opinion/blogs/economic-intelligence/20... [4] - http://energy.gov/contributors/dr-steven-chu http://energy.gov/contributors/dr-steven-chu

hagbardgroup 13y ago
Thank you for the added detail and for correcting gaps in my knowledge about the company. It's been a while since I thought about it. >The type of accounting you're describing is nearly impossible for these extreme tech projects. I thought I had made myself clearer. Obviously the company's losses are what did it in, so of course it matters regardless of how ambitious the company is. Investors can provide entrepreneurs with more time to discover a sustainable business model. Governments do not have a great track record for producing profitable enterprises that sustain themselves, to say the least. The position that I subscribe to is that those sorts of stimulus methods make it harder for companies to discover a business model rather than easier, because it pushes the incentive towards politicking rather than building a successful private company. It was not my intention to impugn the original investors or even the people who work there. I don't agree with your first point, but would rather not get bogged down in it on HN. There is probably a substantial gap there between what I have read, what you have read, and what our values are. We don't have the time to bridge that difference in a discussion like this.