Another dud of an article in Politico: one Joe Horowitz, described as the managing general partner at Jafco ventures in Palo Alto, California, argues that the federal government should fund more Solyndras. “Some industries are just too capitalist intensive to succeed without government help,” he writes. Especially those who spend $6 to make a product that they then sell for $3. And anyway solar panels are an “industry that is strategically important,” so much so that the Chinese are loaning $40 billion to “a handful of their solar companies,” and Japan, Germany and other European countries are subsidizing solar power too. But as the indefatigable Walter Russell Mead notes, the Chinese are getting out of the solar racket pronto. A Bloomberg report notes that solar cell unit prices have fallen 59% since last December. One Wall Street analyst is quoted as saying, “Liquidation is leading to suicidal pricing,” and another as saying, “Most major cell, wafer and module manufacturers are poised to report four quarters in a row of losses and this is just the first one.” Sounds just like Solyndra: we’ll make it up on volume.
There is something almost antique about the green technologies being touted as the wave of the future. The car battery has been around for more than 100 years, but no one has been able to develop an electric car that is, without subsidy, competitive with cars with gasoline motors. Solar power, as Mead notes, “has been touted as the next big thing since the 1970s.” But it’s still uneconomic without subsidy. The politically connected investors in Solyndra like the undoubtedly politically connected operators of the Chinese solar firms seem not to have taken into account the possibility that the subsidy would disappear or, what amounts to the same thing, that governments would decline to issue ukases rendering other forms of energy even more expensive or simply illegal. These folks though politics would eliminate the risk in their business. Instead it made it riskier than they imagined.
