Verret in Washington Times: We Don't Need More Solyndras
"The Solyndra scandal demonstrates that often, the real beneficiaries of government interference, be it subsidization or regulation, are elected officials and their preferred interest groups," says Professor J.W. Verret in an op-ed appearing in The Washington Times. "Solyndra represents an almost perfect case of rent-seeking behavior by political insiders," he adds.
"In the normal course of business, outside the Washington Beltway, the revenue line on a company's income statement provides a logical discipline," says Verret. "It reflects a precise measure of how much the world values the goods a company is producing. But in the case of Solyndra and other companies like it, their revenue numbers reflected imaginary demand created by a combination of government subsidies and preferential treatment by government regulators."
In addition, Verret says, the Department of Energy gambled with taxpayer resources, hurting the future ability of solar power and other green energy sources to compete with traditional sources, as the department's guarantee program caused much of the venture-capital industry to focus on firms other than those able to germinate profitable ideas.
No, dude, we don't need more Solyndras, The Washington Times, December 9, 2011. By J.W. Verret
"Evidence brought forward in the congressional investigation surrounding Solyndra's $535 million loan guarantee from the department suggests that political pressure may have motivated both the original funding of Solyndra and the department's agreement allowing new investors to get paid out first in the case of the company becoming insolvent, as well as the department's continued support of Solyndra in the press even in the face of troubling financial reports from the company.
"However, even if the loan guarantee program hadn't worked to benefit political interests, it represents a bigger and, perhaps, more pervasive government folly: government interference in the private marketplace for innovation."