Perhaps if the administration had shown any interest in going after corruption, it would be better able to defend against fake scandals

Typically, the administration has let discussion of the Solydra "scandal" be carried on by scum-encrusted right-wing liars and ignoramuses.

"Solyndra was a big bet that happened to go bad. But we probably need to be making more bets like it."

-- James Surowiecki, in his New Yorker
"Financial Page" piece this week, "A Waste of Energy?"

by Ken

Last night I whined about the president's astonishing press-conference statements deflecting responsibility for pursuing financial-industry law-breaking. (His basic answer, you'll recall, was what law-breaking? They just exploited loopholes, which we fixed with Dodd-Frank.) In my mind there's a real connection between the administration's across-the-board refusal to look at the kinds of corruption and illegality it apparently doesn't care about (financial, military, war-crimes-related, and so on) and its inability to defend itself against bogus allegations.

Maybe, I'm thinking, when you sign off on a decade's' worth of actual law-breaking and ethical breaches, you're hamstrung when it comes to trumped-up or made-up accusations by right-wing scumbags whose entire careers (entire lives?) are built on law-breaking and ethical breaches. Which brings us to the Solyndra solar-panel-production "scandal." I'm not saying there are no questions here worth answering, but it's hard to see where there's any legitimate ground for scandal-mongering. Did any of the mud-slingers anticipate that the Chinese would get into solar production in such a massive (and of course government-supported) way, thereby shooting the hell out of the economics of U.S. manufacture? No, I didn't think so.

Of course, for the right-wing scum it's a splendid opportunity to sound their familiar tune that government is no good, when the reality is that they're no good, and whether by design or sheer ineptitude, most any governmental undertaking they undertake will turn to doody. Doody-making is really what they're best at.

"Washington being what it is," says The New Yorker's James Surowiecki on his "Financial Page" this week (that's the October 10 issue), "A Waste of Energy?," "the backlash against green subsidies is no surprise. But it’s an overreaction every bit as hysterical as the pro-Solyndra hype was."

Despite legitimate qualms about government-driven industrial policy, Surowiecki argues, it has scored notable successes in a number of developed (as opposed to developing) countries ("many economists argue that government intervention in the market was instrumental in the postwar rise of countries like Japan, South Korea, and Taiwan; more recently, Germany has built a sizable solar industry using subsidies"), and alternative energy is exactly the sort of field where it's most appropriate, because so much of the potential reward would accrue to society generally rather than to customers ("that means that the economic rate of return is significantly less than the social rate of return"), and also because "energy markets are dominated by entrenched, regulated companies, and that reduces the incentive for investment."

Of course, some think the Solyndra failure shows that the government isn’t investing smartly. But, while government subsidies have built-in problems -- most obviously, some money will go to projects that would have happened anyway -- there’s little sign that the Department of Energy has handed out money recklessly: the vetting process, which relied on three thousand outside experts, was unusually rigorous. Solyndra was a wager that went wrong, but failure is integral to the business of investing in new companies; many venture capitalists will tell you that, of the companies they fund, they expect a third, if not more, to fail. By those standards, the government is actually doing pretty well so far: under the stimulus program, the D.O.E. has handed out nearly twenty billion dollars in loan guarantees to renewable-energy companies, and only Solyndra has defaulted, accounting for a small fraction of the money guaranteed. Solyndra’s failure isn’t a reason for the government to give up on alternative energy, any more than the failure of Pets.com during the Internet bubble means that venture capital should steer clear of tech projects. [Emphasis added.]

And Surowiecki concludes with a point that's ignored by the right-wing liars and ignoramuses: "The government is already hopelessly entangled in the energy market."

As a new study by Nancy Pfund and Ben Healey shows, government subsidies have played a key role in the energy industry since the nineteenth century. The nuclear-power industry was effectively created by the government in the nineteen-fifties, and probably could not exist today without government guarantees. The coal industry was heavily subsidized during the nineteenth century. And the oil-and-gas industry has received tax breaks and allowances worth billions of dollars a year for more than half a century -- to say nothing of the implicit, but incredibly costly, subsidy that oil producers have received in the form of the Fifth and Sixth Fleets. On top of this, fossil-fuel producers are subsidized because the prices of their products don’t include the social costs they inflict on the environment -- pollution and greenhouse emissions. We already have an industrial policy on energy -- it’s just that it’s an industrial policy designed to subsidize and encourage the use of fossil fuels. An economist’s ideal solution to all this might be to repeal the oil industry’s tax breaks, tax carbon to reflect its social costs, and let the market work its magic. But that seems to be, at least for now, a political impossibility. Putting money into alternative energy is as close as we can get to levelling the playing field. Solyndra was a big bet that happened to go bad. But we probably need to be making more bets like it.

I'm guessing there are people in the administration who know all of this. Probably some of the right-wing scumbag liars know it too, but it's certainly not in their interest to 'fess up. And what the administration appears to be desperately short of is people who know anything about real honest-to-goodness messaging.

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