Zoot Suits Solyndra While the Grail Remains Elusive

By Doug Magill

“Bad, wicked, naughty Zoot! She has been setting fire to our beacon, which I have just remembered – is grail-shaped … It is not the first time we’ve had this problem. “  Monty Python and the Holy Grail

In the classic movie, Monty Python and the Holy Grail, the fetching Zoot and her sister, Dingo, along with a number of equally blond and attractive teenage girls tempt Sir Galahad to forgo his vow of chastity during his journey to recover the Holy Grail.  Unexpectedly rescued by Sir Lancelot, Galahad is indecisive about leaving such a charming locale.  He argues for his return, claiming that he really isn’t in danger and can use a bit of peril anyway.

Such is the world of fantasy imitated by the feckless politicians pursuing the Holy Grail of renewable energy which seems every bit as elusive as the fictional one.  And yet they desire to keep returning to that world of make-believe.

On the day that the CEO and the CFO of Solyndra plead the 5th in front of a Congressional committee, the Plain Dealer ran an article in the business section claiming that “the realization that Ohio’s economic recovery will depend on smart energy policies is driving a growing political debate.”

The mind reels.  Realization, what realization?  And by whom?  Certainly not by Ohio’s business executives.

I don’t know the reporter who wrote the article, but he clearly doesn’t understand business, or business people.  And neither does the mayor of Cleveland, who claims that not pursuing renewable energy will “sacrifice the region’s manufacturing future.”

To think that renewable energy is the solution to Ohio’s economic recovery is staggering in its simplicity and naivete.  The complexity of Ohio’s economy cannot be reduced to talking points about what is politically correct.  There are enormous tax and regulatory issues that affect manufacturing investment as well as the abysmal educational environment and the unwieldy overhead of our greedy public-sector unions.  Add to that the uncertainly of a business-hostile president and his attempt to impose crushing taxation on successful entrepreneurs (the officers of sub-chapter S corporations will be enormously affected by his proposals), smothering environmental regulations, an anti-competitive NLRB, and the horrendous projected increases in costs due to Obamacare.  It is understandable why no one wants to invest or expand right now.  Anywhere.

And still, grail-shaped beacons of renewable energy attract the hapless Galahads of government, in the form of politicians and bureaucrats who do not understand business and wish to expend our tax dollars for their own amusement and self-aggrandization.

There are a lot of successful manufacturing companies in Ohio that are willing to expand given the right environment.  And renewable energy policies are not driving factors.

What is underneath all the flash and sparkle of the renewable-energy crusade is an ugly conceit: that someone in government is smart enough to decide what investments should be made.  Frankly, it is appalling that after all this time and so many debacles with our tax dollars that our elected leaders, abetted by the media, still don’t get it.

Investments are made by individuals with a dream, a vision, and the willingness to work hard to make it happen.  The government needs to lose the arrogance of thinking it has a role to play in investment decisions.

Solyndra failed because its cost of manufacturing per watt of output was significantly higher than any of its competitors ($.84 for First Solar in 2009, vs. $6.29 for Solyndra).  And its sale price per watt ($3.42) was so far below their manufacturing costs that the company’s demise was inevitable.  Which is what the Department of Energy was told early in the year in the midst of restructuring the $535 million loan – at a lower interest rate than any other company was getting.

But in the fantasy world of government investment, connections matter more than competency.  Solyndra’s investors were significant donors to the Obama campaign – and to Senator Sherrod Brown’s campaign as well.  And in the last year visited the White House almost 20 times.

The  business that was being transacted had little to do with making money for the company’s investors, and a lot to do with paybacks for government loans.

This is what inevitably happens when government tries to manage business, and the economy.  At least Congressman Darrell Issa gets it.  His subcommittee is reviewing the Solyndra fiasco, but is also questioning why the federal government is at all involved in loan guarantees to businesses.

A great question.  One that Mayor Jackson should ask as well.

Northeast Ohio has much to recommend it, and individual businessmen can make the case better than bureaucrats and politicians.  Cleveland Heights just landed an Israeli security company, Ohio City is seeing renewed investment, a Twinsburg company is seeing opportunities in the vehicle natural gas conversion market, and Kent State just initiated a significant push for a stronger research and development focus for the university.  These are just some of the activities that will help us grow and prosper.  All of them are significant, have great potential for the region, and promise something more than mythical renewable-energy initiatives.

For now, the Solyndra executives and the energy department wonks that enabled Solyndra have to find a way to find redemption.  As Robert Byrne once noted wryly, “In order to preserve your self-respect, it is sometimes necessary to lie and cheat.”

Sounds like an Obama administration mantra.

Doug Magill is a consultant, freelance writer and voice-over talent.  he can be reached at doug@magillmedia.net

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Comments

  1. Mike Burkons says:

    Doug,

    Great post and I agree with 95% of it. I hate the gov giving loans and grants to companies particularly startups. 4 of 5 will fail and getting paid back principal plus interest on the one success isn’t smart biz. However, what do they care, it isn’t there money, it is the taxpayers.

    My only disagreement is I wouldn’t have a problem with the state or gov investing in a company as long as the amount that is being invested has a one to one match with priv money and is on the exact same terms as the private investment.

    I am not saying bad investments won’t happen this way, but at least you have people who are investing their own money (not taxpayers) and are more likely to make better decisions, and if a company hits, the taxpayers get rewarded with a strong exit instead of just getting their loan paid back.

    The only reason I support this is increasing the amount of early stage investment in an area is a good thing, however, when investment decisions are made by these people at these local state funded Econ dev groups, using taxpayer money, when their investments tank no one is held accountable and they make up new metrics they can game to tell everyone how important they are. This is what happens at groups like jumpstart, nortech, etc. When a priv fund or angel loses money, they are pissed and try not to repeat that mistake.

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