Is "Government investment" a paradox?

"Felony dumb"

That from Brian Bilbray (R-CA) on the Department of Energy's decision to give Solyndra over a half billion in tax dollar money to...

- invest in the production of the risky and not-yet-ready-for-primetime thin film technology solar panels instead of the less efficient but far-cheaper polycrystalline panels that the Chinese produce exclusively.

- manufacture solar panels in the onerous regulatory regime of California where electricity rates are twice that of Midwestern states like Ohio.

- manufacture solar panels on one of the most expensive pieces of land in the country.

- manufacture solar panels in a completely unnecessary new building when there were plenty of existing Bay Area facilities that could've been retro-fitted or rented.

Add all this up and it doesn't seem like a business plan that would attract a whole lot of private investment dollars and this also helps explain how it is that the government funded it.

There are essentially 4 ways how money is spent and they are as follows (in descending order of efficiency: 1) you spend your own money on yourself 2) you spend your own money on someone else 3) you spend someone else's money on yourself and 4) you spend someone else's money on someone else.


Take a wild guess as to which number best describes how government spends money? If you chose #4, move yourself to the head of the class.


There was simply no incentive for the government to get a quality product at the lowest possible price (#1) and this helps explain the inherent inefficiencies with government subsidies. And when the government has no real skin in the game, they invariably leave themselves open to other incentives such as graft and political favortism which very well may be the case with Solyndra...

... not that Solyndra's big wigs are going to let on to any of that.


Please remember this the next time you hear a pol prattle on about "government investments"... it simply does not work by the same rules, criteria and desired outcomes that our own personal investments do.