That is the title of this superb piece by the House Budget Committee. In a relatively short space and in clear prose, “The Empty Promise of Green Jobs” recounts the sorry history of the Obama administration’s “green jobs” initiatives; reviews the history of failure that such efforts have universally encountered both in the U.S. and abroad; explains the reasons why government “investment” in political favored industries is a bad idea; and outlines more efficient energy policies. The piece is an excellent primer on crony capitalism and why it should be avoided. A few excerpts:
The President has kept his promise to spend billions of borrowed dollars on green energy, but his promises that such spending would create a new, self-sufficient industry capable of providing millions of jobs for Americans have proven empty. The President’s stimulus law alone included tens of billions in new government subsidies for politically favored renewable-energy interests: $6 billion in loan guarantees for renewable energy investments; $17 billion for the Department of Energy’s energy efficiency and renewable energy programs; $2 billion for energy-efficient battery manufacturing; and billions more on other “clean-energy” programs for a total of $80 billion.
Two years later, the President’s promise of millions of jobs stands in stark contrast with reality. As a recent report from a Bay-Area news organization made clear, green jobs predictions are “proving a pipe dream.”
Why haven’t the President’s promises translated into real economic gains? The answer lies in the federal government’s unsuitability for the role the President wants it to play. Since his inauguration, the President has spoken often of the federal government as an “investor” in alternative sources of energy. But the federal government’s job is to make and enforce the rules of the road, so that markets are fair, transparent and competitive – in other words, to foster an environment that is conducive to private-sector job creation.
When the government takes on the role of “investor,” it usually does so because, according to the party in power, the “wrong” companies are winning in the free market, and the “right” companies are losing. By seeking to pick winners and losers in a dynamic and diverse economy, the government-as-investor model distorts markets, weakens the rule of law, wastes taxpayer dollars, and fails to spur sustainable job creation.
Solyndra is only the first of the administration’s pet green jobs projects that will go belly-up:
Since its introduction in the 2009 stimulus bill, the Department of Energy (DOE) has issued $40 billion in new loan guarantees for private-sector loans for renewable energy projects that might not otherwise have been market-viable. Already, multi-million dollar projects, initially labeled as successes, have failed:
* The first renewable energy loan guarantee recipient, solar start-up Solyndra, received a loan guarantee for $535 million in the fall of 2009, even after repeated warnings from federal financial analysts. In the spring of 2010, it failed to complete its initial public offering after an independent audit questioned the ongoing viability of the firm. Then, in the fall of 2010, the firm closed one of its manufacturing facilities and laid off 180 workers. Finally, the firm declared bankruptcy and laid off 1,100 employees only 15 months after Obama visited a company factory.
* Beacon Power, received a $43 million loan guarantee in July of 2009. Since then, its stock price has dropped by 90 percent – a period during which the NASDAQ exchange on which it is listed has increased by 40 percent. The company has not been in compliance with NASDAQ listing requirements, leading to a delisting determination from the exchange.
* First Wind Holdings, received a $117 million loan guarantee in March of 2010. First Wind withdrew its initial public offering in October of 2010, due to a lack of investor demand.  According to the Boston Globe, investors shied away from the company because “First Wind owes more than $500 million, loses money on a steady basis, and reports a negative cash flow.”
Even in the midst of these failures, DOE has been advertising additional loan guarantee recipients, announcing a $1.2 billion loan guarantee to another solar company just one day after the FBI raided Solyndra’s offices. Congressional investigators are initiating a review to examine how many future Solyndras have been already financed by this loan-guarantee program or approved through shoddy review, and how can we prevent future examples of this kind of wasteful federal spending.
Liberals talk endlessly about the government’s alleged subsidies to the oil and gas industry, but such subsidies are virtually non-existent. This chart shows the dollar value of federal subsidies of various forms of energy per megawatt hour of electricity produced:
Crony capitalism–in its full-blown version, national socialism–is always and everywhere a failure. You cannot create wealth by subsidizing the inefficient production of energy–a fundamental rule of economics that the Obama administration, sadly, has yet to learn.
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