The Trouble With Crony Capitalism

The Solyndra scandal gets worse and worse, and as it does so it teaches one lesson after another about the evils of entangling the government with private enterprise. The latest revelation is that when Solyndra was planning a massive layoff in late 2010, the Department of Energy pressured the company to delay its announcement until after the midterm elections:

Solyndra’s chief executive warned the Energy Department on Oct. 25, 2010, that he intended to announce worker layoffs Oct. 28. He said he was spurred by numerous calls from reporters and potential investors about rumors the firm was in financial trouble and was planning to lay off workers and close one of its two plants.

But in an Oct. 30, 2010, e-mail, advisers to Solyndra’s primary investor, Argonaut Equity, explain that the Energy Department had strongly urged the company to put off the layoff announcement until Nov. 3. The midterm elections were held Nov. 2….

“DOE continues to be cooperative and have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet,” a Solyndra investor adviser wrote Oct. 30. “They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd – oddly they didn’t give a reason for that date.”

Ha ha ha. Of course, he who pays the piper calls the tune, so Solyndra’s management complied with DOE’s request–which was intended, of course, to help the Democratic Party by preventing the Solyndra scandal from emerging in time to influence the election.

This is one more reason why crony capitalism is such a terrible idea. Business decisions will be made based not on economic considerations, but rather on political expediency. The result is bad for everyone–except, of course, for well-connected executives whose interests will be looked after by their political allies, and politicians who spin fables about “green energy” to fool voters. The Obama administration is less than three years old, but it is already building an impressive record of corruption.

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