ONCE THE OBAMA administration’s paragon of a clean-energy future, Solyndra has gone bankrupt, taking a $527 million Energy Department-guaranteed loan with it. President Obama, however, has no regrets. “Hindsight is always 20-20,” he told George Stephanopoulos of ABC News. “It went through the regular review process. And people felt like this was a good bet.” Solyndra didn’t pan out, Mr. Obama conceded, but that’s the sort of risk the United States must take to compete with countries, such as China, that subsidize solar power.
This answer, which Mr. Obama essentially repeated at a news conference Thursday, was unsatisfactory — in tone and substance. When a profit-making venture blows half a billion taxpayer dollars, the president should be more upset about it. Much of the criticism Mr. Obama is taking over Solyndra is political. But not all of it.
The important lesson is that the government “is a crappy vc” — venture capitalist — as then-White House economic adviser Lawrence Summers put it in an internal e-mail. Government can foster clean energy by subsidizing basic research, whose fruits become available to a variety of entrepreneurs, and by setting broad incentives that shift demand in favor of alternative energy. Subsidizing selected technologies or companies, by contrast, is a game that taxpayers often lose, as the history of boondoggles from synthetic fuels to the fast breeder reactor suggests. We suspect China will learn this lesson, too.
The Obama administration has noted that private-sector biggies such as Richard Branson also bet on Solyndra. We concede that government officials are no less susceptible to irrational exuberance than capitalists. The problem is that bureaucrats are more likely to bet wrong because they are generally not full-time investment experts and have no skin in the game themselves.
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