Report: Stimulus-backed solar company lays off 70 percent of workforce
posted at 6:35 pm on February 29, 2012 by Tina Korbe
Further evidence that when government officials usurp the role of the free market to choose winners and losers, they inevitably shuffle taxpayer dollars across the table to … losers. The Heritage Foundation’s Lachlan Markay reports:
President Obama used a weekly address in July 2010 to tout his stimulus package’s support for the solar industry. One of the companies he mentioned specifically, Abound Solar, just announced that it will lay off 70 percent of its workforce.
Abound would “creat[e] more than 2,000 construction jobs and 1,500 permanent jobs,” Obama claimed, and would be integral to the administration’s quest to “create whole new industries and hundreds of thousands of new jobs in America.”
But a year and a half later, the company’s staff numbers only 120. It announced Tuesday that it would lay off 180 full time and 100 part time employees, halt solar panel production, and delay the construction of a manufacturing plant in Indiana.
Just how much money went to Abound Solar through the Energy Department’s 1705 renewable energy loan program? So far, the company has drawn $70 million of its $400 million loan. The company won’t be able to draw more until it resumes production.
Meanwhile, natural gas advocates now seek federal subsidies (and make suspect donations to liberal think tanks as a part of their quest). Haven’t we learned our lesson? In an excellent editorial today, The Wall Street Journal editorial board explains that subsidies for natural gas are, in principle, no different than subsidies for solar. Furthermore, the board argues, the many advantages to natural gas are more reasons to oppose government intervention in the industry than to support it:
The natural gas shale revolution is a blessing for the U.S., but its very abundance and low cost mean that it could be a commercially viable substitute for oil without taxpayer handouts. At current prices, a gallon of transportation fuel from natural gas costs about one-third to one-half less a gallon of gas from oil. That’s a big nonsubsidized cost advantage.
Mr. Pickens claims that the subsidies are merely to finance the transition to natural gas vehicles, and that they will be temporary. But there were no subsidies for Henry Ford to build the Model T, and no tax incentives for gas stations in every town in America.
As for “energy independence,” taxpayer subsidies have a miserable record of reducing reliance on foreign oil. In the 1970s the feds spent some $2 billion on synthetic fuels, which were a commercial bust. Ethanol was sold as a path to energy “security,” but 30 years and more than $40 billion later it still can’t compete without governmental support. The two-decade federal nourishment of solar, wind and other non-hydro renewables has cost tens of billions of dollars, yet they still provide just 3.6% of U.S. electricity.
The history of energy subsidies is that they become an industrial and political addiction that is difficult to stop, no matter the results, and may even inhibit innovation and profitability by providing a crutch.
We are also told that government must subsidize natural gas because the OPEC cartel blocks a free market in oil. But OPEC is not the only price-setter in oil markets, and in any case the point of a cartel is to hold the market price artificially high, which should help natural gas and renewables. If the world is running out of oil (doubtful), and prices will rise over time (maybe), this should only make natural gas more promising without federal help.
As someone who would love to see natural gas take off as a transportation fuel (it’s clean, affordable and all-American!), I still want no part of crony capitalism. The purpose of government is to secure the inalienable rights of man. Those rights do not include “the right to a profitable business.” Entrepreneurship always involves risk. Sometimes, the risk turns out to be worth it. Sometimes, it doesn’t. Government policy should seek to ensure that entrepreneurs have the freedom both to succeed and to fail.