After the Green Rush
posted at 8:50 am on November 15, 2011 by Karl
The establishment media equivalent of the Friday document dump is exiling a story to Saturday, which is what the New York Times did with a story on the crony capitalism that might be nicknamed the Green Rush:
The government support — which includes loan guarantees, cash grants and contracts that require electric customers to pay higher rates — largely eliminated the risk to the private investors and almost guaranteed them large profits for years to come. The beneficiaries include financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG — even Google.
A great deal of attention has been focused on Solyndra, a start-up that received $528 million in federal loans to develop cutting-edge solar technology before it went bankrupt, but nearly 90 percent of the $16 billion in clean-energy loans guaranteed by the federal government since 2009 went to subsidize these lower-risk power plants, which in many cases were backed by big companies with vast resources.
When the Obama administration and Congress expanded the clean-energy incentives in 2009, a gold-rush mentality took over.
The story undoubtedly disappoints former Enron adviser turned NYT columnist Paul Krugman, who has picked up the lefty meme about a “Moore’s Law in solar energy.” There are a number of reasons to be skeptical about that, the most obvious being that if there was anything like Moore’s Law going on with solar energy, the industry would not be dependent on government subsidies, mandates and loan guarantees.
As usual, there is a part of this that is news not fit to print in the NYT, but left to a new book from Peter Schweizer:
The so-called 1705 Loan Guarantee Program and the 1603 Grant Program channeled billions of dollars to all sorts of energy companies. The grants were earmarked for alternative-fuel and green-power projects, so it would not be a surprise to learn that those industries were led by liberals. Furthermore, these were highly competitive grant and loan programs—not usually a hallmark of cronyism. Often fewer than 10 percent of applicants were deemed worthy.
Nevertheless, a large proportion of the winners were companies with Obama-campaign connections. Indeed, at least 10 members of Obama’s finance committee and more than a dozen of his campaign bundlers were big winners in getting your money. At the same time, several politicians who supported Obama managed to strike gold by launching alternative-energy companies and obtaining grants. How much did they get? According to the Department of Energy’s own numbers … a lot. In the 1705 government-backed-loan program, for example, $16.4 billion of the $20.5 billion in loans granted as of Sept. 15 went to companies either run by or primarily owned by Obama financial backers—individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party. The grant and guaranteed-loan recipients were early backers of Obama before he ran for president, people who continued to give to his campaigns and exclusively to the Democratic Party in the years leading up to 2008. Their political largesse is probably the best investment they ever made in alternative energy. It brought them returns many times over.
RTWT, as it only gets worse from there. Even if you discount the possibility of crime, the Green Rush is a companion story to that of Occupy Wall Street, as Kenneth Anderson explained in analyzing the Blue One Perecent:
The two tiers of the New Class have always had different sources of rents ***. For the upper tier, since 1990, it has come through its ability to take the benefits of generations of US social investment in education and sell that expertise across global markets — leveraging expertise and access to capital and technological markets in the 1990s to places in Asia and the former communist world in desperate need of it. As [Christopher] Lasch said, the revolt and flight of the elites, to marketize themselves globally as free agents — to take the social capital derived over many generations by American society, and to go live in the jet stream and extract returns on a global scale for that expertise. But that expertise is now largely commodified — to paraphrase David Swenson on financial engineering, that kind of universal expertise is commodified, cheaply available, and no longer commands much premium. As those returns have come under pressure, the Global New Class has come home, looking to command premiums through privileged access to the public-private divide — access most visible at the moment as virtuous new technology projects that turn out to be mere crony capitalism.
Again, when progressivism is no longer a source of spoils, its power will be much diminished.
Blowback
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