Obama Cleantech Stimulus: Bad Policy, Bad Politics and Bad for Cleantech
The Solyndra debacle is no surprise to this cleantech venture capitalist. The inherent conflict between trying to get money out of the U.S. Treasury as quickly as possible to stimulate the economy and, at the same time, have government agencies that are ill-suited at making business decisions do just that was nothing other than a recipe for disaster.
Anytime a government program is giving money to the private sector with the intent of getting the money back, the program is doomed to failure. Bureaucracies, politics and the lack of a profit motive simply don’t allow government to succeed in
business. Anyone who was surprised that politics played
a role in the loan decision for Solyndra (and almost certainly other
awardees) is very naïve.
Even if, by some miracle, the government could make good business
decisions void of political influence, such programs are still
doomed to failure because the public and media won’t allow for even
one loan or investment to fail. In venture capital we make
investments that don’t succeed and we fail often. Yet, we are
still successful on the whole. Our successes more than
compensate for our failures. The government has no ability to
operate this way. Even if a program like the DOE loan
guarantee could operate with an overall effective return (which I
find unlikely anyway), its first failure would sink it. The
government can give away money, but it cannot effectively invest
money in individual companies.
Solyndra won’t be the last default from the DOE loan guarantee
program. The huge amounts of money that will ultimately have
been wasted in the cleantech stimulus – both in terms of loans that
won’t be repaid and the stimulus’ failure to create any meaningful job growth when growth was most needed - is bad for tax payers. The negative PR and the future demise of cleantech policies that otherwise may have had broader bipartisan support is bad for cleantech.
In 2009, amid the euphoria of the Obama Administration’s cleantech
programs, I wrote that the Administration’s cleantech stimulus was bad
policy but good politics. I was wrong… not only was the
cleantech stimulus bad policy, it was bad politics too. While
the politics by which the Administration pushed through these
ill-thought programs may have been deft, the ultimate political
impact is clearly bad for both the Administration and cleantech
itself.
Ultimately, we may look back at Solyndra as the dagger that burst
the cleantech bubble. The hype and euphoria are officially
gone. The long, hard work that will be required to diversify
our energy base and increase energy efficiency wasn’t reduced when
the government sent floods of money out the door to cleantech
companies, and it won’t change now that the hype of those programs
is gone. The good news is that, like the Web and every other
technology bubble, the real value creation comes after the bubble
has burst.
So, let’s get back to work.
