There's now pretty much a frenzy of Monday-morning quarterbacking going on with the Solyndra controversy. It boils down to essentially two core positions:
- Solyndra was too risky a bet for the DOE to pony up a $535-million loan guarantee. The Atlantic's Megan McArdle has been grappling with this one, in strenuous detail, while somewhat evading the question of whether Solyndra needed to spend as much money as possible in a short period of time, to both achieve economies of scale and outrun a collapse in the price of silicon (Solyndra's solar panels didn't use this material).
- Solyndra was a risky bet, but in the face of $30 billion in Chinese solar investment, the U.S. needs to leverage its innovation advantage to capture its share of the solar market. The government needs to subsidiize some of the risks and be willing tolerate failure in and effort to build up a new Green energy sector. I'm on this side, as is Wired's Jonah Lehrer and the New York Times' Joe Nocera.
To continue with my earlier metaphor, Solyndra has become a real political football. As Nocera points out in his contribution to the debate:
...Republican congressmen boasted that, in passing the continuing resolution to keep the government running the day before, they had succeeded in slashing the program that had made the loan to Solyndra. It’s true: of the $4 billion that remained in the program, $1.5 billion was cut.
This is exactly the wrong direction to be moving in, regardless of whether you're in the Solyndra-was-doomed camp or the Solyndra-was-worth-the-risk camp. The spending pace has been established by the Chinese, and in solar alone it's many billions more than the DOE program had available for continued loan guarantees. So now we're not only becoming risk-averse about new technologies — we're pulling back from putting enough money on the table to keep up with global cleantech competitors.
What lesson do we take away from Solyndragate? First, investors try to pick winners and losers — and are lucky if they can bat better than .500 (there's some Monday-morning batting coaching for you). In fact, they're lucky if they can do better than .300.
Second, the government shouldn't expect to do any better. But if other countries are willing to take their chances on the Green energy solutions of the future — and accept high-risk as a cost of doing business — they're probably going to better positioned to reap the gains when their good bets pay off.