Sunday, September 18, 2011

Solyndra "scandal": Explaining the free market to right-wingers



Solyndra, a solar manufacturer, has filed for bankruptcy. This has led to much weeping and gnashing of teeth, as for example:


Fast forward two-and-a-half-years and the chickens have come home to roost. The poster child has shut its doors. 1,100 people are now out of work. Some of them may never recover from this disruption to their economic lives. Those who left other jobs in order to participate in the president’s vision of the future may lose their homes.
Welcome to the green dream.
The concern trolls have come out in force for the occasion:
One failed solar company does not mean the entire clean energy industry is doomed.At least that is what John Doerr, one of Silicon Valley's most prominent venture capitalists, is telling himself and anyone who will listen . . .
Peter Thiel, PayPal founder, is ready to declare the entire industry dead:

“Cleantech is an increasingly large disaster that people in Silicon Valley aren’t even talking about any more,” Thiel said. “The failure in energy and transportation points to a larger failure in clean energy . . .
Of course he is also the guy whose extreme right-wing ideology led him to conclude that "Freedom and democracy are [no longer] compatible."


Grown-ups may be wondering what it is about Solyndra that has the right freaking out, and how they can talk unfortunate Republican friends down off the ledge. To help, I've prepared the following brief script as a guide:

Explaining the free market to right-wingers

Hello, champ. Why so glum?

I know. Solynda went out of business -- all those people are out of work! People who invested their money may not get it back! It's hard to understand how something bad like this could happen. We want to know why. Is solar energy bad? 

Even though we have a lot of sadness about Solynda, our feelings don't mean that the solar industry is bad, or even that Solynda going out of business is all bad. Solynda went out of business because of something called the "free market." 

In the free market, people buy things they want, and they sell things for whatever people will pay for them. Companies like Solynda are started by people who think they can make something people want to buy. Solynda made very good solar panels that people did want to buy.

But in the "free market," even if you make something good, you can't charge too much money for it, or people won't want to buy it. So people are always looking for new ways to make things for less money, so they can sell them for less and more people will want to buy them. Your clothes, the house you live in, and everything you have is nicer because lots of companies are trying to find the best way to make things for less money.

Solynda went out of business because other people at other companies found out a better way to make solar panels. They could make more of them, for less money, and sell them for less money. Because of that, not enough people wanted to buy Solynda's solar panels, even though they were very nice.

In the free market, even though businesses run out of money and go away, we all benefit as companies get smarter about making good things for less money. Now Solynda will belong to the people who lent them money, and someone else will use their way of making good solar panels and try to find a way to make it less expensive.

I know this is extra confusing because the government lent Solynda some money. If the government liked them, how can they go out of business? Shouldn't the government have known ahead of time? But in the free market, no one knows for sure what businesses will make money and which ones will go away. It is a mystery. If the government always knew which businesses were the best, we wouldn't need the free market to find the best ones!

Some people say maybe we shouldn't lend the solar companies money. We can decide that for ourselves, because of democracy (we can talk about democracy another time). But for many years we have been helping all kinds of energy companies borrow money, not just solar panel companies but oil, gas, coal and nuclear companies. Some of them go out of business too; that office with the funny name like a television station (the CBO, very good!) thinks half of the money we are lending to nuclear power companies won't get paid back, just like Solynda, except that nuclear power companies get a lot more money.

Maybe we shouldn't help any energy companies get money, but whether we do or we don't, some will make money and get bigger, and some will go out of business, because of the free market. The free market is for everything, not just solar panels, and all kinds of businesses run out of money and go away, not just solar panel companies. When that happens, remember that it doesn't mean that the product is bad and no one liked it. It probably means, like with Solynda, that somebody found a way to make the product for less money to sell more of it. And that is a very good thing, for solar panels and for us, not a bad thing.





8 comments:

  1. If a single (poor) "scientific" paper is alleged to be able to destroy the entire body of climate science, and if the bankruptcy of a single green company is alleged to destroy the entire green industry, then which of the apparently unending supply of embarrassingly idiotic comments of the radical reich pundits will finally destroy radical reich punditry?

    John Puma

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  2. That is why it is an article of faith for deniers that as "skeptics" they cannot be judged by the standards they apply to others.

    Over and over I've seen the outpourings of rage when you introduce the idea of common standards of honesty, decency, accuracy or professionalism.

    That's why I recommend that we welcome conversations about "credibility" or "bias" -- but never, ever allow the mostly fictional problems of real scientists overshadow the massive, glaring defects of the denialists.

    You want to attack the credibility of scientists because one scientist sent an email saying he'd like to punch somebody? Then let's first talk about the denier who told a scientist to "go gargle razor blades."

    ReplyDelete
  3. Just my thoughts, but a lot better put -- go to deSmogBlog's comments for a laugh (and a cry)

    ReplyDelete
  4. The Wall Street Journal liked Solyndra back in 2010... not any more ;-)

    ReplyDelete
  5. Can you do this the same way when explaining Bain Capital?

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