4 Lessons from the Solyndra Mess

What are lessons from the Solyndra mess?

Lesson Number One. Politicians will seize on a scandal to denounce the moral turpitude of their adversaries. But you knew that already. Happens all the time when there's a chance a little partisan red meat could yield desired headlines. Consequently, the howls of righteous indignation about Solyndra coming out of the Capitol Hill PR smokestacks are not believable.

If we were living in a mirror universe, if a Republican administration had given a loan guarantee for a risky product manufactured under a shaky business model by a company called Coalyndra, and if Coalyndra had imploded, you can bet that Democrats running the House oversight committees would be declaring themselves shocked, shocked at the waste of taxpayers' money.

Which brings us to Lesson Number Two. Investments in newfangled technologies are inherently risky, be they Solyndra's cylindrical thin-film solar modules or, say, a carbon capture process developed by our fictional Coalyndra. Private operators who put money into such investments in hopes of cutting a fat hog if the technology goes viral know, or should know, that there's a significant chance they won't get their money back. The higher the potential return, the higher the risk, and all that.

That goes the same if public dollars are used as risk capital for specific companies. If the investment goes bad, there will be a scandal, even if the bureaucrats-cum-loan officers have done their homework thoroughly. Maybe it's not such a good idea to deploy taxpayer dollars in that manner.

Lesson Number Three. The U.S. still lacks a coherent energy policy, largely because the country is politically divided and those divisions manifest themselves as policy incoherence. People are as likely to tell pollsters that they want the federal government to slim down as they are to say the federal government should fight pollution and promote cleaner forms of energy.

Here's an idea that might be worthy of discussion and debate. The political obstacles against it would be, at best, formidable, but let's run it up the flagpole and see if anyone salutes.

Suppose the federal government funded energy R&D at the bigger scale that corporate worthies such as GE CEO Jeff Immelt and Microsoft founder Bill Gates have proposed to spur technological innovation.

Suppose we stopped using taxpayers' dollars as risk capital for individual energy companies, regardless of technology.

Suppose we wiped out all the tax preferences enjoyed by all forms of energy as part of a "big bang" simplification and rationalization of the tax code.

Suppose that big bang tax reform included lower taxes on good stuff like work and savings and higher taxes on bad stuff like pollution, including carbon emissions.

Lesson Number Four. Suppose, just suppose, we thought about new ways to cut the energy knots in which our country is tied. What would be possible?