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    Subsidized Solar Energy - Let's Not Buy Any More Magic Rocks
    By Hank Campbell | September 20th 2011 11:00 AM | 63 comments | Print | E-mail | Track Comments
    About Hank

    I'm the founder of Science 2.0®.

    A wise man once said Darwin had the greatest idea anyone ever had. Others may prefer Newton or Archimedes...

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    People may complain about tax breaks for successful energy companies but the one thing worse is spending real money on lousy ones.   Yet it has happened because advocacy is taking precedence over science.

    The recent Solyndra LLC collapse is not the first time this has happened, nor can it be blamed solely on the Obama administration simply due to his zeal for alternative energy - the Department of Energy began the loan guarantee program in 2006 when there was a Republican Congress and a Republican senate and in 2005 the wasteful ethanol subsidies and mandates were put into law.

    Yet the House Energy and Commerce committee will be looking into the Obama administration's role in continuing to promote Solyndra even after there were concerns - his May 2010 visit to the company, calling it a “a testament to American ingenuity and dynamism”, followed by a special exemption from the Energy Department subordinating taxpayer debt to investors who are key Obama fundraisers certainly looks bad, but it isn't just Republicans engaging in political theater and delighting that FBI raids are occurring.  Rep. Henry Waxman, D-Los Angeles, has urged an Enron-type investigation.

    In reality, if a crime has occurred it will fall on the shoulders of Solyndra CEO Brian Harrison and company founder Chris Gronet but Democrats will take some heat for blocking disclosure of documents related to these loans.  The real issue is our persistent desire to buy science 'magic rocks'.

    Magic rocks, if you aren't familiar with them, are crystals that grow in water. They were invented in 1940 and are a clever novelty still sold in stores today.  Science knows sodium silicate and water soluble metallic salts are not actually magic, even if they might seem like it to politicians and kids.  Magic rocks have acquired a colloquial meaning as well, namely when it comes to correlation/causation arrows that are mixed up, like the notion that subsidies will create free market viability for a technology that has never been very good.

    Here's an example of a magic rock scenario, courtesy of pop-culture stalwart "The Simpsons" and an exchange between father Homer and daughter Lisa.

    HOMER: Well, there's not a bear in sight. The Bear Patrol is sure doing its job.
    LISA:  That's specious reasoning, Dad.
    HOMER:  Thank you, sweetie.
    LISA:  Dad, what if I were to tell you that this rock keeps away tigers.
    HOMER:  Uh-huh, and how does it work?
    LISA:  It doesn't work. It's just a stupid rock.
    HOMER:  I see.
    LISA:  But you don't see any tigers around, do you?
    HOMER:  Lisa, I'd like to buy your rock.


    In this instance, Lisa is science and Homer is the government desiring to fund a magic rock despite any science evidence it will do anything new. Copper indium gallium diselenide (CIGS) thin film photovoltaics are nothing special, plenty of companies are trying to make that work just in Californa but they live and die on the price of silicone and when that dropped, competitors' products become more affordable. Given that obvious insecurity, what made Solyndra special to the Obama administration - so special they received loan rates a full percentage point lower than other Energy Department loans - is the subject of industry curiosity. We know solar energy technology is not going to get better just by throwing more subsidies at it. Yet we continue to offer companies money for their magic rocks.  

    On August 26th, over a month after it took a subpoena to the Office of Management and Budget to obtain documents related to existing DOE loan guarantees (every Democrat on the Oversight Subcommittee voted against issuing the subpoena at all) another loan for another solar energy company was issued; this one $852 million to the Genesis Solar Project.

    Less than two weeks before that announcement, Evergreen Solar in Massachusetts filed for bankruptcy with $485.6 million in debt. Loss to Massachusetts taxpayers: $58 million. In California, electric car start-up company Green Vehicles folded, taking with it an investment of over $540,000 from the tiny town of Salinas, which had bought the magic rock of cleaner cars and consumer demand and green jobs. 

    There are future technologies, like hydrogen, that are more deserving of research money and, if we must subsidize any company at all, it should at least be common practice to spread the money (and risk and reward) around multiple ventures and not take a chance on one because a Democratic fundraiser is an investor.

    We may have another magic rock waiting in the future. The Dunes Solar Energy project in Nevada has $737 million in loan guarantees - but hasn't even hired a worker after two years.

    Comments

    mhlongmeyer
    ...  if we must subsidize any company at all ...
    Of course we need subsidies!  After all, if Congress had not passed the Automobile Research Subsidy Act of 1885, we would still be stuck with horse-drawn carriages.  Um, wouldn't we?

    Seriously though, government spending on science is most effective when it is channeled into basic research, not to picking winning and losing technology companies. 
    Hank
    I certainly agree, though even the 'effectiveness' of basic research is up in the air.  Drug companies, for example, get nothing at all from academic basic research despite taxpayers spending $20 billion a year.

    The most successful basic research efforts have been companies like Bell Labs and 3M, not universities.  The Germans developing a gasoline-powered vehicle in 1885 did far more for Henry Ford than the government ever did and there was certainly no basic research or subsidy for his assembly line, which made cars achievable to the masses.   
    Hydrogen is an inefficient energy medium if split using electric hydrolysis from hydrocarbon fueled power plants. It's only abundant natural source is as a fraction from methane fields so reliance on this hydrogen still means reliance on hydrocarbons.
    Forget all talk of hydrogen unless you have a means to gather it efficiently from extra-terrestrial sources.

    Solar, wind, wave, whip grass, tapping the Yellowstone caldera, improved nuclear, the ever unattainable fusion and greatly improving efficiencies are the only reasonable sources. Hydro is generally tapped because of competitive land uses and political fights over flood plains.

    Actually when you have more wind energy generated than the grid can handle, then the hydrogen is essentially free. But rather than add a whole new infrastructre, go the next step and make methane out of it. The Sabitier process is well known you take the hydrogen generated above add co2 at high pressures and you get methane and water. Split the water for more H2 and put the methane into a nearby natural gas pipeline. Why go to the trouble of adding a new infrastructure for hydrogen distribution. As an example a good bit of west texas has reverted to mesquite as the land is left to lie fallow. Put in both wind and solar and make methane because the natural gas pipe lines are left from when gas was produced in the area. (A gas plant in Midland is running at 1/10 of capacity). Or just go with the wind, and note that the cows grazing on an acres per cow basis will not care.

    MikeCrow
    I have neither enough wind nor solar to supply my needs let alone enough to sell. Well that is if I want less than a 30-50 year pay back time, and not that either of these systems will last that long without some sort of expensive component failure that will need repaired.
    Never is a long time.
    If you look at reports a lot of the time wind is currently constrained because there is insufficient transmission capacity to bring it to where it is needed. The area of west texas is de-populating so the demand is actually decreasing there. Since so many folks find transmission lines objectionable, putting in wind and then going to methane is a way to provide a buffer that electricty does not allow being a just in time product for energy that would otherwise just be thrown away. (See the ercot board of directors grid operations report for an example of the periods of wind curtailment. ) Actually given that there are depleted gas reserviors in the region in question, pump the methane down there, and then run it thru combined cycle plants to make electricity when needed at peak times like summer afternoons from 4-8 pm. As one goes north the transmission problems become worse due to very low local demand so the big lines have not been built. Or take eastern NM which is basically once you get off the Llano Estaco (high flat plains) is empty, a great place for wind no scenery to destroy just miles and miles of miles and miles. There are a few wind farms here, but again the lack of transmission hinders development.
    Note that in aug the price of a kwh in the 4-8 pm time frame hit $1 on the spot market in Texas, and 4-8 pm in the summer in Tx is when the wind does not blow.

    Hydrogen is just a fuel medium derived from hydrolysis powered by mostly coal powered plants and so does nothing to reduce the carbon footprint. The only other abundant source of hydrogen is as a fraction of methane production and thus doesn't reduce hydrocarbon dependence. So unless you have a cheap and reliable extra-terrestrial source of hydrogen suggesting it as a fuel source is irresponsible.

    The only real alternatives to reducing emissions are, solar, wind, wave, whip grass, algae, improved nuclear, the yet unattainable fusion, tapping Yellowstone Caldera, magnetic tether research, greatly improving efficiencies of all products and households and lowering demand. Hydro has some resources left but alternate land use battles and fresh water needs constrain much further growth there.

    OK so my objection to hydrogen maybe overridden by this new development of microbial hydrogen fuel cells IF they aren't another magic rock that will never amount to much:

    http://www.bbc.co.uk/news/science-environment-14976893

    Solydra seemed like a great investment at the time, as evidenced by some very smart private equity player investing. What caused the problem between 2008 and now is that the Chinese government has recognized the massive potential for renewable energy and is beating the US government and US companies to the punch. The Chinese government invested 20 fold in 2010 what the US government invested. Set aside Solyndra for a second and look at the two largest US solar companies - First Solar and SunPower (now owned by the French), both multi-billion dollar companies. First Solar is US -based and the largest solar company in the world - but for how long? The stock prices of the largest US solar companies are trading at a fraction of what they traded for in 2008 (SunPower just 10% of the 2008 high) due to agressive government support by the Chinese which has driven down panel prices to one-third of where they were in 2008. That's great for consumers but not so great for the US companies trying to compete worldwide.

    US Governemnt Support? The problem is that we are destined to take a back seat to the Chinese in this trillion dollar market unless we have a long term government strategy. If the long term strategy is no support for US businesses then I expect we will be buying renewable technology from the Chinese for generations to come. GE was just replaced as the number one wind turbine manufacturer by a Chinese company.

    This isn't about whether the US government should pick winners or losers, but whether we will have any winners at all. The battle with the Chinese in the future won't be a military battle, but rather an economic battle. If it was a military battle, I expect there wouldn't be much criticism on government support to survive an attack - why is it any different with regards to our economic survival?

    MikeCrow
    Solydra seemed like a great investment at the time

    You mean at the same time they expected them to run out of money Sept 2011?

    But, if the Chinese are dumping solar cells onto the market, we should be talking about tariffs, not loans.
    Never is a long time.
    Hank
    Solydra seemed like a great investment at the time, as evidenced by some very smart private equity player investing. 
    No, the Bush government refused to give them any money because CIGS was too much like ethanol; it relied on the price of the standard product being really high, which means when it went down they burned cash too fast.

    As taxpayers, we spent $1 million per job that last two years.  There is no rationalization for it.  The government should not be employing as many people as they do much less trying to be venture capitalists but, like I said, if they feel they must, spread the risk.  The 'smart private equity player' happens to be a huge fundraiser for Obama and so they got a loan rate 1% point below everyone else?  And then the government subordinated the debt below the Friend Of Obama.

    Please.  If a Republican were doing this stuff, the media would be up in arms.
    So you don't oppose government subsidies to solid American solar companies as long as it doesn't stink of political favoritism?

    Hank
    I oppose them completely but I live in the real world.  Al Gore wanted ethanol subsidized and Obama wants solar subsidized, Bush basically subsidized the defense industry.
    You could not have done any better a job rebutting the arguments in this article for pushing our solar industry because we are at a war with China... pure and simple.

    mhlongmeyer
    If it is true that China is exporting wind turbines at artificially deflated prices made possible by government subsidy, the usual remedy would be a complaint to the World Trade Organization.  See, for example, the second subheading of this page.  Granted, China does so much of this type of thing that the United States (or perhaps Germany, which also exports wind turbines) may not have got around to addressing this particular problem yet. 

    In any event, if China comes up with a genuinely workable replacement for fossil-fuel-based energy (hint: wind turbines and solar panels ain't it, at least not yet--China is building more coal-fired power plants for itself, not relying on wind turbines and solar cells), I would have no problem importing the necessary technology from China.  History suggests, however, that the country with the best basic research infrastructure will hit on that technology first.  Subsidizing current manufacturers' exports is not basic research.
    Hank
     the usual remedy would be a complaint to the World Trade Organization. 
    This is the same China that insisted it had so few CO2 emissions it should be exempt from Kyoto and when outside monitoring showed giant clouds wafting across the pacific, they had to concede maybe they were number one in emissions after all.  And the Three Gorges Dam duplicity, etc.  The WTO is useless just like every other world body so it would be a waste of time.

    China will respond that Europe is 85% of the world's agriculture subsidies so they won't stop with theirs until Europe stops.
    mhlongmeyer
    Right, "remedy" was a poor word to associate with the WTO.  But if GE really cared about this, the U.S. (which is currently best friends with GE) would file the WTO complaint, and then bargain with China by offering to drop one of its own subsidies that China has griped about.  Since this hasn't happened (as least according to my own very quick search), one might conclude that GE is less interested in making profits by growing market share for its product, and more interested in having a statistic about "evil China" that it can cite to gain more government subsidies of its own.
    MikeCrow
    There may well (in the future) be a better way to liberate H into a useful form, making a true energy source, and not just a storage medium.

    I've read that almost all commercial hydrogen is made from the steam shift reaction of methane, and you're correct in that it's not carbon free.
    Never is a long time.
    This article from today is about bio hydrogen fuel cells so there is new hope:

    http://www.bbc.co.uk/news/science-environment-14976893

    I wouldn't characterize the Chinese as "dumping panels". They are taking US developed technology, coupling that with massive Chinese goverment grants and loans, as well as a robust home market to sell their products and generate profits, and developing real cost savings in technology and manufacturing. Meanwhile, in the US we are still debating whether we should increase our oil addiction by the "drill baby drill" mindset and refining the definition of "clean" coal so it's not really clean. 50 years from now we will burdened by dwindling fossil fuels and the cost of these limited supplies, while the rest of the world will be 'breathing easy'.

    Stevels,

    Right now renewable energy has tremendous growth in Europe, Chine, Inida, South Africa, the Middle East. and Latin America. We fall further behind every day, and as a taxpayer (a big one) that's bad politics.

    I expect you'll be the first on your block to buy a Chinese car or the Korean version of Coca Cola. They make great products and they are moving quickly from the provider of raw materials to the providers of high tech. I guess the US is destined to be the world's consumer, rather that the world's supplier. Hope you don't need a job to pay your bills, though.

    I am not sure where you got that conclusion from my postings.

    China is our enemy and is subsidizing their solar panel industry and forced 3 of our companies under because they see a future advantage over the US. They want military control over the South China Sea, to be the planet's only super power and they want the US as a vassal state.

    Of course I do not wish to be buying their products and am severely displeased at the failures of these solar companies. If some of Obama's cronies were getting kickbacks at least that would be American cronies getting paid off.

    Has partisanship gotten so bad in this country that we are willing to give advantage to our enemies just so the other political parties hangers-on gets no benefit???

    Ahh, you are correct. China is building plenty of coal plants. But they recognize that renewable energy is a great business opportunity, and they are powering past the US. Not with "dumping" activities, but with aggressive support for businesses and clear long term energy strategies that promote product utilization at home, enabling these same companies to compete overseas with the advantage of a strong home market. Some suggest we should claim "foul" (which we have done) rathing than picking ourselves up off the ground and getting our act together.

    Bush did not deny Solyndra, he advanced their loan guarnatee. I should know - I voted for guys named Bush for president FOUR times, and proud of it. He also spent $200 billion chunks here and there on failed military products like advanced fighter jets, carriers and other items. Solydra's $500 million is a drop in the bucket - equivalent to 8 hours of imported oil (we spend $1.5 billion per day on imported oil).

    MikeCrow
    Not with "dumping" activities, but with aggressive support for businesses

    When you sell something for less than it costs to make, and your government is making up the difference
    , it's called dumping.

    http://en.wikipedia.org/wiki/Dumping_%28pricing_policy%29

    Well, as long as the Gov is throwing around drops, I'll take one please.
    Never is a long time.
    Hank
    Aggressive support for business that is a mandate and a subsidy is certainly no indication that another country is 'ahead' in a technology.  Communist governments are allowed to ban cars and displace a million peasants as part of their five year plan but it's something the US would rather not emulate.

    Solar activists tend to see the effect and ignore the cause - they are as anti-science as any global warming denier.
    Gerhard Adam
    When you sell something for less than it costs to make, and your government is making up the difference, it's called dumping.
    That's also a narrow definition.  I've seen far too many companies take a loss on a services contract as a means to try and gain market share.  Their objective was not to make a profit, but rather to keep competitors out.  This had nothing to do with government, it is and was a business practice in the U.S.  If you've ever watched a bid lost, only to wonder how a competitor could provide a service so cheaply, and then discover that they couldn't but were happy to take the loss, you'll know what I mean.  (I personally watched some contracts produce $1M/yr losses of which the corporation didn't care one bit, if it helped them gain market share by keeping competitors out).

    The problem is that most of these other countries aren't going to be surprised nor subject to U.S. business practices any more.  They're quite capable of holding their own and now it's many U.S. businesses that are suffering because of this disparity. 

    Reality is that large amounts of money will always beat out those companies will lesser amounts.  We've always considered that to be a reasonable outcome in economics (in the U.S.)  Now that we find that many of these companies are being leveraged by their governments we think the practice isn't fair.  Well, welcome to the world the small businessman has inhabited for decades.
    Mundus vult decipi
    vongehr
    We've always considered that to be a reasonable outcome in economics
    Interesting point. Yes, now as China actually does the same tricks that we told them good people do, all of a sudden capitalism is evil, ha ha.
    MikeCrow
    I've thought a lot about this point overnight.
    But is it really the same if one is funded by the Company (which is how the game is played in the US), vs sponsored/funded by the government?

    In the US when a company does this (ie Solyndra), and they don't do it right, they go bankrupt.

    This is also why countries invoke tariff's. In the US, there's a view that tariffs are in general bad for everyone, NAFTA, and various other treaties try to remove tariffs to improve international trade. China has greatly profited because of this, but if they keep up with predatory pricing (and gov sponsored corp spying), they are going to cut their own throats.

    My Company does a lot of development in China, which on many levels I think is really stupid, But I frequently joke with colleagues that our latest software is available in every open market in China for the cost of a live chicken. This is going to bite us in the ass, and it has nothing to due with low cost labor, but espionage.
    Never is a long time.
    Gerhard Adam
    But is it really the same if one is funded by the Company (which is how the game is played in the US), vs sponsored/funded by the government?
    Then why is it not frowned upon to provide loans or subsidies to companies?  The U.S. government has no trouble in engaging with the private sector when it suits their purposes, but then they want to argue about what the boundary conditions of such involvement should be?

    The U.S. has never been squeamish about engaging their power and influence to advance business interests, so it's a bit late in the date to suddenly want a "hands-off" approach.  In fact, that's one of the naive traits of our economic practices, is that on the one hand we argue that some businesses are "too large to fail", which clearly recognizes that economics is an important local social force.  They done everything from regulating company pricing to giving away free hand-outs.  Yet, when other countries also recognize the role their governments can play in gaining international "market-share" we want to behave as if they are doing something underhanded.  Sorry, but that's economics.  Economics doesn't question where the money comes from and to insist otherwise is a simple failure to recognize economics for the social force that it is.
    China has greatly profited because of this, but if they keep up with predatory pricing (and gov sponsored corp spying), they are going to cut their own throats.
    I don't believe that.  I think it will probably cut our throats, because the way U.S. businesses are so desperate for market share, they'll engage in any deal in which they think they can benefit themselves regardless of the risks.  A major problem is the notion that U.S. companies are somehow supposed to succeed simply because they're U.S. companies.  We saw this mindset with the automobile manufacturers in the 1980's when they couldn't figure out why other companies were kicking their butts.

    The U.S. likes to indulge in "free market" fantasies, while trying to do their best to control markets.  The last thing most companies want is a truly "free market".  So, I'll employ the same argument that is such a fond retort among U.S. businesses.  They aren't doing anything illegal.
    Mundus vult decipi
    MikeCrow
    Because when the loans run out, the company goes out of business.

    Subsidies on the other hand are done to mitigate a risk (or trade say local corp tax revenues for local income taxes) that the company would not otherwise take (such as say deep water drilling in the gulf), because when things go wrong it could cost your company over $20 Billion dollars.

    Sure it can be a social force, it can also be the employer of 100,000's of thousands, and a key to keeping most all businesses running, which employs millions. Would you feel better if the Gov let the banks and the auto makers collapse?

    Who cares if there's 50% + unemployment, right!

    Whatever it is that makes you despise business the way you do clouds your judgment, well that's my opinion anyways. But it is obvious you have some sort of deep seated hate for it.

    As for putting up with what the Chinese are doing, IMO you'll start to see this change.
    Never is a long time.
    Gerhard Adam
    I don't have a quarrel with what you're saying, but you're simply rationalizing government intervention which argues against the concept of a "free market".   It appears that you don't have an issue with government involvement, so why have one with the Chinese?

    You can argue about unemployment or the banks/automakers collapsing, etc. but THAT is the reality of a "free market".  Unemployment is a governmental/social concern and not a business concern. 

    This is precisely the problem I have with these discussions.  People want to talk about "free markets" and economic theory, etc. etc. etc. until it is actually observed.  Then they want to cite all the exceptions and ramifications of those choices.  You can't have it both ways.  Either there is a "free market" or there isn't (and we know there isn't).  If there isn't one, then it is pointless to complain about how one country (versus another) supports their local society or businesses. 

    It irritates me to no end, seeing people that are among the richest in the world, whining about how unfair it is that they aren't more wealthy.  The problems in the U.S. are a direct result of THEIR decisions and their policies.  Ask the guy that's lost his home and is unemployed whether he cares what the unemployment percentage is.  In truth, the average person on the street isn't optimistic, because they know that the government and business is selling them down the river and that all the whining about foreign competition rings hollow, because those same companies will exploit those foreign markets without a second thought to employment in the U.S.
    Who cares if there's 50% + unemployment, right!
    As difficult as it would be, if that is necessary to bring people to their senses then I say let it happen.  Do you really believe that our current policy makers, business leaders, and economists actually know how to avoid this occurring?  Do you really believe that they really care (beyond their own hopes for continued gain)?

    As I said before, it is fascinating that you would make this statement and then defend the notion that companies have no obligation to the societies they operate in.  Should businesses care about unemployment?  If not, then why bring it up?
    Mundus vult decipi
    MikeCrow
    IMO, much of this is as irrational as some of the comments in the Elenin thread.

    But I'm not going to argue. I will point to this
    http://en.wikipedia.org/wiki/Adam_Smith#As_a_symbol_of_free_market_economics

    I'll quote this line
    Stein writes that Smith "was not pure or doctrinaire about this idea. He viewed government intervention in the market with great skepticism ... yet he was prepared to accept or propose qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system.
    To show approximately where my views sit. You seem to think the one, excludes the other, I don't and, it's argued that Adam Smith didn't either.
    Never is a long time.
    Gerhard Adam
    I argue about it, because politicians and economists are fond of invoking "free markets" with a wild abandon despite the fact that they never actually implement such.  As a result, we have all kinds of schizophrenic policies that are couched in "free market" terms, while the pundits sing the praises of "free markets" and yet when all these brilliant schemes crash and burn, then suddenly it's the fault of government intervention.

    In the end it doesn't matter what Adam Smith thought, it only matters what works in an economic system.  We want to pretend that our system is "free" and represents a level playing field.  It's a fantasy, but nevertheless that is what is being projected.  Therefore one has no basis for complaint when other countries/economies don't share the same views, but instead use whatever means at their disposal to gain market advantage.

    If we persist in being stupid, then shame on us.  However, we all know that the reason why we tolerate these practices is because there are many people enriched by the process.  As a result, we have turned over most of our social standing and financial future to business optimists in the hopes that enough crumbs will fall from the tables of the corporations with which to sustain the standard of living in the U.S.  This is what the experts wanted;  globalization.  The economic paradise.

    Unfortunately, not a one of them recognized that economic theories depend on closed systems, but we'll let that slide for the time being.
    You seem to think the one, excludes the other, I don't...
    OK, so what is your basis for your complaint regarding how other countries manage their economies?  Why talk about fairness?  Why use terms like "dumping"?  Isn't the fundamental point that sound practices will tend to succeed while faulty economic practices will fail?  If so, then why care what other countries do (i.e. China's cutting their own throat)?
    Mundus vult decipi
    MikeCrow
    If people called it a sort'a free market would that make you feel better?

    I've mentioned before that I consider myself a Monopoly (from Parker Bros) Capitalist, a semi-free market. Enough rules to make sure the game is played fair, but not so many that the 'bank' limits creativity and wealth creation. Centralized control of businesses in the history of the world have never worked to the benefit of their population.

    yet when all these brilliant schemes crash and burn, then suddenly it's the fault of government intervention.

    Well in many cases it is poorly crafted regulations, that potentially could take decades to get corrected (for instance the requirement for Sealed Beam headlights).


    Therefore one has no basis for complaint when other countries/economies don't share the same views, but instead use whatever means at their disposal to gain market advantage.

    This is why we have international trade agreements.


    IMO outsourcing enriches most of us, but there are warts. I'm not sure they out weight the benefits, it seems you are, and that's okay. I do think the world is in transition, and these types of changes are difficult for many. The world had a similar transition with the rise of the industrial era, yet the industrial age brought huge riches to much of the world, and the countries who embraced the industrial age are all far richer than the ones who didn't (well that's my take as of now).

    As a result, we have turned over most of our social standing and financial future to business optimists in the hopes that enough crumbs will fall from the tables of the corporations with which to sustain the standard of living in the U.S.

    Here's why America is just about the best place in the world to live (IMO), there's nothing stopping you from competing with (almost) anyone. Ask Hank if Science 2.0 is competing with the big leagues.
    My last 3 jobs were for startups, all three gave me stock options, one of which did okay. I took a cut in pay, for a swing at the fence. And the biggest impediment to me being wealthy right now was the taxes I paid(but this is really another topic). I wasn't raised in a wealth family, didn't get a gold plated degree. It is possible to make something of yourself in America.

    OK, so what is your basis for your complaint regarding how other countries manage their economies?  Why talk about fairness?  Why use terms like "dumping"?  Isn't the fundamental point that sound practices will tend to succeed while faulty economic practices will fail?  If so, then why care what other countries do (i.e. China's cutting their own throat)?

    My issue with this is that US corporations are having to compete with the Chinese government, not a self funded corporation( which includes ones getting Gov loans, the gov isn't funding them, just letting them borrow money). Two companies want to slug it out, great! Competition is good for consumers, we get the benefits of that. The Chinese may be cutting their own throats in the long run, but in the short run if they run everyone else out of business, well there's no competition then is there.
    Never is a long time.
    Gerhard Adam
    If people called it a sort'a free market would that make you feel better?
    Actually, it isn't so much what it's called, but the myths we tell ourselves about it, and how it is often used to articulate economic theories.  In my view, economists have always been on somewhat shaky ground, but they've really gone over the top in trying to turn their views into "science". 

    After all, economics existed long before there were economists, so the entire principle of economics is a social construct and description of human interactions.  As we know, human interactions tend to be messy when it comes to descriptions, so my irritation stems from the point that economists seem to have lost their focus regarding the true nature of economics and simply decided that business success was a reasonable indicator of people's success.  While this may certainly track in some ways, it is far from complete.

    This becomes especially germaine now, where we find that businesses may do well by outsourcing, but the local economies suffer because of unemployment.  Instead of scratching their heads, the economists should've seen that the problem rests in their persistent view that tracking businesses is sufficient to understand the flow of money.

    Good and bad things will happen, but people aren't as mobile, nor as flexible (given that there are nearly 7 billion of us), so concepts like globalization sound ridiculous when matched against the reality of people's ability to respond.  In addition, simple concepts like supply/demand become caricatures when one sees the ease with which these principles can be turned on their heads, because the model has presumed local boundaries and suddenly shifted to global access.

    In short, economics isn't JUST about business.  In my view, the Supreme Court ruling that granted "personhood" to a corporation is one of the most ridiculous assertions one can imagine and has produced no end of harm by pretending that live humans are synonymous with legal pieces of paper.

    I don't have a problem with businesses, nor their success.  I do have a problem with the idea that the only objective of economics is to foster business success while the members of society are left to flounder.  I also have a problem with the idea that taxes should be diverted to support those same businesses, while they legislate (and buy governments) to ensure that citizens are more beholden to corporations than ever before.

    I don't believe corporations are fundamentally evil, but I know from history that they behave that way and will if left unfettered.  This is why I have grave concerns when I see how cozy government is with corporations.  Their objectives do not coincide with mine.  Business has it's objectives and government should have the interests of its citizens at heart.  However, when government interests also coincide with business interests, then we have a serious problem and that's where my frustration comes from.

    By recognizing that we don't have a "free market", then we can stop pretending that this is some sort of "magical" enterprise which will work if simply left alone.  We are long since past the point at where it can be left alone.  As a result, if we don't have a coherent discussion amongst the citizens and government, then I'm seriously concerned that businesses will undercut us all.  Not out of malice or evil, but because their interests dictate that they do so.
    Two companies want to slug it out, great! Competition is good for consumers, we get the benefits of that.
    I agree with one major stipulation.  The companies should not be able to gain advantage through favored legislation, taxes, or legal protections (and even subsidies).  Yet, this is precisely what does occur.  Much of this has occurred, because individuals are able to hide behind the protection of the corporate legal paper.  Instead of being a business owner and being responsible for one's business, we allow corporations to form that are essentially anonymous, legally treated as persons, and possess nothing that can actually be punished or held to account.  As a result, the humans within them are compelled to act in preservation of the corporation, instead of actually running a business.

    One of the major problems I see, is that we have gone too far down the road of preserving corporations and have created monsters.  Corporations should and must fail, so that new innovative ideas that be introduced.  Yes, people would suffer, but they already suffer, and at least they could participate in new rounds of development.
    Mundus vult decipi
    Steve Davis
    "By recognizing that we don't have a "free market", then we can stop pretending that this is some sort of "magical" enterprise which will work if simply left alone."
    As I see it Gerehard, that is the main problem with the US economy today.
    Policy makers, politicians, and commentators have been parroting the childish dogma of free market theory for so long, that the nation in general has been conditioned to complete acceptance of stupid policy.
    So what happens now is that policies that fail are recycled over and over again.
    Without a radical rethink, the US economy is headed for free-fall.
    Hank
    How would they know?  For my entire life 50% of the capital has been controlled by government so there has never been capitalism much less a free market. In my lifetime government controlled the market using money supply (pre-1980) and then interest rates (post-) and guides commerce using a rather flawed definition of commerce.

    You seem to be contending that we need even more government interference screwing it up, whereas the problems of the economy (housing and job creation) both resulted from heavy-handed legislation.
    Steve Davis
    What I'm actually contending, this being a science site, is a line I've pushed from my earliest articles, that is, that the fittest societies are those that achieve a balance between individuality and social conformity and cohesion.
    The US is failing in this regard because the rhetoric of individuality has drowned out alternative views.
    This is reflected in the economic debate, where free market theory, (the economics of individualism,) dominates the discussion.
    Hank
    But if being a science site is the standard, then look at all the data.  America's Golden Age was before there were any social conformity programs or welfare or even an income tax. A culture cannot force cooperation and inefficient spending by a centralized government has never shown to be more efficient than people spending it for their own benefit.  The discussion is stronger on free market now because the alternative has clearly not worked.
    Steve Davis
    "America's Golden Age was before there were any social conformity programs or welfare or even an income tax."
    Co-incidence is not causation.
    To assume that the factors you mention were the only factors at work in the economy at that time is to assume too much.
    As for your assumption that government spending is inefficient, I've worked in both the public and private sectors, and in my experience both are equally capable of inefficiency and poor policy. The GFC bears that out.

    And there was another golden age for the US.
    Remember the Reagan years, when Reagan raised protection for US industry to unprecedented levels, while preaching to the people about the virtues of market discipline?
    That was a prime example of free market theory and free market practice being poles apart.
    "A culture cannot force cooperation..."
    A culture that has to force cooperation has already missed the boat. In societies with a high fitness level cooperation and cohesion develop naturally.
    "The discussion is stronger on free market now because the alternative has clearly not worked." And the free market has worked?   
    mhlongmeyer
    Social security, Medicare and Medicaid are the antithesis of free market.  I am not free to participate in them or not as I see fit ... a big chunk of my paycheck goes in whether I like it or not.  Almost no one disputes that social security, Medicare and Medicaid are going to fail in their present forms.

    In light of that imminent failure of non-free systems, I'm curious how you can show that the problem in the US is that the balance between free market individualism and social cohesion (which I suspect you limit to involuntary taxing and government programs, not voluntary association and charity--sorry if I'm wrong) is such that free market individualism drowns out the alternatives.  Are you suggesting that if we could only wipe out the last vestiges of free markets and regulate every market like Medicare, we would have a more "fit" society?
    Steve Davis
    "... a big chunk of my paycheck goes in whether I like it or not."
    If you're in the US, Mike, I'd say it's not a very big chunk at all. Which is why many rock stars, even some scientists possibly, choose to live there. Social security and universal health care do not fail when properly funded.
    "...we would have a more "fit" society?"
    That's not what I'm suggesting at all, as you already know from my point that the societies that survive and thrive are those that achieve a balance between the strengths that come from diversity and the strengths that come from unity.   
    mhlongmeyer
    If you're in the US, Mike, I'd say it's not a very big chunk at all.
    Just because it is not a very big chunk relative to some European rates does not mean it is not a very big chunk by my reckoning.  Way too many people are way too eager to implement their pet social theories with my involuntary chunk of money.  If they had to compete for my chunk of money, they would have to show me that they genuinely help some needy portion of society, or I would donate to a group that does.  Right now, I don't see a lot of positive results from government-backed social engineering in the US.
    Social security and universal health care do not fail when properly funded.
    True as far as it goes.  The problem is that they can't be properly funded over the long term, because they require so much funding that it chokes the rest of the economy.  When the rest of the economy struggles, there is no source for funding at all.  Is that not precisely the problem that the US is headed for right now, not to mention many European countries?
    That's not what I'm suggesting at all, as you already know from my point that the societies that survive and thrive are those that achieve a balance between the strengths that come from diversity and the strengths that come from unity. 
    I concede your point on this, my apologies for mischaracterizing.  I was attempting to indicate my view that social security and Medicare are currently unbalanced almost entirely in the direction of unity.  For example, is it really necessary to provide a set level of benefits from these programs to everyone, even the many who could have provided for themselves as individuals?
    Gerhard Adam
    Social security, Medicare and Medicaid are the antithesis of free market. This statement demonstrates part of the problem in assuming that government's objectives and economic objectives are the same thing. The government's responsibility is NOT to support business. It is to promote a balanced society and represents a counterforce to all special interests (at least that's what it is supposed to do). Therefore it is irrelevant to compare social security or Medicare in any manner that suggests that they are business enterprises subject to the 'free market'. While many people may argue about the need for government, it is important to distinguish the fact that as long as government exists, it's role must be in support of the population it is supposed to represent. As a result, the government is NOT a business, nor can it be run as a business. It levies taxes, creates/enforces legislation and is responsible for creating the environment in which these various endeavors operate. Unfortunately, there can never be a 'free market', so there is a need to achieve some balance between encouraging economic pursuits without having the runaway problem of pure exploitation. It is important for business to succeed, but not to the extent that it decimates the social infrastructure in which it exists. As a result, businesses will never get everything they want, but neither will individuals. Without considering the balance between economic interests and social objectives, the entire exercise becomes a waste of time and will invariably fail.
    Mundus vult decipi
    mhlongmeyer
    The government's responsibility is NOT to support business. It is to promote a balanced society and represents a counterforce to all special interests (at least that's what it is supposed to do). Therefore it is irrelevant to compare social security or Medicare in any manner that suggests that they are business enterprises subject to the 'free market'.
    Gerhard, I have seen you make a similar point before and I think it is a good one.  I get drawn into making the faulty free-market comparison because, arguably, the government has inserted itself into areas that should have been left to the market.  For example, to repeat myself from a previous comment, is it really necessary for the government to provide a set social security benefit to everyone, including people who could have taken care of themselves in old age?  It is useful to compare the government's performance in this area with the performance that might have been achieved by allowing competent individuals to make their own way in a (admittedly only somewhat) free market, while devoting government benefits to the truly needy (for which a comparison to a free market is extremely limited).

    With social security, Medicare, and soon a universal health insurance, government in the US has moved far from the realm of taking care of the truly needy (which I think almost everyone recognizes as a proper concern for government at some level) into the realm of creating dependency in otherwise competent individuals.  My reading of history is that the US did much better as a society when the government allowed most individuals to make their own way.
    Steve Davis
    "My reading of history is that the US did much better as a society when the government allowed most individuals to make their own way."
    Mike, that's possibly right, but again, we cannot assume that the economic factor of allowing individuals to make their own way, was the only factor that produced prosperity. And, it's not hard to imagine situations in which allowing individuals to make their own way would produce chaos and hardship.
    Also we have to ask if this period of prosperity was good for everyone. Was it a golden age for Afro-americans? Was it a golden age for Native Americans?
    If, after considering those types of questions, we have general agreement that yes, it was good for everyone, that is not sufficient reason to decide to return to those conditions. Because the world has changed. Economic realities have changed. Protections for corporations have changed. Lobbying is now big business. The US political process has changed. We cannot turn back the clock.   
    Gerhard Adam
    I would agree that arguing that the truly needy would receive entitlements could be justified in most cases.  Similarly, I would agree that the government should not be creating dependencies for its citizens.  Ultimately, the problem is that we don't actually have a vision for what government should be doing.  We perpetually confuse politics with economics and vice versa.  Instead of recognizing that the government's sole reason for existing is to provide a focal point around which its citizens can make decisions regarding the shape and direction their society is to take, then it is pointless and doomed to ultimate failure.

    In the final analysis, it seems that the citizens of this country (the U.S.) have failed in exercising their power to harness the power of the government and to control its influence.  Instead the citizens have allowed themselves to become victimized and subservient to the very system that they are to control.
    Mundus vult decipi
    Steve Davis
    Hence the joke currently doing the rounds, to the effect that people in the US are considering hiring lobbyists to represent them in Washington.
    Gerhard Adam
    That's a joke?!?
    Mundus vult decipi
    Steve Davis
    From where I'm sitting, yes. From where you're sitting, maybe not so funny!
    But I'm not getting smug about it, the sickness exists wherever there's big government.
    Bonny Bonobo alias Brat
    Well unfortunately here in Australia, all we have is little government which I think is even worse!
    My article about researchers identifying a potential blue green algae cause & L-Serine treatment for Lou Gehrig's ALS, MND, Parkinsons & Alzheimers is at http://www.science20.com/forums/medicine
    Steve Davis
     "Yes, now as China actually does the same tricks that we told them good people do,..."
    Exactly the same thing happened with Japan in the 1930s.
    Look how that turned out.
    Green technologies are failing because of cheap natural gas, extra gas from fracking of old wells. Very little to do with management of green companies. The US went from a natural gas deficit in 2008 to exporting gas in 2011. In the mean time Sci Am. points out that "The health impacts of the aftermath of natural gas production remain largely unexplored"... probably as unexplored as the health effects of smoking. (on the face of poisonings, water wells providing water that catches on fire and isotopic analysis that shows the culprit: fracking.)

    MikeCrow
    Green technologies are failing because of cheap natural gas

    So instead of realizing that Green tech isn't ready to compete with existing technologies (which is how everything else is judged in business) "we" want to jack the price of the existing tech up so it can compete, that's ass backwards, and stupid. Which if you don't get, you might need to take a few business courses, and some history lessons.

    Just another reason why I think the people who run one of our political parties are idiots.
    Never is a long time.
    Natural gas is cheap because it's price does not reflect the environmental costs. Those costs are socialized. Fracking is cheap for the companies that extract and sell gas, or for the companies that generate electricity from that gas. Fracked gas is not cheap if you are one of those humans that have to drink water for a living, then you have to count the health costs, the cost of selling your land at lower prices and the costs of moving away from the fracking lands. (sorry, I think I repeated this comment elsewhere)

    Hank
    There can be no energy if an arbitrary social cost metric - similar voodoo math is what led to pseudoscience claims like it takes 140 liters of water to make a cup of coffee and therefore coffee drinkers are killing the planet, or that it takes a gallon of gas to produce a pound of beef, as vegetarians once invented.

    There is no energy source that can be made without an environmental cost - if you drive a Prius you are swallowing an emotional placebo and if you think wind or solar can work for anyone except the very rich, you can't do math.
    Hank
    Solyndra received favorable IRS ruling weeks before loan - so now the government was not only subsidizing failed technology, it gave them a cheaper rate than they gave companies where a major Obama donor was not a key investor and the IRS magically coughed up additional tax breaks.

    Traditionally, scandals hit during a president's second term but it is nice (well, nice for his opponents) Pres. Obama is putting one on a platter early.


    Hank
    It looks a little strange that emails are suddenly being provided by Democrats warning Pres. Obama not to visit Solyndra in 2010
    A number of us are concerned that the president is visiting Solyndra,” California investor and Obama fundraiser Steve Westly wrote to Obama senior adviser Valerie Jarrett in May 2010. “Many of us believe the company’s cost structure will make it difficult for them to survive long term. ... I just want to help protect the president from anything that could result in negative or unfair press.”
    So Westly, one solar investor and friend of Obama and huge fundraiser, was trashtalking the company of another solar investor and friend of Obama and huge fundraiser, George Kaiser, after $500 million was down the drain?

    Not only was he miraculously prescient (actually, not that hard, a lot of people knew these loans were wasted money, that is why Bush did not approve them) but he nailed the exact month his emails would need to be released to absolve Obama of wrongdoing and portray him as instead an idealist:
    “If it’s too late to change/postpone the meeting, the president should be careful about unrealistic/optimistic forecasts that could haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc.”
    This is darn conveniently absolving Obama and other investors and putting blame squarely on the DOE...and therefore Steven Chu.
    Bonny Bonobo alias Brat
    There used to be a popular series in Britain called 'Yes Minister' and later 'Yes Prime Minister' that was a comedy showing the many obstacles and pitfalls facing senior politicians and preventing them from carrying out many of their election promises. I wonder was there ever a similar series in America, maybe a 'Yes President'?
    My article about researchers identifying a potential blue green algae cause & L-Serine treatment for Lou Gehrig's ALS, MND, Parkinsons & Alzheimers is at http://www.science20.com/forums/medicine
    Halliday
    I think a "Yes, President" series sounds like a great idea!  :)  Someone should make a pitch...

    David
    Hank
    As predicted, this Solyndra thing is not going away - unlike Enron, when it was only implied Republicans were somehow benefiting, Solyndra is clearly the darling of one party because the Bush administration turned them down.   Making Congress subpoena the documents relating to Solyndra looks perceptually like they have something to hide.  For a president who claimed he wanted transparency, this is another campaign commercial about him waiting to happen.
    Hank
    Herbert M. Allison Jr., a veteran Wall Street executive who performed an independent review that exonerated the Obama administration's program of loans to energy companies contributed $52,500 to re-elect President Barack Obama in the months since completing his work, according to an Associated Press review of campaign records.  The campaign contributions to Obama started after his congressional testimony in March, minimized concerns that the Energy Department was at high risk in more than $23 billion in federal loans awarded to green energy firms.  His contributions to Obama and the Democratic National Committee totaled $52,500 by last month. Allison previously was the former head of the government's mass purchase of toxic Wall Street assets.
    Hank
    A123 Systems Inc., the electric car battery maker that received a $249.1 million federal grant, has filed for bankruptcy protection. Let's continue to hope we are finally out of the magic rock business.