Crony capitalism is the buzz word right now. The Solindra deal appears to be an example of an Obama supporter receiving a huge loan to support a business of questionable viability. The details of this deal do indeed smell of the fish stall on a hot summer day, but we must remember that Obama's administration is not the first to be tainted with these types of charges. Virtually all administrations, Republican and Democratic, in the history of our country have engaged in these same activities. In fact, as long as we have government assistance programs, I don't see why a friend of a president can not receive assistance in the same way that a total stranger might receive that assistance. My problem with the Solindra deal is that it was an unsound business deal, hyped effectively, that went bust, and wasted a huge amount of taxpayer money. In addition, the restructuring of the loan to put private money ahead of public money in the event of a default would appear to me to be illegal. And finally, it irritates me that the Energy Department appears to have tried to cover up the collapse of Solindra until after the mid-term elections, but that is a politics-as-usual side show. The most important criticism that I have is that the Obama Administration was incompetent in deciding to support this company.
I would suggest that the Solindra fiasco is instructive of another more important challenge facing the United States and that is how we can improve our ability to compete in the global economy. As I currently understand the Solindra story, the solar products produced by the company were of good quality and the company was trying to increase production to a level that would make them profitable. In the end, they were unable to do that, their products remained too expensive to be sold, and they went bankrupt. According to press reports, the competition that beat Solindra in the marketplace was primarily Chinese. I know nothing of the Chinese solar panel industry, but it would not surprise me to find that it is supported by the Chinese government. It obviously also has far less expensive labor costs and greatly benefits from Chinese currency manipulation. Donald Trump would say that the Chinese are taking advantage of us and our leaders are too stupid to know what to do about it. I agree with the Donald's assessment of the problem, but do not agree with his proposed set of solutions, which I believe would initiate a trade war with China. That might make us feel good for a while, but nobody would win that war.
President Obama's error is strategic and, for that reason, his attempts to apply tactical solutions are going to fail every time. Solindra is illustrative of the necessity of choosing the economic battleground carefully. Much as we might want solar energy (and I want it as badly as Obama does), we should not try to to do battle with a competitor that has strengths that we can not match. Much as we might not like it, we should, at the present time, leave the production of solar panels to the Chinese (and concentrate our solar research on energy storage). If someone comes up with a panel manufacturing process that can beat their price, then this decision could be revisited, but right now let's fight on different ground. I actually agree with Obama when he says that we should invest in our infrastructure, but I define infrastructure more broadly than just roads and airports. I am all for repairing our highways and bridges and building better and safer airports, but I want to include our labor force, energy, and capital in the definition of infrastructure.
This country needs to invest in job training for more fundamental reasons than just lowering the unemployment rate. It will continue to be relatively easy to compete with the Europeans who are as sleepy as we are, but if we are to compete in the global economy with very hungry and increasingly smart Chinese, Japanese and Indians, we need to get one heck of a lot smarter than we are right now and it is going to have to start at the preschool level and go through post graduate training. We also need to invest in our national energy resource base. Think about the importance of electricity in the modern world. I would argue that it is the foundation of our economy. It is one of the resources that we take for granted, but we shouldn't. It is almost as much of a vital resource as air and water. It is in our national interest to secure it and to produce it as cheaply and reliably as possible. That requires us to develop what we have at home and not be as dependent as we currently are on foreign sources. Another resource that is critical to the economic challenges that we face is capital. Why in the world is so much of American capital offshore? The answer to that question is infinitely complex, but that can not be the excuse for not addressing it. If we are to compete successfully in the global economy we need to retain our historic dominance of the capital flow, not only in this country, but in the world. It is as though we were in a conflict and we gave our opponent one of our weapons.
For me, Solindra is a useful illustration of why I want to replace Mr. Obama as president. The man can see the problem pretty well, but he can not even begin to find the solution, let alone bring the leadership necessary to carry us forward to meet the challenge. He is a very smart man in the wrong job.