Chapter 11: The New Shape of Solar?

Sep 11 2011 Published by under Uncategorized

Once hyped as a prototypical green jobs pioneer, Solyndra Inc., a California-based maker of high tech solar modules, has filed for bankruptcy. One thousand workers are back to pounding the pavement, and $535M in Department of Energy loan guarantees to Solyndra are in jeopardy, triggering an FBI investigation. Sounds like a bad thing, but—if you’re a Republican—bad things are good. Indeed, right wingers are doing victory laps, lambasting Obama’s green jobs proposals with Solyndra as their cause célèbre.

In a recent Washington Post opinion piece titled “Enough with the green jobs,” monocellular quarterwit Jennifer Rubin unaccountably crows that Solyndra’s bankruptcy (and the Obama administration’s missteps on its behalf) “put an end, we hope, to the green-jobs fetish,” a truly irrational statement based upon little more than blind ideology.

Rubin cites the Weekly Standard’s “Green Jobs in the Red,” a transparently political right-wing puff piece assailing Obama’s supposed “crony capitalism.” She echoes the Weekly Standard’s conclusion that “even liberal media publications have figured out that green-job talk is mostly hype,” referencing the completely discredited New York Times article “Number of Green Jobs Fails to Live Up to Promises” as evidence of a widespread liberal retreat. Pompous NYT alum David Brooks chimes in as well, citing the same discredited article and drawing the same unwarranted conclusions.

Was Solyndra a bad investment? Apparently. Did Obama and DOE play fast and loose to give Solyndra a leg up? It’s looking that way. But to impute all of the negative aspects of Solyndra’s downfall to the green industry as a whole is nonsensical. In fact, the problem with most other green, or “cleantech” manufacturing is the same problem that has been bedeviling manufacturing for decades: our schizophrenic neoconservative industrial policies and so-called global free trade. We’ve systematically hollowed out our manufacturing base and increasingly, Yankee ingenuity is made in China.

Consider SunPower, another California-based manufacturer of solar panels. According to a story in the Bay Citizen, some 10% of SunPower’s manufacturing is in Milpitas, but the rest is done overseas in China, Malaysia, the Philippines, Mexico, and Europe. The same story cites a recent Department of Energy report revealing that the U.S. share of solar panel and module manufacturing has fallen from 43% in 1995 to 7% last year, as China and Taiwan have gobbled up market share. The point of the story, however, is that the ready availability of comparatively cheap imported solar panels is fueling a surge in solar installations and conversions in California—and the associated jobs—which can’t be outsourced as easily as manufacturing.

In the United States, we do not have what is generally known as an “industrial policy,” or an overt policy of favoring certain industries over others, particularly where it concerns subsidies. Needless to say, several industries (e.g., oil) are favored with preferential tax treatment and other forms of government largesse, but this typically represents old-fashioned influence peddling and political logrolling rather than a rational attempt to cultivate strategic or “infant” industries. One of the chief rationales for not subsidizing industries is that to do so is tantamount to letting the government “choose winners and losers.”

Instead, we let foreign governments choose winners and losers for us.

Cellular phones, televisions, personal computers, and other industries too numerous to mention have been targeted by foreign governments for development at the expense of our domestic production. They have subsidized specific industries directly and indirectly through government-funded research and development, while we have lowered tariffs and hoped for the best. Even the celebrated Lexus of Thomas Friedman’s The Lexus and the Olive Tree was in large part—despite Friedman’s convoluted argument to the contrary—the product of decades of strategic government nurturing of the Japanese auto industry.

Apart from China’s much-maligned manipulation of the yuan, dramatically lower wages and environmental standards in China and elsewhere irresistibly woo manufacturing away from the U.S., and corporate profits soar as domestic wages stagnate. In our race to the bottom, we have systematically erased our comparative advantage in every single industry, and still we puzzle time and again at one “jobless recovery” after another.

It’s incredibly hard to generate green manufacturing jobs for the same reason we can’t seem to generate sufficient manufacturing jobs in any industry. Even well-established industries such as auto manufacturing struggle as free trade ideologues gloat. Small businesses can’t even secure financing if their business plan includes domestic manufacturing. No matter what gold-plated non-Euclidean widget we can conceive of here, it is always cheaper to export revolutionary technology abroad and manufacture elsewhere.

There are only two courses of action to solve this conundrum. We can reverse course on global free trade and subsidize and protect our infant cleantech and other industry from unfair foreign competition, or we can accelerate our race to the bottom by dismantling organized labor and further relaxing environmental regulations, which seems to be our current course.

Solyndra failed for a variety of reasons, not least of which was its single-minded focus on the extraordinarily expensive technology involved in producing cylindrical modules. It could be argued that no amount of government intervention could have saved Solyndra, and even that the Obama administration bent rules to breaking in a well-intentioned but ill-advised attempt to make a point. In the end, Solyndra may have been a bad investment, but it was most assuredly not because it was green. All technological advance entails some measure of trial and error, and Solyndra simply happened to succumb to this unpleasant business reality while under a media microscope, thus magnifying its apparent significance. Nevertheless, green industry in general promises to be a growth industry for the foreseeable future, one with incalculable side benefits to the environment.

In the wake of Solyndra’s public flameout, Mark Muro and Jonathan Rothwell predict:

“Inevitably, tough new questions are going to be asked about the wisdom of clean energy subsidies and loan guarantees. Inevitably, a new round of second-guessing will soon question whether the U.S. can or should compete in globalized manufacturing industries, whether in cleantech or other areas. Which is as it should be—within reason. Policymakers absolutely must study what went wrong at Solyndra in business terms, but it is also imperative that they not overlook the strengths and opportunities of the emerging ‘clean’ economy, lest America fall further behind in this crucial sector of the global economy.”

Can we revive domestic manufacturing and make green manufacturing a centerpiece of a new American manufacturing renaissance? Perhaps, but it will require nothing less than a top-to-bottom restructuring of our industrial and trade policies (an unlikely scenario), not half-measures such as loan guarantees. If we were to identify a strategic industry we were willing to go to the mat for at the WTO, it would have to be green technology, which is already outperforming many other industries despite prevailing headwinds.

In the meantime, if we want to create jobs, what meager stimulative funds we can manage to wrest from a Congress still laser-focused on shrinking the economy might be better spent on implementing green energy projects such as installing solar panels—regardless of where they’re made. While disparaging Solyndra now amounts to kicking a dead horse, publicly pumping more money into green manufacturing might very well amount to performing an MRI. Another misstep will only provide more ammunition to forces already organized around defeating green technology, and that is something we definitely cannot afford.

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