Yes, but these are countries that have taken clothing and low level manufacturing from us; we are not talking about picking cutting edge unproven technologies. They chose technologies which already work and imported them from the US and elsewhere because they have a low cost labor advantage.

rickyp wrote:

That's a big assumption. To use your own favorite weaponry against you: do you have a source?

Grade 4 math.
650 jobs X 80K a year X 25 years = total payroll generated for permanent jobs.

Must restrain fist of death . . .

No, do you have a source that those jobs are permanent? You originally wrote:

I assume thats per job, and not per job year.

So, doing math based on your assumption makes it a fact? Again, do you know that those jobs are permanent?

I've excluded a lot of benefits from this calculation. temporary construction jobs, spin off jobs (jobs generated by service industries for the emploeees)

You've also excluded the possibility that this venture will fail or fail to get environmental approval.

Its this type of long term calculation that govenrments can make when helping establish an industry sector that private investors can't. And, as the artcle by Freeman stated getting to a point where an industry can be comercially viable usually takes some time.

But, Obama has embarked on a "brilliant" strategy: destroy the economy by restricting oil production and then throw money at any snake oil salesman who mentions "solar" or "green energy."

I'm not certain solar is necessarily the right choice for the govenrment, and its certain that this particular investment was a bad bet. However the idea that it should never be done probably dooms anyone trying to start a company in a new industry when and if China or another nation decides its worth them having the industry rather than the US.

Rubbish. Plenty of industries have started and will start without government help. Some form of energy will eventually compete with oil and natural gas. Whether or not it's solar is speculation. The government should not speculate. It should not gamble.

Now, if we knew solar panels of the Solyndra type were going to be economically viable, that's one thing. But, the empirical evidence was this company was going to fail. Then, it did. What's worse is that the government knew it was going to fail and THEN subordinated the taxpayers' interests to other investors. That is probably criminal and definitely corrupt.

Solyndra seems to have been doomed by China's intervention in the industry more than anything else.

From the previously linked op-ed in the St. Pete Times:

Market forces created a decline in the price of silicon, the European debt crisis reduced demand for solar panels and China entered the solar energy market with lower costs. Solyndra's prospects quickly dimmed. But Obama and Chu could have been honest with taxpayers, acknowledged that Solyndra was a bad investment and limited the risk. Instead, the administration attempted to stage-manage the crisis through disinformation, misdirection and denial, making a bad situation worse.

Even if you're right and it's China's fault that Solyndra failed, the Administration knew Solyndra was in deep trouble when it decided to break the law and subordinate my interests (as a taxpayer) to Obama's bundler.

You can argue that you'd rather import Chinese solar panels then make your own.

Here's a crazy thought: stop subsidizing solar panels. If we didn't offer tax breaks, would China expend capital trying to corner the market? When the panels can compete, fine.

Meanwhile, expand oil production to lower the price. Increase natural gas production. Make solar panels less viable. All of China's efforts go for naught.

Oh. Yeah. Forgot. We have to do the opposite because the President promised to destroy the economy in order to create green jobs.

But at some point new industry sectors will have to develop domestically.

Good thing the government has lots of cash to invest. Otherwise, no corporation would have a shot.

Or, we could cut back government and let rational investors do what they do.

Nah! Way better to let Obama call the shots. He is quite the economic wizard.

Here's another good investment:

Beacon Power, a Massachusetts-based company that won praise from renewable power activists and loan guarantees from the federal government, has filed for bankruptcy, potentially leaving taxpayers on the hook for $43 million.

The company, which promised to build storage devices for intermittent power produced by wind and solar power facilities, was never able to attract investors. Coming on the heels of the Solyndra bankruptcy and ensuing scandal, the Beacon Power bankruptcy has a growing number of people calling for an end to federal loan guarantees for risky alternative energy start-ups.

Never is the operative word. By the time the Obama administration handed Beacon parent company EnerDel a huge line of credit, its share price had fallen more than half from its peak two years earlier. Three weeks ago, it was trading at eleven cents a share. According to the report from the Heartlander, the share tumble was worse when put in wider perspective:

According to published reports, Beacon’s shares traded for $47 in 2005 but fell to $3.44 in February 2011 and less than $1 a few months later. The company was cautioned by Nasdaq it was in danger of losing its listing. In late October, the price per share fell to just under 11 cents, leaving the company with a market value of $3 million.

The beauty of this whole thing from a conservative point of view: it's going to be death by a thousand cuts. As more and more of these "investments" fail, we're going to see a mounting backlash. Again, I think I could create a number of permanent jobs with $43M.

Obama? He's more interested in gambling.

ray

Yes, but these are countries that have taken clothing and low level manufacturing from us; we are not talking about picking cutting edge unproven technologies

Originally. But they moved into high tech long ago. Form Factor moved from California to Singapore .
And the went thousands of jobs in DRAM Flash and Logic devices all went to Taiwan and Singapore.
Most of the product development is done in the east now too.

Ray Jay wrote:

danivon wrote:

Ray Jay wrote:There's a tremendous amount of clean energy private equity and VC money available.

Citation needed.

I've done that before. If you Google "private equity clean energy" or "venture capital clean energy", you will get dozens (scores?) of companies who do this sort of thing for a living. They are doing it to make money and will invest in a profitable company.

I didn't notice you provide a source for it in the past. I'm sure there are loads of companies, but the question is about how much money is on offer and at what terms

You did, but I didn't find it persuasive. There's no absolute level that is appropriate. It could be $100 billion or it could be $500 billion. The important point is that if the business plan makes sense, there will be investors. Fewer people are investing in horses and buggies, but that's okay.

But if the environment is hostile, there will be less to invest, or fewer investors, or harsher conditions on that investment (or a combination of the three) regardless of how good a start-up's plans are.

I'm sure you grasp that point, Monte.

I agree. Perhaps we should cool our investments until someone makes a persuasive case that the US is pursuing it in a way that it is money well spent. I don't see that case being made at the moment.

Huh? I was referring to the USA of 60 years ago, which was a relatively planned economy. It's nonsensical to argue that planned economies don't work when we can see examples that did. The question is why they did work.

I'd argue strongly (having been there) that Greece's problem was not a planned economy, but widespread tax evasion. Who did that? The middle classes - business owners, property owners, those who could afford to do it, rentiers in the public sector.

rickyp wrote:

Would you say the developing countries of Thailand, Vietnam, the Philippines, and Indonesia are appropriate comparisons to the US, or is that URF? (useless rhetorical flourish)

Each of these countries has invested in specific industries to attract production of products that were once made in the US.
So actually they directly impact the arguement two ways. Not only did their intervention help create secure long term employment and secure an industrial sector in which their bsuinesses can compete - which was the goal of the govenrment investment in Solyndra, and the goal of government intervention by most other nations...
But they also did so by hiving them off from the US.

Ricky:

ray

Yes, but these are countries that have taken clothing and low level manufacturing from us; we are not talking about picking cutting edge unproven technologies

Originally. But they moved into high tech long ago. Form Factor moved from California to Singapore .
And the went thousands of jobs in DRAM Flash and Logic devices all went to Taiwan and Singapore.
Most of the product development is done in the east now too.

You've now changed Thailand, Vietnam, the Philippines, and Indonesia into Singapore and Taiwan. Time to up your meds.

Danivon:

But if the environment is hostile, there will be less to invest, or fewer investors, or harsher conditions on that investment (or a combination of the three) regardless of how good a start-up's plans are.

I'm sure you grasp that point, Monte.

Owen, the environment isn't hostile. It's normal. The conditions for Solyndra to acquire money were hostile because it is a bad business plan. There are good business plans out there and they are getting funded. Just because its hard doesn't mean that the government needs to step in. The country is filled with millionaires and billionaires who are greedy and will invest in anything with a decent return.

I'd argue strongly (having been there) that Greece's problem was not a planned economy, but widespread tax evasion. Who did that? The middle classes - business owners, property owners, those who could afford to do it, rentiers in the public sector

It sounds like you blame part of the 99%.

When I join Occupy, I'll let you know. Until then, don't assume I agree wholly with their critique to the exclusion of all else.

Just making a joke ... my overriding concern is that governments will spend money until they cannot, as evidenced by Greece, Spain, France, Italy, and the US. The US has history's longest leash and I'm afraid of a terrible hanging.

What is the scholarly evidence that Germany's government investment policy is the reason for its success. Have they backed future unproven businesses. Are there other examples comparable to the US. Did Germany do it with deficit spending? Also, (and this is to Ricky) spare me discussions of Vietnam and other countries that are not comparable.

Germany did it with borrowing, Marshall Aid and they have run deficits themselves (even broke the Euro limit sometimes).

ray

Did Germany do it with deficit spending? Also, (and this is to Ricky) spare me discussions of Vietnam and other countries that are not comparable.

A country that is one of a group that is taking industry sectors away from the US not comparable? Why? Competition is competition isn't it?
As for Germany, they ran deficits. When East Germany was absorbed for awhile in particular. But they also have a different business culture. Unions and corporations work collaboratively to ensure they maintain productivity and that labour and owners share in the success of a company. Executive compensation is much lower and corporations tend to express corporate citizenship differently. Loyalty to the home country means actually thinking about a contribution to the home country... I think one can reasonably assert that US corporations haven't always demonstrated those traits in abundance. (ex. Halliburton makes a very large percentage of its revenues from the American taxpayer, and yet moved its corporate head quarters off shore for tax and legal reasons..)

There have been plenty of public/private partnerships investing in that way.
example: http://www.spinnovator.de/index.php/en/ ... ncept.html
The government investment includes more hands on involvement than in the US I believe. Its viewed more as an ownership position than a grant. (My view of stuff like Solyndra. "here's some money, good luck". Arms length investing (grants or loan guarantees) means less accountability.)
Germany's political life is mostly about compromising between the various parties as there is seldom (if ever?) a majority in their parliaments at federal or state level. So perhaps part of the thing is cultural based upon the need to compromise?
Further, German business tends to look further down the road and as an isolated language they have come to find themselves more capable of working within other cultures...
Example: When BMW looked to open factories in China they couldn't find Chinese Engineers who spoke German, or German engineers who spoke Mandarin. But they found plenty of English speakers in both places. That speaks to the power of the English language, but also to the necessity for flexibility and accommodation. (I know stereo typically that's not something Germans are known for...but evidence since the war shows they've evolved.)
Education is generally free, meaning students that are genuinely achievers can also get the best educations, and they don't graduate with massive debts. (Nor has a financial industry been built up around the financing of education to build profit into the student debt.) And the social safety net is generous, so that the poor are not particularly disadvantaged in terms of access to medical care or other basic amenities . Yet the cost of health care is 8% of GDP. This also means that German businesses aren't burdened with providing insurance to workers and workers have genuine ability to move jobs without the anchor of "insurance and pre-existing conditions..."
I know I wander. But you can't isolate one thing like running deficits or not. Or public investment in start up industries for German stability.
However, on point, Germany has been very successful at involving the government in start ups. And they haven't been shy about ensuring that Germany as a whole benefits rather than just the corporations.
I think thats the fundamental difference in how most countries approach to "public funding" versus the US. When investment means an ownership in the startup, and a say in how it operates, then the benefits are more likley to accrue back to tax payers and the domestic economy.
From 2001 German VC money was hard to come by, which is why the govenrment increased invovlement in things like spinnovator.
Why did VC money dry up? A lot of it went into the folly of Credit default swaps and real estate...
VC's were atracted to the quick buck and return. Startups are often losers, with a huge winner 1 in 20 times that make up for the losers...
Thats something government investing has to be leary of in the SU where the political volitility is so great. Start ups are nortoriously dangerous investments because of their failure rate. When a government investment IS made in a sector it has to be there for the long haul ...and make sense as a base industry. But the political cycle in the SU, the constant electioneering and white black nature of discourse means investments are always looking for a quick demonstration of the investment...
And frankly thats seldom achieved in start up sectors. (It took 30 years for investment in the Alberta OIl Sands to start returning an operating profit. 20 just to start getting any revenue.)

All very interesting. Here are my central questions again:

What is the scholarly evidence that Germany's government investment policy is the reason for its success? Have they backed future unproven businesses?

Ray Jay wrote:All very interesting. Here are my central questions again:

What is the scholarly evidence that Germany's government investment policy is the reason for its success?

Hmm. Originally it was all about how central planning kills economies. So surely the response of pointing to a country with central planning that has not failed (and is to the contrary successful) is sufficient to show that it's not a truism. Now we have to produce 'scholarly' evidence that central planning is 'the' reason for the success?

Moving goalposts alert!

The planning of Germany's economy, and crucially Marshall Aid, were certainly important aspects of the German post-WWII recovery. Were they the only factors? Of course not. The pre-war economy was strong already in many areas (following Nazi central planning, and before that a long history of growth and progress). When East Germany was being integrated in the 1990s, it took masses of spending to deal with the transition. That, I would contend, is more about not failing than success.

Have they backed future unproven businesses?

There's a reason I didn't attempt to answer this: I don't understand what you mean. What is a 'future unproven business' when it's at home? Surely all investments are future unproven because the future is unknown and even a business that is currently 'proven' may become less successful at some point in the future. Without a time machine, all investments are 'future unproven'. It's the future that proves (in the old sense of the word).

danivon wrote:

Ray Jay wrote:All very interesting. Here are my central questions again:

What is the scholarly evidence that Germany's government investment policy is the reason for its success?

Hmm. Originally it was all about how central planning kills economies. So surely the response of pointing to a country with central planning that has not failed (and is to the contrary successful) is sufficient to show that it's not a truism. Now we have to produce 'scholarly' evidence that central planning is 'the' reason for the success?

Moving goalposts alert!

Owen, you are making stuff up. I've looked at all 5 pages of this discussion and I haven't writen that. Shame on you. You are the one moving goalposts[/quote]

danivon wrote:

Ray Jay wrote:
Have they backed future unproven businesses?

There's a reason I didn't attempt to answer this: I don't understand what you mean. What is a 'future unproven business' when it's at home? Surely all investments are future unproven because the future is unknown and even a business that is currently 'proven' may become less successful at some point in the future. Without a time machine, all investments are 'future unproven'. It's the future that proves (in the old sense of the word).

Not my best choice of words. Let me try again. Solyndra used an experimental technology. There are at least hundreds and maybe thousands of scientific breakthroughs being attempted in solar energy. That is a good thing. But there is no reason for the US to invest in the companies making these breakthroughs because they haven't been proven in the marketplace. The US should invest in scientific research (largely through grants to universities and researchers) but should not invest in companies that are using new technologies on the premise that the technology will work economically because the government is not good at picking winners and there are private sector VCs and Private equity players who do that for a living, and do it very well..

Ray Jay wrote:Owen, you are making stuff up. I've looked at all 5 pages of this discussion and I haven't writen that. Shame on you. You are the one moving goalposts

No you did not, but it's what I was talking about. And you are asking me to justify my position, are you not? I never said that Germany's success was solely down to the planned economy. I pointed to it as an example of an economy which is successful and has had planning. Along with others.

Besides, you can probably find 'scholarly' opinion to back up any position, with the evidence to fit, but it would prove little. I'd be more interest in a less subjective way of looking at it and a statistical rather than 'scholarly' position. But perhaps the difference it semantic.

Not my best choice of words. Let me try again. Solyndra used an experimental technology. There are at least hundreds and maybe thousands of scientific breakthroughs being attempted in solar energy. That is a good thing. But there is no reason for the US to invest in the companies making these breakthroughs because they haven't been proven in the marketplace. The US should invest in scientific research (largely through grants to universities and researchers) but should not invest in companies that are using new technologies on the premise that the technology will work economically because the government is not good at picking winners and there are private sector VCs and Private equity players who do that for a living, and do it very well..

I would probably argue that what the government should do instead is to give tax-breaks to innovative sectors (which is still 'picking winners', but with a broader scope) rather than making direct investment. But still, I have shown that venture capital has been lower than it was before the 2008 crash. You seem to be brushing that aside as if it's not an issue. You also know that the prospects for any company will look worse now than 5-6 years ago simply because of the state of the economy.

And a VC picking winners is similar to a government doing it, really. It partly becomes a self-fulfilling prophesy because it's with the VC/gvt support that helps companies to succeed. But also, it's not 100%. Many companies that VCs invest in still fail. What they are aiming to do is to make enough on those that end up succeeding to cover their losses. So to measure success for a VC you would look across all of their portfolio, would you not?

Similarly with government investment. They picked a lemon with Solyndra, but is that all of the picture?

ray

But there is no reason for the US to invest in the companies making these breakthroughs because they haven't been proven in the marketplace.

Investing in a company participating in a tchnology once it is established in the market place? Thatsa a long time into the development cyucle of an industry, or sector... By this point you're past Angels, VC and probably about to go public with an IPO or be bought out by an established company in the sector with the means to expand the company quickly.
The investment in a new technology that is best for a government is sometimes to help it achieve commercialization. From the original premise, to the proof of the premise to the early engineering ... there's a lot of investment generally required. Especially in high techology. And there is always the risk that things won't pan out.
Thats why VC's make such a great return on their money. The risk.
But when the scope of a project is both 1) beyond the means of VC's or other investor types 2) has potential benefits that can help shape and define the future economic structure of a country, then governments may legitimately get involved.
The US government has done this throughout its history. (The US Navy owned 20% of RCA as the result of its early under writing of engineering development., DARPA, the first computers, SEMATECH...)
Its usually beeen due to military investment, but military security and energy security have much in common.

It seems you're entirely right that Solydra was a bad bet. But that happens. When South Korea, Taiwan and China bet theat they could attract sectors of the emerging computer industry to their countries that was a good bet. And I suppose you could say they picked winners...which companies that arose as private sector participants. Who were the losers? The US populace engaged in those industries before they were lured away.
My point? That if you don't get involved in picking winners and losers, it may be that some other govenrment picks the winners...and you end up losers. You can't be free enterprise, free traders when you are the only one's playing that way.

Five years from now, past employees of Solydra may open a new company based upon something they learned in their experience at Solyndra and revolutionize the energy industry. The apparent failure could easily still pay dividends. But without the original investment and attempt nothing will be learned or gained and nothing will ever arise. Original research by itself is great, but there is always that period between the notion and the ability to commercialize. And sometimes government can play a role.
Now, is that the only reason Germany has been successful? Hell no. Its a small part.
Solydra is a blip in the American economy. So was the personal computer business in its inception. But without the initial govenrment funding to IBM and their suppliers that wouldn't have developed either. If you went back to those years and examined all the government projects that went no where... there are probably more than a few failures like Solydra.
A few failures shouldn't stop you from trying. And shouldn't exclude government involvment in industrial development when it makes strategic sense. Using Solyndra as a cautionary tale has to be balanced with the success stories.
VC's would never invest if failure frightened them They fail 90% of the time. The same thing really should apply to government. However, one should expect that when govenrment is involved, like the Germans involve themselves, there is going to be a much lower failure rate. Too big to fail, and armed with the power of govnrment to shape policy and regulation for a nascent sector... In germany bio techology is now booming. Thanks in part, to german govenemnt involvement in efforts like Spinnovator.