Government Shortfall

Here is another example of the failures inherent in government intrusion into the market.  The Wall Street Journal describes a solar energy project that is about to founder at great cost to at least one of the investing private enterprises.

It seems that First Solar, Inc., a solar panel manufacturer, had sold a 230-megawatt plant to Exelon Corp, an electricity generating company, with the sale contingent on Department of Energy execution of a loan it had made to finance the deal.  No money has flowed from DoE, though, because the Department cannot proceed until “all applicable permitting issues are resolved,” and there is “an issue with a construction permit that First Solar obtained from Los Angeles County.”

The items underlying the “issue” are both unclear and not relevant in this context.  What matters is that the problem exists; therefor, DoE cannot proceed with its loan; so the project, starved of these funds in particular, is in jeopardy.  Since time is short for getting everything finalized, First Solar may end up having to buy the plant back from Exelon, and the project may die on the vine.

This is not a failure of the present administration, in particular, or of the preceding one, though.  It’s not a failure of any particular administration.  This sort of failure is inherent in any government involvement in private markets because of the necessarily different imperatives inherent in government efforts vs those of private enterprise.  In particular, this failure is driven by government’s necessary concern for the use of the citizens’ tax money, its equally necessary caution in committing that money, and its equally necessary concern for not intruding into other governments’ jurisdictions (here the jurisdiction of Los Angeles County).

Even in an ideal world where these concerns could be taken as effectively and efficiently satisfied by government, these three are enough to make labyrinthine any governmental efforts to commit the money.  Private enterprises in a free market, on the other hand, are free to handle these imperatives among themselves according to their own readings of the risks involved—including ignoring them altogether, using Alexander’s bronze tangle-separating implement on the knots, or not structuring the deal in this kind of way in the first place.

Leave a Reply

Your email address will not be published. Required fields are marked *