A world in economic crisis

Solyndra: a case study

Posted in Uncategorized by Aussie on August 8, 2012

The Daily Caller has given me the idea for this particular title. This is a follow on from my thoughts of yesterday when I began exploring what I consider to be ill-conceived notions about the role of government in the building of a national economy. The Solyndra debacle is only one of many, not just in the USA but also in Australia where government backing has not proved that an enterprise becomes a success.

Solyndra is a good case study because it highlights the problems with crony capitalism. The owner of Solyndra was a 2008 Obama donator and bundler. The funds that came from the government were a payback for that support during 2008. Despite the large amount of the loans given Solyndra failed. Why was that?

Actually, it is not hard to give a reason for the failure of Solyndra, it was the wastefulness that took place around the time that the loan was given. The money was not wisely invested in securing the future of the business, but it was wasted on buildings etc. that added no value to the product being produced. This is a simplistic, on the surface analysis, but I am sure that there are people who have taken the time to analyze what went wrong.

The point to make here is that even when Government chooses to invest there is no guarantee there will be success in the future. It takes more than crony capitalism to make a business successful. It takes research into the market, as well as good marketing etc. etc. to ensure the long-term viability of a business. Government on the other hand can hinder any young business through the imposition of red-tape. Solyndra was given a boost, yet it failed. Obviously blame must be laid at the feet of the owner of the business.

As a case study for why crony capitalism does not work, Solyndra is an excellent example of government interference in business.

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