[mrj]

The problem can't always be left up to pure market forces, though. VCs do not fund projects that they don't believe will stand a chance of producing a large return. They may fund several ideas with a small chance, but a business that will provide for the greater good, cost a lot of money up front, and only provide small returns simply won't get funded. Sometimes government must be used to provide for the greater good or it won't happen at all.

The greater good is often politically based, it's true. It may not be business-based at all. Fundamentally, a politician can use any issue as a talking point, and certainly, a politician that funds an idea that creates something good will use that for their own gain or another's detriment. But simply because an idea is politically based doesn't mean it is not worth pursuing, or that the business world would do it any better.

In a way, this is what the government is doing in solar. Solar companies need to be funded and researched now before the market makes solar (and alternative energies in general) viable on a large scale. Right now solar is too expensive to produce and the price of oil gives little incentive to change habits. For the greater good, companies must be founded and research performed that will ultimately decimate the entire energy sector of the economy. Few VCs are going to be interested in destroying value, and yet we must do this before it is forced on us by the limits of the natural world.

It is not a perfect vehicle but only the government has the pockets and patience to make that happen. Some will fail. That does not mean we should never try though. That means all those on the sidelines cheering for government failure should instead try to assist with better solutions and better oversight. Most are happier to criticize and make sweeping judgements though.

[astine]

It's not a matter of free markets, it a matter of corruption. Solyndra's business model as a company was provably unsound years before it emerged as scandal but it still received funding from the government because people believed in the idea of a solar company. The thing is that Solyndra ended up not actually contributing much to solar as a business or technology because their source of income was based on politics and not on making solar power workable. Seeing as Solyndra's founders were politically connected, it looks a lot like the real driving motivator here was political back-rubbing and not actual improvement to alternate energy technology.

If you want the government to fund scientific advancement so that alternate energies can become reality, that's one thing, but the government shouldn't be funding provably unsound companies just because they happen to be in a popular field. It's comparable to investing in Pets Dot Com because the Internet is the new thing.

At best government funding of industry won't actually improve the industry and will just be a colossal waste of money. At worse, it will be yet another avenue for politically connected connected millionaires to get free public money put into their private ventures.

[mrj]

Heh, well, the private sector is immensely corrupt, too. Witness the news from Wall Street on just about any given day. It's not fair to point to one thing the government screwed up and say that government is wholly corrupt. It is imperfect but we're supposed to be working towards a "more perfect union," not that we had achieved it already.

The great thing about government is we can involve media, we can send FOIA, and we can scare politicians into doing the right thing if necessary. If government corruption was as bad as you seem to think, Solyndra would still be getting paid and none of us would know about it.

[astine]

No, no. It's one thing if crooked business men steal from and lie to one another, it's another entirely if Congress, which is supposed to prevent that (on at least some level) has an active interest in those lying and cheating business deals.

The problem isn't that the government is currently actively corrupt (it isn't for the most part,) it's that the more it get's involved in the economy as member rather than a governing body, the more motive individual government members and workers have to be corrupt. We have an active free press and law enforcement agency which catches corruption but that's not a good reason to create conflicts of interest where there shouldn't be.

[mrj]

Hm, well I see your point. Direct investment in companies is risky for everybody, governments and individuals.

But what else is there? How is government supposed to create the right conditions for a market solution? The solution was supposed to be carbon credits by making using polluting materials gradually more costly over time and thereby creating the conditions for clean(er) energy to be viable in the market. But that was rejected outright as a "tax."

Government as a member in the market is bad, we can agree there. But outside of direct investment, it gets politically difficult to change anything.