Is the Tesla Debt Payback Vindication for Crony Energy Capitalism?

K. Lloyd Billingsley says no. He notes that anyone who sees a company merely doing what is normal for borrowers--paying off their debt--as validation of the economic efficacy of government subsidies for "green" companies cannot see the forest for the solitary tree.

As he says,

The real news on the clean-energy front is the number of stimulus recipients who have gone bankrupt. In 2009 Flabeg Solar U.S. Corp. got $10 million in stimulus funds and another $9 million in job creation money. By April 2013 Flabeg had shut down its plant, laid off workers and will likely seek Chapter 11 bankruptcy protection from workers suing over severance pay. Flabeg is hardly alone.

Solyndra got $535 million in federal loan guarantees but went bankrupt in 2011. Stimulus recipients Evergreen Solar and SpectraWatt, both in the alternative energy business, also went bankrupt. And of course, Fisker Automotive Inc, is heading south despite $529 in federal loans to produce luxury cars built in Finland and selling for nearly $100,000. Tesla did better and paid back its loan but on balance the $800 billion American Reinvestment and Recovery Act, also known as the stimulus, remains more of a bust than a boost.

In fact the entire "green job stimulus" is one more example why, if we want to promote economic prosperity, government spending is less desirable than entrepreneurial investment.

The main economic problem with bureaucratic spending is that it is not predicated on economic profit-and-loss calculation. This was regularly illustrated by the two most-heard phrases during my years at the U.S. Bureau of Labor Statistics: 1) “Good enough for government work;” and 2) “That’s okay. We don’t have to make a profit.” Both of which are true. Because the government does not have to make a profit, it has little if any incentive to direct investment toward those areas that are sustainably productive.

Additionally, government spending creates a distribution process separate from production. In the market economy, wealth and income is not redistributed, because it is not distributed in the first place. Income is earned by providing productive services. It is earned by serving other people. Government spending, however, wastes scarce resources. It distorts the allocation of income away from efficient service to customers, because subsidies prolong the life of inefficient firms at the expense of efficient ones. Government spending, therefore, hampers the flow of factors of production to uses more in demand by consumers.

The bottom line is that, whenever the state gets into the business act, we get more of whatever government bureaucrats subsidize and less of what people value the most. Scarce resources are wasted. Capital is consumed. We become less productive. Our standard of living declines. Prosperity? I think not.