Friday, August 3, 2012

Solyndra and the problem with Technocrats

I've talked a great deal about technocrats and technocracy in previous bits. In one, I spent a great deal of time explaining the basic assumptions of a technocrat--like President Obama--with regard to the economy in general:
The technocrat knows how complicated reality is, knows that the economy is complex, yet still believes distinct, targeted measures can have entirely predictable consequences, can in total be used to even "fix" the economy or remake society in the "proper" way. Or both.

Technocracy is ultimately rooted in Plato; it is a reaction--a rebuttal, of sorts--to Plato's idea of philosopher kings. But both lead to the same place: a society ruled and ordered by those who know better, be they experts in morality and justice, or experts in bridge-building and economics.
But note that the door is still open for technocrat decisions and policies of a more limited sort. The perfect example of such is the now-infamous push by the Obama Administration for green energy, which has ultimately led to a slew of bad loans to various companies because they "fit the mold," were supposed to be on the cutting edge of green energy like solar power. Solyndra, of course, is the poster-child for such companies. It's bankruptcy means that we, the tax payers, are on the hook for some $500 million in losses because of a DOE loan pushed through for Solyndra and because of a restructuring of that loan that put private investors ahead of the government, when it came to recouping invested dollars:
I've been following the Solyndra scandal quite closer--as should be clear to frequent readers here--and the one issue in the mess that troubled me the most, once it became known, was the subordination of the governments investment to those of some private investors. The government--when it loans money--never does this. Government loans are always supposed to take priority, as a matter of law. If that is not acceptable to whomever is to get the loan, the loan doesn't happen.  
Yet, the DOE loan to Solyndra was subordinated. This issue was the subject of discussion today on Capital Hill, as Treasury Department officials were called before the House Commerce and Energy Committee to testify about the Solyndra loan deal. According to the given testimony, officials in the Treasury Department did not believe that the loan could be subordinated (duh, that's the law) and thought the DOE's actions might be illegal (might?)
The DOE insisted then--back in October of 2011--that the subordination of the loan to private interests was perfectly legal. And according to the DOE, this restructuring was the best move, the best way to help Solyndra succeed and repay the Federal loan:
"The secretary gave final approval for the deal because, based on the information we had available to us at the time, we concluded that this restructuring gave Solyndra and its workers the best possible chance to succeed in a very competitive marketplace and put the company in a better position to repay the loan," DOE spokesman Damien LaVera said last year.
That "information" supposedly included the analysis of OMB (Office of Management and Budget) personnel, its analysts and lawyers. And all of this is apparently very much in keeping with a technocratic approach: let the experts review the information and determine the future course. But here's the problem: at least one expert at the OMB--Kelly Colyar, an OMB branch chief--was saying exactly the opposite, according to Administration e-mails released yesterday by the House Energy and Commerce Committee:
The emails show that OMB analyst Kelly Colyar urged the company be shut down and its assets sold off in January 2011. Liquidating Solyndra then, she estimated, would limit taxpayer losses to $141 million. The Department of Energy’s plan to save the company by restructuring the loan, she warned in a January 2011 email, could mean losses “significantly HIGHER” for taxpayers.
In hindsight, it's clear Ms. Colyar was exactly right. And as an OMB branch chief, we have to assume her analysis was a part of the information on which the DOE was basing its decision. In fact, we know it was, because the above referenced e-mail came from the DOE. So why was she ignored? Whose analysis trumped hers? No one's. Her analysis was ignored for purely political reasons: the fear of admitting failure on the part of Steven Chu, the DOE, and the Obama Administration.

And thus we see the hypocrisy of the technocrat: experts are listened to and heeded, except when it is politically inconvenient to do so. Because admitting that the Solyndra deal had gone South was admitting that the experts behind the program were wrong. And those experts were the ones who were responsible for pushing the Administration's agenda on green energy.

Cheers, all.

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