By on November 7, 2011

Ever since the messy collapse of solar panel maker Solyndra just two years after it received over half a billion dollars in government loans,  the political climate around all green energy loan programs has heated up considerably. As the White House opened an investigation of the Department of Energy’s entire loan portfolio, loan recipients and startup automakers Tesla and Fisker found themselves under attack. And why not? Fledging firms with unproven products in brutal, scale-driven industries are hardly safe bets, even in the best of times. And with the government drowning in deficits, who’s in a gambling mood?

What gets left out in the hue and cry is that Tesla and Fisker between them represent “only” about a billion dollars worth of DOE loans in a program that was supposed to be able to loan out $25b (the final tally could be closer to $18b). Dwarfing the half-billion-each investments in Fisker, Tesla, and Solyndra are projects that seem a lot less risky in contrast to the startups. Here, in Smyrna, TN, I got to see one of them being built.

This plant, which was still very much under construction when we visited two weeks ago, will be able to build 200,000 battery packs per year when it reaches full capacity. That will make it one of the largest battery manufacturing plant in the US, and will add 1,300 workers to Smyrna’s already Nissan-swollen economy. Perhaps most astonishing in the age of the global supply chain, it will be a remarkably integrated production center: batteries built from raw lithium will be assembled and mounted in Nissan Leafs built at the main manufacturing facility next door, using electric motors built down the road in Decherd, TN. It’s as close to Henry Ford’s ideal of the materials-in, product-out “complete factory” as you’re likely to find in the auto industry, let alone the green-car startups.

And though the Smyrna EV manufacturing capability may be a throwback to the days of vertical integration, the battery assembly plant itself couldn’t be more different than anything ever seen in the auto industry. We weren’t allowed to bring cameras into the plant, but it would have been difficult to photograph anyway. Instead of a huge, open space full of robots and stamping presses, this plant is a huge open space full of gigantic clean rooms. Materials move in one end of its U-shaped assembly flow, where they are assembled into cells. The completed cells are tested at the back in what looks like giant racks of servers, and then they move down the other arm of the U, where they are assembled into packs. But none of this is obvious from any point inside the main structure, as the huge clean rooms where assembly work is done obstruct any view of the complete process.

For now there’s not much to see at the Smyrna battery plant. Equipment is only just being installed amid the ongoing construction, and because the manufacture of cells is so unlike traditional automaking processes, it’s difficult to picture what these rooms-inside-of-rooms will look like when production gets rolling. Only the giant HVAC ducts which keep the clean rooms relentlessly ventilated speak to the kind of white-glove environment that will eventually take root in this plant. Some b-roll footage from the Leaf’s pilot plant in Oppama fills in a few blanks.

It doesn’t take a good imagination to understand what the Department of Energy invested in at Smyrna. Though EVs are, in the sweep of the industry, a relatively risky segment, Nissan already has a plant pumping out Leafs in Japan, and the resources to manage a ramp-up in volume. When Smyrna joins a Sunderland (UK) plant in production, Nissan could muster a quarter-million electric cars each year… and likely has left room to grow. There’s no awkward transitions in the business plan from high-price, low volume to low price, high volume, no question of the company’s manufacturing ability. The car was developed in-house, by a company that is backing it at a scale aimed at crushing the start-ups. If the US government wants to lay the foundations for an EV manufacturing base in the US, it’s hard to imagine a better project to stimulate.

Whether the government should be involved in developing any specific kind of economy is, as always, a matter for philosophical debate. Practically speaking, however, neither the Solyndra scandal nor the possible future collapses of Tesla and Fisker will have much bearing on real the value of the DOE’s ATVM program. Especially if political patronage did indeed play a role in Fisker, Tesla and Solyndra’s funding, they will simply prove that government programs are vulnerable to waste and corruption. No surprise there, nor any problems unique to the “green economy.”

If, on the other hand, events in a certain turbulent region of the world (combined with demand pressure from China and India) send gas prices soaring again, Smyrna could end up justifying the entire loan program.If the market turns to EVs in an energy crisis scenario, the Leaf will be the only EV with the combination of (relatively) low price, adequate performance and most importantly production scale to meet a spike in demand. In a scenario in which EVs are suddenly in high demand, what good are Tesla and Fisker with their expensive low-volume luxury cars?

Like any other investment or gamble, you always have to balance risk and reward. Not only does Nissan’s project offer the least risk, as it has the resources to absorb losses, but it also offers the most clear reward of any other EV bet. Certainly the government should have stayed away from Tesla and Fisker, but it’s difficult to say that we won’t one day be glad to be hosting the epicenter of EV manufacturing for the leading pioneer in EV manufacturing.

Disclosure: Nissan bought myself, Bertel and Steve Lang lunch at a “Meat and Three” on the day we visited the Smyrna facility. Don’t know what a “Meat and Three” is? I didn’t either…

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54 Comments on “Smyrna And The Solyndra Problem...”


  • avatar
    Toad

    “Like any other investment or gamble, you always have to balance risk and reward.”

    Investing in and gambling on private companies should not be the business of government. Government does a bad enough job doing the things it is supposed to be good at (policing, roads, education, etc); it is had to argue that it can do a good job at venture capital investing.

    On the other hand, it is a great way to reward your political contributors/cronies/supporters, directly or indirectly. That makes it inherently worse.

    • 0 avatar
      Doc

      I agree 100%. As Thomas Sowell says, this is just a matter of brain power. A relative few in Washington simply cannot match millions of consumers, investors, business owners etc across the nation in brain power. The idea that they can invest our money better than we can is foolish.

      Not to mention, the enormous potential for corruption here. Politicians directing billions of dollars in subsidies and loans will inevitably bring out all sorts of schemes.

      Whether people are going to flock to electric cars by the millions is a question that is still very much up in the air. There is no evidence to suggest that people are clamoring for these things. Yet, our government has bet the farm on them. Of coarse the farm that they have bet does not belong to them.

    • 0 avatar
      cfclark

      One factoid to remember about this particular case: The current senior (Republican) Senator from Tennessee, Lamar Alexander, was the Governor of Tennessee when Nissan announced its intention to build the Smyrna plant in the early 1980s (and was finishing up his second term when GM was going through the site selection process for Saturn, for that matter). I don’t know what role he may have played this time around, but he is “the Senator from Nissan” as much as anyone.

    • 0 avatar
      vww12

      The article assumes that just because Nissan/Renault is “too large to fail”, the government loan is not already wasted (like the Tesla/Fisker/Solyndra/Beacon loans). The article also counts/hopes oil prices might spike at some point in the future. Way to root for the home team.

      Newsflash: electric cars are not selling. These are $35,200 toys for government fleets and rich guys.
      GM was the largest company in the world when it saw its own foolishness and abandoned the EV1.

      • 0 avatar
        psarhjinian

        Newsflash: electric cars are not selling. These are $35,200 toys for government fleets and rich guys.

        Lots of things don’t sell in their infancy. The internet was either a) a tool of the military-industrial complex, b) a plaything of ivory-tower academic, c) both a & b, during it’s nascent, government-funded phase.

        Government actually does very good work as an incubator and financier for technologies in their infancy. It also does a good job at non-profit infrastructure (when it’s not being hamstrung). Venture capital is nice, but even the noblest VC would be challenged to bootstrap something that has an unprofitable growth phase of five years or more.

        The problem with Green is that it has a “stink” among the Right that Defense or Traditional Energy does for the Left. Tell you what: you stop bitching about Solyndra and the Volt, we’ll let you guys off the hook for much, much larger boondoggle that is the F-35.

      • 0 avatar
        joeaverage

        The first few comments are why I love this website. Not once did anyone do a knee-jerk throwing of Obama under the bus. You guys clearly recognize that there is more to it than it’s “his fault”. I’m so tired of “his fault arguments”.

        Looking forward to the rest of the comments. Psarhjinian – that’s what I would have lived to have said if I could be so eloquent.

    • 0 avatar
      jaje

      Though I normally agree with Gov’t shouldn’t invest in private business which Solyndra so well demonstrated – the US is falling behind the world in the green industry. We still consume significantly more resources per capita than any other country in the world. We waste so much energy, food and consumables it is crippling our country as we cannot sustain this way of life for too much longer.

      I did agree that we need to modernize our centuries old buildings with current insulation technologies and HVAC systems that use promising technologies such as geothermal heating/cooling; solar / wind power generation where it is feasible; rain water runoff capture systems for irrigation and graywater systems (toilet water); green roofing to reduce co2 and provide higher insulated roofing; and other promising technologies. Our Government should foster adoption of sustainable technologies and reduce its own waste. We need to also invest in our future – not our present.

  • avatar
    areader

    “Investing in and gambling on private companies should not be the business of government.”

    This is silly. There are times when a technology would not be advanced without govt. support, and when it is neither necessary nor prudent for a govt. to assume the full burden. China is swamping the renewable energy field with subsidized research and manufacturing. They have made it uneconomical for US competitors to participate, so we’ll be buying from them. Still and again. At some point, their energy cost will be much lower than ours, and they can pull away at an accelerating rate. Meanwhile, the corrupt and ‘conservative’ forces here continue to protect and subsidize the use of fossil fuels and the boondoggle of corn-based ethanol. I’d much prefer investing in new technologies via above board and obvious grants than years-long, seemingly permanent tax breaks for corporate farms, agribusiness titans and the like with absolutely no chance of anything other than more of what we have in terms of efficiency and pollution.

    • 0 avatar
      VA Terrapin

      The entire American economy, including the Federal Government, is seriously overburdened with debt. The government struggles to provide basic necessities like maintenance of interstate infrastructure and enforcement of regulations. The government acting as a venture capitalist is a luxury we can’t afford.

      Regardless of tax policy, the government has to cut spending a lot in order to keep debt from destroying the economy. Cutting out these subsidies is a good place to start.

      • 0 avatar
        krhodes1

        The American Government is floundering in debt because they lack the political will to raise taxes to a rational level necessary to support public programs.

        I am firmly on the side of sometimes government support, direct or indirect is necessary to jump start things.

      • 0 avatar
        joeaverage

        VA Terrapin – so let’s end these expensive wars and get back to work here domestically. Question is – will the ending wars lead to a recession and more unemployment? I think that happened in the past. Might throw this recovery right off the tracks. Still continuing them is another kind of gov’t program we can’t afford much longer.

    • 0 avatar

      By all means, let’s not develop our own energy resources, let’s not use shale or tar sands or natural gas, or further develop the Marcellus and Bakken deposits.

      Can you cite a single non-military technology that was advanced through gov’t support? I’d say that the private sector does a much better job at developing those technologies and that the market does a much better job at picking winners and losers than the gov’t could ever do.

      • 0 avatar
        VA Terrapin

        The Federal Government has too much debt because it’s spending too much money. If you have MS Excel, go here to take a look at where the Feds are spending money. Take 1964 as a base, the last year before President Lyndon Baines Johnson created Medicare and Medicaid, and the last year before LBJ greatly escalated America’s involvement in the Vietnam War.

        Table 8.4 shows what Fed spending was as a percentage of GDP. You will notice that Fed spending has gone up about 29% between 1964 and 2010, the last year the table uses actual figures. You will also notice that Programmatic Mandatory spending (mostly made up of entitlements) went from 5.8% to 13.8% of GDP. This is a 138% rise in what mostly amounts to entitlement spending as a percentage of GDP. Add non-military discretionary spending, and the Feds have spent almost as much in non-military spending alone in 2010 in GDP terms as it spent in its entirety in 1964.

      • 0 avatar
        robdaemon

        The Internet. You know, then technology that’s allowing you to post this today.

        http://en.wikipedia.org/wiki/ARPANET

      • 0 avatar
        dolorean

        “Add non-military discretionary spending, and the Feds have spent almost as much in non-military spending alone in 2010 in GDP terms as it spent in its entirety in 1964.”

        Why the ridiculous notion that we always look at this stuff beginning at 1964? Why not start at 1917 when we nationally mobilized a million people for war and had funded several belligerent countries loans that never got paid back? What about 1953, where during the height of McCarthyism we spent millions on anti-communist witch hunts and defense programs that are still hemoraging money? Or 1981, after Reagan, creator of deficit spending politely packaged as Voodoo Economics, took office? Or when W. took office thanks to illegal procedure of the Supreme Court and began the greatest gummint spending spree since King Midas had his gold allergy?

      • 0 avatar
        Toad

        There is a huge difference between investing (what we used to call “spending”) in research vs. actually giving money to private companies.

        The US has the best research facilities in the world spread among universities and pure research laboratories. These facilities and the researchers in them do great work on matters spanning biology, physics, materials science, medicine, etc. and are money very well spent.

        On the other hand, putting money into specific companies and their proprietary technology or research is basically gambling, or socializing the risk while privatizing the reward. Plus, the investment will always go to the well connected (via lobbying and/or campaign contributions), not necessarily the most promising idea. See the comment above about Lamar Smith; whether true or not the stink of crony capitalism hovers around the issue and that is not good for anyone involved.

        The government needs to stay in research and development, and out of the private sector.

      • 0 avatar
        psarhjinian

        On the other hand, putting money into specific companies and their proprietary technology or research is basically gambling, or socializing the risk while privatizing the reward.

        The government needs to stay in research and development, and out of the private sector.

        It used to, before someone got the idea that privatising was a good idea and that we shouldn’t have these government/academia partnerships and should dump everything on the private sector.

        I can tell you that, interestingly, it’s the same people who are now making the argument you’re making above, who pushed for privatisation in the first place.

      • 0 avatar
        psarhjinian

        By all means, let’s not develop our own energy resources, let’s not use shale or tar sands or natural gas, or further develop the Marcellus and Bakken deposits.

        I have to ask you this: if it was your water being fouled, your property being devalued** and your chance at compensation effectively nullified, would you be so supportive of tailing ponds and hydro-fracking “for the greater good”?

        Really?

        ** admittedly, you live in Detroit, and in some areas property value has nowhere to go but up.

      • 0 avatar
        George B

        Anyone who flies into DFW International Airport gets to see what a shale gas field looks like.
        http://www.freese.com/our-work/engineering-support-development-gas-wells-dfw-airport
        Not much to see except for some pipes after the well is completed. If you hail a taxi at DFW, it’s likely the panther is fueled by natural gas. George Mitchell and his employees at Mitchell Energy worked for a couple decades reducing the cost of hydraulic fracturing so they could make money extracting natural gas from the Barnett Shale. 10 years ago Devon Energy bought his company for $3.5 billion, added their expertise in horizontal drilling, and helped start an energy revolution. Funny how environmentalists suddenly got worked up about shale gas when it started to seriously undercut the price and justification for green energy.

        It’s cool that Nissan is manufacturing an only somewhat too expensive electric car, but I would prefer that the federal government would quit trying to pick energy winners and losers. If they simply got out of the way, the market for energy and transportation will deal with the problem of high oil prices with some combination of conservation, increased production, and alternative energy. Look what happened to the demand for 4 cylinder cars when gasoline doubled in price.

    • 0 avatar
      golden2husky

      areader. Exactly. Except that I’m willing to bet that there is Democratic support for the ethanol boondoggle as well. The power of status quo can be very difficult to break. Especially when there are fat cats raking it in, they will do anything to protect their cash cow.

    • 0 avatar
      DC Bruce

      Jeez — If your goal is to reduce energy costs (which makes you an outlier among the greenies), that’s simple to do. We have abundant petroleum and natural gas supplies in North America. Develop them. Seven years ago, companies were talking about building CNG terminals in the U.S. to import LNG into the United States from places like Qatar. Now, the U.S. is going to use those terminals to export gas, because the supply situation is so changed.

    • 0 avatar
      GS650G

      Petroleum is not the Great Satan that must be eliminated at all costs. If China wants to invest in electric stuff let them, they have lots of money to do so. It won’t change the performance curves very much. It’s hard to beat a drop of oil in energy or usefulness.

      • 0 avatar
        VA Terrapin

        Why the ridiculous notion that we always look at this stuff beginning at 1964? Why not start at 1917 when we nationally mobilized a million people for war and had funded several belligerent countries loans that never got paid back? What about 1953, where during the height of McCarthyism we spent millions on anti-communist witch hunts and defense programs that are still hemoraging money? Or 1981, after Reagan, creator of deficit spending politely packaged as Voodoo Economics, took office? Or when W. took office thanks to illegal procedure of the Supreme Court and began the greatest gummint spending spree since King Midas had his gold allergy?

        Reagan and Dubya spending too much money doesn’t absolve Obama from spending too much money.

  • avatar
    amca

    Neidermeyer makes the salient point that the Leaf generally, and the Smyrna plant in particular, are designed to crush the competition with scale. Good strategy in a scale-driven business, of course.

    What occurs to me also is that while the Feds are financing this competition crusher, they are also financing the upstart competition that Nissan aims to crush: Fisker and Tesla.

    Great strategy there.

  • avatar
    niky

    The problem with leaving alternative energy development up to venture capitalists is that there’s no profit there. Not without a whole crapload of money’s worth of investment. No private investor is going to invest his own billions on a potential 1% profit after a few years and a possible rolling profit after probably another few years of zero to lean profits (if you’re lucky)… with the looming threat of a total investment loss if market demand doesn’t support the product.

    Without government loans, all you get are rebadges of woeful Chinese-built products (so woeful even the Chinese mainlanders don’t buy them) or little more than kit-cars in drag with kit-electrics.

    The sad part is when government loans actually go to those aforementioned Chinese-built and Kit-car-level electric start-ups. Because you know we’re never going to see that money again.

    • 0 avatar
      highdesertcat

      Any money the government invests in bail outs, hand outs, nationalization or green energy loan programs is money we’ll never see again.

      Ditto with the unemployment money Obama handed out to the 99rs. Most of them are still not working after 99 weeks of unemployment and are no longer drawing the freebie money so generously donated by the American tax payers..

      We could have saved ourselves a ton of money had Obama not been so eager to redistribute America’s wealth to the unemployed. The hand-out money made absolutely no difference in the plight of the unemployed.

      They’re still unemployed and they’re still going to lose everything they worked for. They’re still on welfare and still drawing food stamps. Nothing has changed, only delayed by 99 weeks.

      That’s why so many people who can, actually drop out of the work force, kick back and quit paying taxes. We have a constant influx of newly-retired people from the East coast moving to my neck of the woods.

      They’re sick of paying in to the system, funding all sorts of ill-advised money-losing ventures. So instead of paying in, they’re now taking out, even though most of them would do quite well without the government entitlements programs they are now using.

      • 0 avatar
        dolorean

        “Any money the government invests in bail outs, hand outs, nationalization or green energy loan programs is money we’ll never see again” Welcome Foxnews and friends and the lunatic fringe.

        “Ditto with the unemployment money Obama handed out to the 99rs. Most of them are still not working after 99 weeks of unemployment and are no longer drawing the freebie money so generously donated by the American tax payers..”

        Firstly, every reactionary like yourself seems to forget that the original bailout plan was initialized and half-paid out by W. $850 billon before Obama. But hey, that was for banks and corporations so they could fund their lobbying efforts to be able to fund politics publicly, which you apparently don’t care about. Second, whose this mysterious ‘they’ you refer to constantly? Are they the same ones who are protesting in every city but are called communist pinkos because they don’t dress up like Paul Revere and get inspired by the Koch brothers?

        “That’s why so many people who can, actually drop out of the work force, kick back and quit paying taxes. We have a constant influx of newly-retired people from the East coast moving to my neck of the woods.”

        Again with the ‘they’ manifested as ‘people’. Even the unemployed pay taxes. I would assume that the East coasters are moving to your neck of the woods because the job opportunities and housing market is better, but yeah, your theory of them picking up and moving solely to piss you off sounds plausible.

        The government has every right to invest as it sees fit in programs that will progress the country forward. NASA, DOT, the Air Force and unfortunately the National Security Agency brownshirts are all programs that the gummint have funded because it needed getting done.

      • 0 avatar
        chuckrs

        The government has every right to invest as it sees fit in programs that will progress the country forward. NASA, DOT, the Air Force and unfortunately the National Security Agency brownshirts are all programs that the gummint have funded because it needed getting done. I couldn’t let this go. In the US, the Federal government doesn’t have every right to invest as it sees fit. Its duties – not rights – are enumerated in the US Constitution, a document written to protect citizens from exactly this attitude. And BTW, every example you cite is tied into an enumerated Federal duty – defense – including the DOT as overseer of implementing The Defense Highway Act that created our deteriorating Interstate system. But I certainly wouldn’t mind seeing DOT revert to an agency, not a department.

      • 0 avatar
        dolorean

        Chuckrs will give you that. I used ‘invest’ as a verb as in putting front the money. Meant it to be ‘invest’ as in endowing with a quality; providing impetus to ideas and promoting it as policy to Congress, and the people, for voting.

      • 0 avatar
        highdesertcat

        dolorean, the people who have dropped out of the workforce and are moving to my area are all retirees, as in NYCPD cops retiring after 20 years, or NJ plumbers cashing out, or Philly doctors seeking the wide open spaces.

        One of them grows Christmas trees, another has a wrought-ironworks shop, another one makes wood ornaments and lawn furniture, another one rebuilds small-engines. lawn mowers and yard tools.

        My nearest neighbor who came from NJ is building his own house, from scratch. They wouldn’t come to this area for jobs because there aren’t any. Even McD is not hiring.

        Only the recipients and beneficiaries of the various bail outs, hand outs and nationalization think they were a good thing. Most of the people actually footing the bill don’t.

        Because you’re pro-bail out and pro-government investment in money losing opportunities I must conclude that you are some ultra-left liberal Democrat environmentalist nut currently on welfare and foodstamps.

        Not a ringing endorsement, bud. But there is room for everyone in the tent called America even though some real people choose to no longer contribute to the support and welfare of others.

        Why work if you can be on welfare or social security retirement where they pay you not to go to work and you don’t have to pay taxes? More and more people are beginning to realize that.

    • 0 avatar
      DC Bruce

      This is a problem? Could it be that a handful of government experts, and a few politicians in search of campaign contributions (all of whom will be using Other People’s Money) are actually smarter at this than a few hundred venture capitalists, who are using their own money?

      The real problem is that the VC model is based on high risk/high reward, but in the “green” area, the VC community in California (see Fisker, Tesla, Solyndra and hoards of others) have made a deal with the politicians to invest the taxpayer money, which greatly reduces the VCs’ risk. Meanwhile, if one of these projects does pan out, the VCs’ get all the reward . . . and the taxpayers just get their money back plus a single-digit return.

      Let’s take a simple example. Suppose the VCs put up $10M in equity capital for a new windmill venture, and the government kicks in with a $100M loan at, say, 6%. If the project succeeds, the taxpayers will get a 6% return on their investment, but the VC folks will get a whole number multiple (2x, 3x, etc.) return on their investment. However, if the project fails, the VC folks only lose $10M, and the taxpayers lose $100M.

      This is called crony capitalism . . . and the Democrats do it at least as well as the Republicans.

  • avatar
    Adamatari

    All of you who say “investing in technologies shouldn’t be the government’s job”… Really? Roads, the space industry (and its various spinoffs), nuclear tech, even oil drilling – it’s probably harder to name a major technology that doesn’t or didn’t have the fat wallet of government funding its development. Famously, even the internet originated in government-funded networks, first with DARPA and then with agencies such as the NSF providing support. Government still provides support for power plants and agriculture as well, and that money goes into “private” pockets. Medical businesses? Many of them make the majority of their money from Medicare.

    Libertarianism sounds great, but in reality our entire society is organized in a web where government and corporations (which are far from being benign entities themselves) form symbiotic parts. The very structure of corporations is determined by laws. This is also not at all new – I challenge you to find a society in history where government didn’t have a hand in these things. The European exploration and conquering of most of the rest of the world was paid for by a mix of government and private sponsorship – Columbus famously went to the King and Queen of Spain for the cash, and the British and Dutch East India Companies were very tightly tied to their governments.

    Frankly, we should be making more and bigger bets on renewable energy and tech like this instead of using it to fund military adventures. But of course, we have to defend “our” oil overseas!

    • 0 avatar
      poggi

      Whenever stories appear about these loans to startups, they invariably include mention that the money was “used to construct a building to house…”. My goodness. In my travels, I see millions of square feet of empty manufacturing space, some of it brand new and unused. Why would any company need to build more brick and mortar in this commercial real estate environment?

      • 0 avatar
        CJinSD

        They need to do something to hide their embezzling. When auditors say, ‘where did our half a billion dollars go?’ Obama’s big contributors can say, ‘look at the physical plant we constructed,’ hoping that the tens of millions they put in their pockets can be lost in the hundreds of millions they wasted on a state of the art unicorn fart factory.

    • 0 avatar
      DC Bruce

      You’re confusing basic research with applied manufacturing. The government’s role in basic research is a long and productive one. The problem is that basic research is not particularly salable to the public, doesn’t provide jobs on a mass scale and doesn’t provide an immediate, tangible return so it can’t be traded for campaign contributions. Therefore, it is not attractive to politicians. A government agency — DARPA (military, by the way) — developed the basic architecture of the Internet. But the physical construction of the communications network was not a government project, nor was its construction subsidized by the government in the way that, say, electric cars, is.

      AS far as analogies to 16th century Europe, a good case can be made that the accelerating pace of technological change that has raised the standard of living worldwide has been accompanied by an increasingly small role of government in these projects, in favor of a diversity of sources which, collectively, are smarter than the king or even 400 elected representatives.

  • avatar
    MrBostn

    IMO politicians (on both sides) are short sighted. They can only see up to the next election.

    Padding pensions/writing books for/about themselves/family/friends is all that politicians/gov’t employees care about. They rarely care about “us”.

    Also companies that deal directly with the government (at any level) are nearly as corrupt as the officials. Overcharging for products and services is the name of the game, and it hurts us all in the long run.

    I despise paying taxes due to the level of graft/corruption/padding of pensions. I want our fearful leaders to take a cut like many of us have for once in their lives.

  • avatar
    VanillaDude

    For the past 40 years, the Federal Government has been confusing the auto industry with demand of higher miles per gallon and safer cars.

    Now the Federal Government is telling us that they want the economy to grow, but to grow based on some environmental belief even if it leaves our economy worse off.

    The “experts” are the ones who are confused here.

    If we follow Washington’s recent demands we will spend too much for too little, all in the name of preventing some calamity that may or may not occur sometime in our lifetime, or possibly not.

    This is all utter nonsense.

    I don’t want my money leaving the US and into the wallets of Japanese auto makers, Finnish Fisker auto assemblers, or ending up in China thanks to an American company.

    I want my cars built here by American companies. Anything else is not going to help the US in the long run. I have had enough believing people repeatedly proven wrong in their economic theories of the benefits of globalization. It has been 20 years, and we are not better off with it.

    Just as we should not kill ourselves trying to make a green economy because of unproven fears, we should not continue to ship our jobs overseas trying to make a service economy. If we ever do get there, we will be so bad off it would not have been worth the attempt.

    This isn’t progress. I know it isn’t because I look around my country and see empty factories, bankruptsies, unemployed people, and a weak dollar. This isn’t progress.

  • avatar

    I’m just wondering why this relatively conservative project needed a government loan?

    I was hoping to think the Leaf was the only electric car that came more or less close to standing on its own two feet, and here Nissan is with the government’s big bucks.

    D

    • 0 avatar
      fvfvsix

      You see, it needed a government loan simply because the project was eligible for one. This is the reason governments should never be allowed to safeguard the solvency of companies making high-risk bets… The money inevitably flows to those most well-connected, always to the detriment of the taxpayer.

  • avatar
    DC Bruce

    Thanks for this informative story. I have always wondered why $7,000 of my tax dollars per unit sold should be handed to a person who buys a car made by a foreign company, in Japan. (I’m referring, of course, to the tax subsidy for the Nissan Leaf.)

    Now I have the answer: Because Nissan says it’s going to build these things in the United States as well as Japan.

    Sounds great . . . if anyone actually buys these things in significant numbers.

    What I would like to know more about is the financing structure for this whole enterprise — what kind of tax breaks did the state of Tennessee grant Nissan and, most importantly, if it all turns to shit, who is left holding the bag?

    • 0 avatar
      psarhjinian

      I have always wondered why $7,000 of my tax dollars per unit sold should be handed to a person who buys a car made by a foreign company, in Japan.

      Just to put it in perspective, your tax contribution to this is fractions of a penny. So is Solyndra, for that matter.

      “The little things add up” is nonsense. Serious, large-scale decisions need to be made about taxes, defense, medical care and social security. Talking about the this, the Volt or Solyndra is like complaining about the colour of your kitchen countertop after the roof is blown off. You have more pressing problems to deal with.

      What should be on the table:
      * Pulling troops out of the eastern hemisphere
      * Moving to single-payer healthcare or vouchers
      * Raising the retirement age to 70+
      * Implementing a national VAT
      * Raising or simplifying the tax code

      What is not worth the time to discuss
      * Solyndra
      * Stem-cell research funding
      * Anything on YouCut

      • 0 avatar
        chuckrs

        So when the canary in the mineshaft dies, its just a little thing that doesn’t add up? If Solyndra were an outlier in how the government spends money, it would be an outrage but not much of an issue. Unfortunately, this is just SOP for how the US government spends money.
        I have an idea. No money for Solyndras, no money for Leafs, no government employees working on those things at all. Instead, a smaller and braver government working on your list of important things.

        What should be on the table:
        * Pulling troops out of the eastern hemisphere – maybe, gonna happen in Iraq
        * Moving to single-payer healthcare or vouchers – how about moving to medical tort reform and streamlining FDA approval of drugs and equipment, How about fewer minders and more medical professionals – we’re short 600k nurses as the boomers move into the age requiring them. A BSN beats a BFA in bongodrumology any day.
        * Raising the retirement age to 70+ – no, but agreed on not being able to collect until 70, although you get to break the news to the construction workers with bad backs and blown out knees in their 50s
        * Implementing a national VAT – hell, no – our tax-crack addict government will just spend all that and more. We don’t need invisible taxes.
        * Raising or simplifying the tax code – simplify it and pare back government. As the Iron Lady said, sooner or later socialists run out of other peoples money to spend. (See the PIGS). I am in favor of adopting the Canadian solution – the NYT noted that Canada cut government spending by 20% between 1992 and 1997. From April until last week, private sector new weekly unemployment claims averaged 400k people. I’d like one of those weeks to be fully devoted to the Federal civilian workforce – that would be about a 12-15% RIF. It would need to be weighted top heavy – the GS15s do far more damage than the little GS-single digit schlubs.

      • 0 avatar
        VA Terrapin

        Over the past 3.5 years, Bush and Obama have spent over $1.5 trillion on stimulus packages and corporate bailouts. In addition, corporations were sitting on about $2 trillion in cash as of late last year. With conditions like these, you would think the economy would be booming, but economic growth is slow, unemployment is persistently high, there is a perverse combination of high commodity prices and pressures on businesses to reduce non-commodity prices, and Federal Government debt has grown massively. These conditions indicate that there’s too much debt.

        In any situation, but especially in a situation where debt is destroying the American economy, every penny spent by the Federal Government counts. Cut military spending, cut entitlements. But also cut “little things” like direct investment in green companies because a bunch of little things can add up to a lot.

        Anyone who thinks that the government should spend more to pump up the economy is deluded. This is exactly what Japan did during the 90s, and outside of high commodity prices, Japan’s result is just like what’s happening in America now.

  • avatar
    Conslaw

    Like it or not, with 7 billion people on this planet, we need to make the transition from what we want to what we need. We may all want 400 horsepower muscle cars, but if 7 billion of us, or even 3.5 billion of us, are driving those things around, not to mention their household equivalents, the planet is f—ed.

    That’s where industrial policy comes in. By developing alternative technologies before they are market driven, perhaps we can get to a sustainable equilibrium in time to prevent catastrophe. Government greasing the wheels of technological movement is nothing new. We did it for the railroads, the highways and the internet. Government money in defense and the space program paid for the R&D behind many of our most important inventions.

    Look at the development in China the past 25 years. China went from a country with almost no highways to one with a highway system that is extensive, and they did it while building, automated shipping ports, airports and high speed trains at the same time. At the industry level, China has come to dominate certain technologies largely through government backing and financing. Of course, it helps that they weren’t fighting two distracting foreign wars at the same time, but that’s for another discussion.

    • 0 avatar
      Toad

      China is a dictatorship with all the repression that comes with it. If the leadership decides to do something it gets done, and everything and everybody that gets in the way gets squashed. Under this system bad ideas don’t get vetted until it is too late; remember that millions died during Mao’s Great Leap Forward.

      As an example, now China is putting the brakes (literally and figuratively) on their high speed rail program because the construction, safety, and cost are turning out to be bad on every level. China is also putting roughly one coal fired power plant on line every week, which is hardly green friendly.

      If you want to cite an example of a bright, clean, shiny future, China is not a good example to use. Of course, all dictatorships seem to have their admirers.

  • avatar
    Conslaw

    China’s high-speed rail network has problems. Ours doesn’t exist. China is building lots of coal plants. There’s a very expensive one going up in Indiana that is massively over-budget and might not ever be completed.

    For all of China’s problem, I can’t see how that their economy or their energy policy would be better if they relied on a more pure form of capitalism.

    My use of China as an example was to the commentor who suggested that the most efficient way to move technology forward is to wait for private enterprise to do the work. If lack of government enabled technological development, then Somalia would be the next Silicon Valley.

  • avatar
    philadlj

    “quarter-million electric cars”

    If only Nissan were as proactive in developing an infrastructure in which to keep EVs running.

    Driving a Chevy Volt around NYC, they found the infrastructure “woefully inadequate”, and “would have been screwed” had they attempted a similar road test with the Leaf.

    The Nissan Leaf commercial that mocks the Volt for using gas shows a fairly smug-looking Leaf owner unplugging his Leaf from a public charging station in an anonymous Anywhere USA.

    Too bad such charging stations are nowhere to be found in most of the country.

    I like how Americans are being put to work building things…anything. But shouldn’t just as much if not more effort be put into having Americans build the systems that will maintain those things?

    If they don’t, shoulders across the nation will be littered with dead EVs, all waiting to be rescued by gas-powered tow trucks.

    • 0 avatar
      joeaverage

      There are these things in most homes called 220V outlets. I put in two when I bought a welding machine and a big air compressor for my car projects. There are also 120V outlets in homes. All you’ve got to do is plug an EV into one.

      My cars are typically parked from supper time until after breakfast. What infrastructure are you talking about?

      Assuming you don’t need to charge at work or the shopping center – we’re ready for EVs. The apartment dwellers and the curb parking folks are screwed of course but who wants to leave a $40K car along the curb? If I can afford a $40K car I’m going to buy a house with a driveway and a garage first. I’m also inclined to install a solar panel equipped roof first so my house is self-sufficient.

  • avatar
    vanpressburg

    I have been living in Canada for 10 years.
    I know about 30 green companies and ALL OF THEM(!!!) have more or less the same problem as Solyndra.
    Some of them function much more ridiculous than Solyndra, but Canadian media don’t write about it.
    Green socialism is a scam.
    Socialism is a pyramid game, a Ponzi swindle.
    I am writing a book about Canada.

  • avatar
    mikey

    @vanpressburg….Sooo you have been living in Canada for ten years. Okay,and your writing a book about us? Do you not like our, oh so pricey social safety net? Do you use it?

    If your not happy here,my friend, may I suggest something? It may require an airline ticket,or a moving truck.


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