The Government's record as an "investor" in new technologies

Mr. Jim McTague in his article "Our tough-luck President" (Barron's July 12, 2010, pg. 24) takes a few examples of real tough-luck to make the point that the Obama Administration is wasting tax payers money. This is a serious topic which deserves a balanced treatment.

The Barron's article gives as an example the decision of the Administration to give (through DOE) a $535-million loan guarantee to Solyndra Corp., a new start-up working to improve solar (PV) systems for household applications. Apparently, Solyndra is facing financial problems; hence, the conclusion that Solyndra is "a king-size political embarrassment"!!!

But is it? There is a long history of technological development which proves clearly that both the public and private sectors are needed to bring about technological innovation. The public sector alone should not try to pick winners, but the private sector is not likely to invest in early stage technologies, which are perceived to be and they are risky. Both sectors are needed. The critical element of success is how the two sectors are involved. DOE's Clean Coal Technology (CCT) program in the 1990s was (by most standards) a very successful program.

Maybe The Administration rushed to get money to whoever had a promising idea and could put the money to work quickly. But it should be kept in mind that even private investments do not ensure 100% success. In fact, all the Venture Capital (VC) firms I know are very happy if 2 out of the 10 firms they invest in are successful. At least 4-5 out of the 10 do not make it to IPO stage and often go bankrupt. Why judge the public sector by different standards?