Saturday, September 3, 2011

This just in: Social-engineering fails again

I am sure you have all heard that Solyndra has shut its doors. Companies go bankrupt all the time, but what makes this one different is that this company was given a $535 million loan from the federal government (read: taxpayers) to help them, ahem, expand their operation just last year. The reason the company closed its doors? Industry insider, Peter Lynch had this to say to ABC news (emphasis mine):

"Here's the bottom line," Lynch said. "It costs them $6 to make a unit. They're selling it for $3. In order to be competitive today, they have to sell it for between $1.5 and $2. That is not a viable business plan."
Okay, I'm not the sharpest crayon in the box, but I do know that if it cost you more to make your product than you can sell it for the company will not be around very long. But the broader point is that there had to be a cost accountant on staff that would point out this slight problem, right? I own a small business and am very conscious of costs vs. revenue. Call me old fashioned, but that's just the way I was taught in business school. Make your product for X, apply a reasonable mark-up and see what the market says. If enough consumers find my product compelling enough then we got ourselves a business otherwise - back to McDonald's.

Solydra could be called many things, but a viable business is certainly not one of them, at least not in the old-school sense. No, Solydra is apparently following the new and improved the business model brought to you by the same knuckleheads who bought the taxpayers a automobile company. And, in this case, just like the auto industry, the administration has an idea of just how the world should be molded. So rather than allowing the markets to find equilibrium they just gotta muck wid it! And why? Because it's just in their nature. Honestly, I don't think they can help themselves. They live in a world where all the country's energy needs are like food in the Garden of Eden, where all we have to do is sprinkle a bit of pixie dust around that will magically allow you to harness the wind and sun and live happily ever after.

We now know that this is all bull-$#%^ of course. If these "green' energy sources were ready for prime time, some clever entrepreneur would have already brought it to market without the aid of the federal government. The truth is these 'green' sources of energy are nothing more than the play things of the liberal elites and always will be.

So why flush over a half a billion dollars down the drain and not think anything of it? I can think of a few reasons. The first is that liberals take satisfaction in their efforts regardless of the result of their attempts to manipulate the market. In their minds - 'They tried' - is all that really matters to them and they pat themselves on the back regardless of the disastrous unintended consequences left in their wake. Second, the $535 million bucks they flushed they see as their money and not taxpayers, so no big deal.

Lastly the way Obama and the autocrats around him approach the business environment is deeply flawed (newsflash I know). It is painfully evident that none of these folks have never had to sign the front of a paycheck. They have never run a business, and therefore do not understand that throwing money at a particular pet project does not insure success. Do you think anyone in the White House actually looked at the Solyndra's business plan? Probably not, and even if they did would they even understand what they were looking at?

Eventually, somebody has to buy the (unsubsidized) product for the business to work, otherwise it's just another form of welfare.

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