Picking winners is hard

Cutting ribbons has its appeals. It also has its pitfalls.

The sorry case of thin-film solar manufacturer Solyndra going bankrupt despite receiving a half-billion dollar loan guarantee from the government is about as unfortunate as it gets.

One Mr. Jon Stewart, slightly sanitized:

Solyndra's failure doesn't discredit the entire idea of a green energy economy, but:

If you spoke about the growing importance of air travel in front of the Hindenburg, you'd be right about the future of air travel, but you'd still be on fire.

Ironically, this mess is also a sign of a relatively strong solar industry. Solyndra tried to compete against much cheaper photo-voltaic technologies and failed.

Equally ironic, despite Solyndra's failure, solar energy in California represents one of the best case studies to show how government subsidies can play an enormously positive role.

We are dealing with two fundamental problems: too much of a bad thing (pollution), and too little of a good thing (innovation). To get rid of the bad, have everyone pay the full socialized cost of the damage. To encourage the good, subsidize it.

The California Solar Initiative subsidizes the deployment of solar panels on people's roofs. It's not often that a team of academics looks at a government policy and concludes: "nailed it" (or whatever words academics would typically use in that case in a peer-reviewed journal).