As brutal as it can be, the system of profit and loss forces businesses to operate as efficiently as possible. Hardly the same can be said of the government, where workers rarely lose their jobs, and have their own economic troubles used as an excuse from politicians to simply give them more money. With incentives the way they are, it’s no surprise that the government is much less efficient than the market. In fact, Friedman’s Law, named for the late Nobel Prize-winning economist Milton Friedman, states that “it costs any government at least twice as much to do something as it costs anyone else.”
Things don’t get much better when it’s a private company getting the government dole either. By mid-2015, solar companies that received taxpayer money thanks to policies attributable to Barack H. Obama left taxpayers $2.2 billion in the red, which is actually less than the $4 billion loss initially projected (which must’ve been the first time the government conservatively budgeted for something).
Even as the Obama presidency has ended, the solar projects his administration funded continue to drop like flies.
According to the Daily Caller, the latest to go bankrupt is Suniva Inc., which received millions from the federal government to manufacture solar panels.
Suniva blamed its bankruptcy on competition from cheap Chinese-made solar panels, but the company received about $20 million in support from federal and state taxpayers, according to the Atlanta Journal-Constitution.
“For many years, Chinese manufacturers of solar cells have benefited from favorable, state-sponsored financing and lower labor costs, allowing them to flood the United States market for solar cells and modules with cheap imports,” David Baker, the company’s restructuring officer, said in a statement. “This has negatively impacted manufacturers based in the United States, such as Suniva.”
Suniva, founded in 2006, used federal and state subsidies to produce solar panels in the U.S., but the company struggled to compete with a flood of imported panels from China. Baker said Suniva’s lost $56.3 million since the end of 2014.
But Suniva got help from taxpayers. The company received $8.8 million from the federal government between 2010 and 2016 on top of up to $11 million in state incentives so they could manufacture more solar cells, the Journal-Constitution reported.
The company also received a $5.7 million federal tax credit in 2010 as part of the American Recovery and Reinvestment Act (a.k.a. the stimulus).
The help from taxpayers obviously wasn’t enough – and they had to compete with Chinese solar companies, which their government spends more subsidizing than we do. Let’s hope nobody thinks the logical thing to do next is try to out-subsidize our Chinese competitors.
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]