In the great rush to politicize the bankruptcy of Solyndra, potentially valuable lessons are being ignored. I’ve argued before (investing the wrong way, VCs and Green Tech, and More VCs in Green Tech) about the folly of public investing in Solyndra and similar new ventures, but now fear the scramble of politics will wash away valuable lessons in pursuing innovations in clean technology.
We’ve been here before, so pick your scandal. The way Solyndra’s bankruptcy is playing out reminds me of the Lincoln Savings & Loan scandal [http://en.wikipedia.org/wiki/Keating_Five] of the late 1980’s, when five United States Senators intervened on behalf of Charles H. Keating, Jr., Lincoln’s chairman, a prominent donor, and the target of a regulatory investigation. The investigation was stopped. Only when Lincoln Savings and Loan collapsed in 1989, costing taxpayers over $3 billion, did we express shock and disgust over Keating’s undue influence.
Keating was less naïve, later telling reporters:
“One question, among many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause. I want to say in the most forceful way I can: I certainly hope so.”
The other reason Solyndra’s fallout reminds me of the Lincoln Savings & Loan scandal is that, in the rush for political advantage, we will likely miss more important and persistent issues.
The political maelstrom that followed Lincoln’s failure drew attention from the underlying causes of Lincoln’s collapse: the deregulation of the banking industry, which allowed Savings & Loan banks to make high-risk investments with their depositors’ money, and the federal backing of home mortgages, which fueled the (over)construction of new homes and resulting collapse in mortgage-backed securities. That collapse cost taxpayers roughly $500 billion in the late 1980’s but didn’t change the underlying problems. Didn’t that come back to bite us.
Only the young have any right to be shocked by the discovery that, with Solyndra, corporations have again attempted to unduly influence policy makers. In fact, Greentech Media has posted a nice chart to put the Solyndra “boondoggle” in perspective to recent military spending “boondoggles.”
It would be a shame if all we learned from Solyndra was what Charles Keating already told us: that private financial support influences politicians. Beyond the political value of our shock and disgust, there is much to learn in Solyndra’s case.
When all the dust settles, we are still left with the original challenge of how to best pursue innovative solutions the persistent issues of climate change and energy security. Failure is endemic to innovation. It’s how we deal with that failure that determines our success. What lessons can we learn about the pitfalls, and underlying structural weakness, in public efforts to foster clean technology revolutions?