A solar energy company’s bankruptcy filing isn’t ordinarily the most tantalizing of headlines. When it follows a $535 million loan guarantee from the federal government, and prompts a congressional investigation, however, it’s hot news.
The Red and Blue teams, both eager to appear as allied with the taxpayer, hastily seized upon Solyndra’s bankruptcy and began their pathological blame-game exercise. Republicans, for their part, accuse the White House of nepotism since a billionaire private investor in Solyndra, George Kaiser, was a key fundraiser for US president Barack Obama’s 2008 campaign.
Now called on the carpet by the House Energy and Commerce Committee as expected, CNN reports, “Solyndra Chief Executive Brian Harrison and Chief Financial Officer Bill Stover will exercise their Fifth Amendment rights.” The Beltway political elite, of course, maintain that they’re going to get to the bottom of the company’s failure, ensuring the public of accountability if any impropriety is discovered.
Whether you consider the Solyndra story an out of the ordinary scandal or a predictable and characteristic feature of American political economy is telling. Because while this is the sort of thing that animates the most stale partisan reflexes and feigned outrage, it’s also just the kind of phenomenon that’s most fundamentally built into the existing structure.
These low-interest “sweetheart” loans, available only to the state’s appointed favorites, stand out as just one among many examples of the plenitude of cheap credit for connected corporations. Indeed, even where the federal government is not itself the owner of a particular loan, banks are far more likely to overextend in an environment like the present one, in which investments and loans are made with what is — at least for the banks themselves — free money.
Banks are not required, either by law or as they would be by the inducements of a genuine free market, to maintain any particular ratio between money in reserve and receipts given to depositors. In practice, commercial banks can loan the same money multiple times over, generating interest at no cost at all and acting as counterfeiters, though in perfect accord with the law.
Even more attenuated from the cues of the authentic, human marketplace, which is constantly striving in vain to reassert itself, is the state, issuing credit simply by increasing an indebtedness that is beyond any hope of being repaid. In the version of “American free enterprise” that prevails today, the federal government and the big banks, both inextricably part of the same all-embracing fraud, are able to — and do — “pick the winners.”
The result is an economic system where, instead of ensuing from the sum total of individuals’ freely made judgments, monumental investment decisions are decided by corporate and government bureaucracies far removed from the substance of those judgments.
Crisis naturally follows as money and resources amass in the inefficiencies and wastes of the corporate economy, siphoning lifeblood from the bit of economic life able to survive at the margins. The industries and firms that enjoy most-favored status fluctuate from time to time, with the ruling class always looking to corner inchoate technologies and knowledge.
The fundamental character of the system doesn’t change: Big business gets the “sweetheart” loan terms, while the average, working person must prostrate himself before privileged monopolists.
If Solyndra is a scandal, then so too are the state and its economic outcomes. A society without a state, one with a free market of voluntary exchange and free association, is the road away from the corruption and favoritism of politics; that road is a viable option if we choose to explore it.
Citations to this article:
- David D'Amato, Back Room Deals Revealed, Carroll County, Maryland Standard, 09/27/11