Opinion

Know when to fold ’em

We already knew that government is a crappy mom, rule-giver, soothsayer and job-creator. So it was refreshing to hear that one of the Obama administration’s former top lieutenants, Larry Summers, admitted in a blunt e-mail that “Gov is a crappy vc,” or venture capitalist.

What is disturbing about the bankruptcy of Solyndra, the California solar-panel manufacturer to which the government gave a $535 million loan guarantee, is not that Solyndra was a disaster, or that it blew so much money building itself, on one of the most expensive swatches of land in the universe — an area where no factory has been built in at least a decade — a tech temple whose conference-room walls magically changed colors, whose spa-like showers featured LED temperature readouts and whose robots hummed Disney tunes.

The real mistake was funding Solyndra, and companies like it, in the first place.

Oh, but the vetting process was “unusually rigorous,” in the solemn words of The New Yorker’s James Surowiecki, because it involved soliciting opinions from “3,000 outside experts.” Wow, 3,000 experts! How dazzling it must have been to interact with so many Ph.Ds and policy wonks who were . . . totally wrong. (Did any of them later have to return their “expert” badges? Or is anyone who is cool enough to be consulted by the Obamanoids automatically an expert on everything forever, regardless of results?)

Let’s apply the “3,000 outside experts” theory to recent history. Subprime mortgages? Multitudes of financial experts thought they were tip-top investments. Vietnam? The best and the brightest thought that was a good idea. It would be cruel to start a list of all the experts who thought the Obama administration was going to be a smashing success that would fundamentally transform the country.

Here’s an expert the White House didn’t listen to: “A number of us are concerned that the president is visiting Solyndra,” Democratic California venture capitalist Steve Westly wrote the White House on May 24, 2010. “Many of us believe the company’s cost structure will make it difficult for them to survive.”

Obama ignored him. Aware that the president was steamrolling ahead with a planned visit to his left coast eco-Potemkin Village to brag about the Solyndra loan, one waggish OMB official wrote — four days before the visit — “Hope it doesn’t default before then.”

Venture capital firms are gamblers. They expect that a third or more of their investments will go bad, so because there haven’t been many such failures (yet) with the Department of Energy’s loan guarantees, maybe we should think of DOE as a really successful VC firm. Obama said the goal of the program was to “take bets,” by which he meant, unless he has become a bookie, “make bets.”

But he was making those bets with your money, in a game that was so clearly fixed that the sharps were walking away. If even VC firms that gamble like retirees playing the slots at Circus Circus wouldn’t give Solyndra the money, shouldn’t that have made the government extra wary? (Wary enough to hire a crucial 3,001st expert, maybe?)

Moreover, would any VC firm guarantee a loan if the maximum potential upside was that it would get the money back (plus a small amount of interest)? VCs can afford to lose money here and there because when they win, they win big. Their money buys them an equity position that might be worth 100 or 1,000 times the initial investment.

Still, clean-energy firms are different. Special. Solar-panels equal lots of cool futuristic jobs for Americans, won’t they?

Not really. They’ll be built by Chinese and installed by Mexicans. And in America, every industry is special. Farms receive subsidies: They’re essential to the American character. President Obama described GM as “not just any company” as he threw away over $10 billion in public money to enhance his electoral prospects in Michigan. Any huge shopping center or football stadium that promises to “create jobs” gets a handout. Of course any unionized industry is special because we have to protect those high-paying middle-class jobs. Even Jack in the Box is special, doubly so: It profits from both agriculture subsidies and a waiver from ObamaCare.

We learned this week that, even as Solyndra’s accountants were warning that the company was in full meltdown, the Department of Energy was rushing to shovel another $469 million into the solar funding furnace. The resignation of the titular head of the loan program, Jonathan Silver, became public shortly thereafter.

But it’s evident that the real responsibility for wasting our money on bad bets falls to President Obama himself, who continues to defend the loan program to this day. Shouldn’t he be demanding his own resignation?