Since President Barack Obama took office four years ago, he attempted to stimulate the economy and one of his measures was backing green energy corporations. One of the companies became a regular household name because of its failure and enormous $570 million government investment: Solyndra.
The Heritage Institute published an in-depth report over the summer that listed the top energy companies that have since gone bankrupt, even though they were heavily supported by the federal, state and/or local governments.
Last week, however, the right-wing think tank updated its report and it shot up from 12 to 19. In total, United States taxpayers will be paying $2.6 billion (conservative estimate) because the federal government chose to support certain green companies. The amount of money was distributed through various means, such as loans, tax credits, grants, loan guarantees and others.
Opponents of public subsidies argue that financial assistance, incentives and “artificially support politically preferred” businesses is bad policy because it is risking taxpayer dollars to private companies. The group also adds that successful private companies should not be receiving subsidies because it is doing well enough on its own that it doesn’t need government aid.
“While government intervention in the private economy didn’t start and will likely not stop with President Obama, the growing list of failed companies demonstrates the futility of central economic planning,” wrote Rachel Slobodien.
Here is the list of the top 19 bankrupt companies and how much they cost the taxpayer:
– Abound Solar: $790.3 million
– Solyndra: $570 million
– A123 Systems: $377.1 million
– Ener1: $182.8 million
– Range Fuels: $162.3 million
– Azure Dynamics: $119.1 million
– Energy Conversion Devices: $110.3 million
– Evergreen Solar: $84.9 million
– Beacon Power: $77.4 million
– Raser Technologies: $33 million
– Nordic Windpower: $24.6 million
– SpectraWatt: $20.5 million
– Konarka Technologies: $13.6 million
– Satcon Technology: $17 million
– Olsen’s Crop Service and Olsen’s Mills Acquisition: $10.8 million
– Stirling Energy Systems: $10.5 million
– Thompson River Power: $6.5 million
– Cardinal Fasteners and Specialty: $480,000
– Mountain Pizza: $424,000
As Michigan Capitol Confidential noted Monday, the state of Michigan was home to four out of the eight largest government-backed green energy companies. Democratic Governor Jennifer Granholm promoted green energy and promised that it would improve the state’s fledgling economy, but it is now the epicenter for the most government-subsidized failures.
A123 Systems, Azure Dynamics, United Solar Ovonics and Evergreen Solar are the companies with locations in Michigan. In total, the companies were supposed to create a total of 1,685 jobs by the year 2014, but most of the aforementioned have liquidated or sold off its assets – only seven jobs remain at A123 Systems.
It isn’t just green energy companies that receive funding assistance in the United States. One example in Florida is Digital Domain Media Group Inc., a taxpayer-subsidized film studio. The business was given $135 million from 2009 to 2012 to spend on real estate and a lavish headquarters. The exorbitant subsidy wasn’t enough for the company, which later closed its doors.
Furthermore, it’s not only the U.S. subsidizing green energy and other industries. For the past decade, several European governments have doled out a total $130 billion, which mostly has been distributed to solar power companies.
In the province of Ontario, exiting Premier Dalton McGuinty gave Samsung a $437 million payment, $263 million grant to a French video game developer and a $10,000 rebate to subsidize General Motors’ Chevy Volt electric car (estimates suggest this could cost the taxpayers $3.5 billion to implement).
Gary North, an adjunct scholar of the Mises Institute, wrote in 2006 that businesses must reject subsidies very early on because the “grand illusion” will eventually spiral out of control and “the longer a violation of principle continues, the more difficult the withdrawal process becomes.”
Nobel laureate economist Milton Friedman stated repeatedly throughout his distinguished career that a man spending someone else’s money cannot do so as carefully as a man spending his own money.
“When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it. When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on. When a man spends someone else’s money to buy something for himself, he is very careful about what he buys, but doesn’t care at all how much he spends. And when a man spends someone else’s money on someone else, he doesn’t care how much he spends or what he spends it on. And that’s government for you.”
The Serbian government announced in late September that it is cutting its subsidies by 20 percent from 32 billion dinars ($305 million) to 26 billion dinars ($290.9 million) in order to pay pensions, finance the budget deficit and keep on servicing foreign creditors.