Solyndra is discussed on The Bob Zadek Show as an example of government subsidy to a favored firm. The company was a solar manufacturer that received federal loan guarantees and later went bankrupt. Guests and the host return to it across several episodes as a case study in cronyism, capital misallocation and the erosion of legal equality.
The loan guarantee and the bankruptcy
In the October 27, 2012 episode, guest Tom G. Palmer raised Solyndra while discussing the General Motors bailout. Palmer said the Solyndra case involved the president’s “good buddy,” who was his primary fundraiser, and that this person ended up getting over $600 million in loan guarantees. Palmer asked rhetorically whether that costs anything, answering that it does not — except when the company goes broke and bankrupt. He said the money was pushed through so that the vice president could be photographed cutting ribbons at the factory, despite people warning that the company did not look like it was going to survive. Palmer characterized the response as putting up the money anyway, and called the episode grotesque, a violation of fundamental property rights and of legal equality before the law, and cronyism that stinks The Morality of Capitalism (2012).
Bob Zadek framed the same episode around the erosion of the rule of law and property rights over the preceding four years, citing the GM bailout as an instance in which the government overrode creditors’ vested property rights to favor the UAW and other unions. He described this as a constant threat of cronyism and government violation of the rule of law. Palmer agreed, calling the General Motors case egregious corruption and authentic, real corruption, and said the same pattern appears in subtler forms in bailouts to companies cozy with the White House or with members of Congress, on both sides of the aisle The Morality of Capitalism (2012).
Solyndra as a subsidy that never sold a product
In the January 3, 2015 episode with Mike Munger, Solyndra served as the illustration of a firm that profited by partnering with government rather than by selling to customers. Munger said the way Solyndra made a lot of money was that Solyndra never sold a product and never sold solar panels, but went to hundreds of millions of dollars taken from taxpayers at gunpoint by the government. He argued this makes perfect sense: selling a product voluntarily requires making the buyer better off, whereas selling something for a government subsidy is easy because the government collects the money and sends the check Who Wants to Buy a Politician? With Mike Munger (2015).
Zadek drew the implication that government makes the decision instead of the marketplace, and that in many industries it is cheaper to spend at the government affairs level than on marketing and building a better product. Munger agreed and added that it is an arms race problem: if a competitor does it, one has to as well, which he said is what Microsoft found. The surrounding discussion concerned regulatory capture and campaign contributions, with Munger arguing that companies give money for access to members of Congress on committees with regulatory oversight over their activities, and that the amounts involved are too small to buy a senator Who Wants to Buy a Politician? With Mike Munger (2015).
The unpaid loan and the technology
In the February 14, 2019 episode, Solyndra was invoked in a discussion of the Green New Deal and Henry Hazlitt’s Economics in One Lesson. The host described the Green New Deal as the perfect illustration of Hazlitt’s rule of the seen and the unseen — that every policy has visible costs and benefits alongside unintended consequences and hidden costs. He said that if winners and losers are picked at the central level, the result will be dozens of Solyndras, describing Solyndra as the solar company that received what he recalled as a $500 million loan from the federal government that it could not pay back Not Enough Bricks (2019).
The host attributed the bankruptcy to the product: cylindrical solar panels that were too expensive to maintain and that did not generate as much electricity as a standard flat panel. He said the project looked great on paper — a cylindrical solar panel presented as innovation — and that government officials with no background in technology or engineering heard from some people that this was the future, did not do the full accounting, and ended up with a big unpaid loan. He warned that on steroids this would mean new debt for towers of power and solar concentrating fields in the middle of the desert, backed by government propaganda, producing an economy far less efficient and requiring far more fossil fuels to build and maintain than the free market would develop Not Enough Bricks (2019).
Guest Mark Joffe added that one reason Solyndra and some other companies had trouble was low-cost solar panels coming from China, and that the Trump administration had recently increased tariffs on those. He asked why, if solar energy is thought to be a solution, the United States would not take every discounted solar panel China wants to subsidize. Joffe was identified in the episode as a senior analyst at Reason who writes about public sector credit and transportation issues Not Enough Bricks (2019).
Subsidy across the energy sector
In the January 3, 2021 episode with Lisa Conyers, Solyndra was not named, but the discussion supplied the broader subsidy context in which the show places it. Zadek asked for the big picture on how much government spends subsidizing one segment of the energy sector and then another, when it could subsidize none and let the market dictate prices. Conyers said the energy industry is the second best-performing sector of the economy, with revenues of $238 billion in 2018, and is not an industry in need of support or at risk of going out of business. She said every kind of energy — oil, gas, coal, solar, wind — is subsidized, and that the coal industry, which was slowly dying, keeps getting propped up by the federal government, especially given President Trump’s stated love affair with coal. She said such industries should either function on their own or go away Welfare for the Rich? (2021).
Zadek added that beyond the wealth transfer, the real distortion is that subsidies prevent capital from finding its true investment home, because the true value of a commodity, product, good or service cannot be known if it or its competition is subsidized. The result, he said, is misallocation of capital and harm to national productivity Welfare for the Rich? (2021).
Mission creep and the corporation
In the February 7, 2021 episode with Ed Freeman, Zadek used Solyndra as the classic example of government’s poor record at earning a return on investment. Arguing against corporate charitable giving, he said government is not good at making a profit — Solyndra being the classic example — but may be good at running a court system and protecting person and property, because that is its core mission. He worried that urging corporations to take on responsibilities belonging to government or charities fuzzes core missions and makes performance hard to measure, and he called for specialization: corporations doing what they do best, governments doing what they do best, and nonprofits and charities doing what they do best Stakeholder Value: A New Story About Business (2021).
Freeman responded that corporations should do what they do best, which he described as creating value for customers, suppliers, employees, communities and the people with the money. He rejected the idea that the purpose of a company is to make as much money as possible, while granting that businesses have to make profits, and compared profits to red blood cells: necessary to live, but not the purpose of life. He said entrepreneurs do not start businesses just to make money, and that the stakeholder idea shows how purpose and profit, stakeholders and shareholders, ethics and business are connected Stakeholder Value: A New Story About Business (2021).
Across episodes
Solyndra is treated consistently across the episodes rather than developing: Palmer in 2012 supplies the loan guarantee and the bankruptcy, Munger in 2015 supplies the claim that the company never sold a product, the 2019 discussion supplies the product failure and the unpaid loan, and the 2021 episodes extend the same subsidy critique to the energy sector generally and to corporate mission creep. The later treatments add detail and analogy — the Green New Deal, Chinese panels, energy-sector subsidies, stakeholder theory — but the underlying argument that government picked a loser and stuck taxpayers with the bill is unchanged, and no guest in the excerpts disputes it.
What the sources do not cover
The excerpts do not state the amount of the loan guarantee consistently: Palmer says over $600 million, the 2019 host recalls $500 million, and Munger says hundreds of millions. The sources do not identify the president’s fundraiser by name, do not give Solyndra’s founding date or location, and do not name the loan guarantee program or the legislation authorizing it. They also do not describe the bankruptcy proceedings, the treatment of Solyndra’s creditors, or any court ruling in the matter.