President Obama pushes the "green jobs" idea hard in his weekly address, delivered from Orion Energy Systems, which the president touted as "an innovative company" and "a thriving enterprise" that is an example of "how America will win the future."
The stock chart for Orion tells a different story — the company's shares, which traded around $19 at the end of 2007, are now in the $4 range, and the company is cash-flow negative. The company's largest institutional shareholder is reportedly — wait for it — General Electric, which has been a similar disappointment for shareholders under CEO Jeffrey Immelt, chairman of President Obama's "Council on Jobs and Competitiveness."
President Obama makes it sound like Orion, in Manitowoc, Wisconsin, is some sort of example of heartland virtue rather than yet another bad investment by GE. And who knows, by the time Mr. Obama gets done lavishing subsidies on the company, its shareholders may yet profit. Said the president:
as we can see here in Manitowoc, we need to ensure that we are promoting innovation – especially in promising areas like clean energy. This is going to be key to growing our economy and helping businesses create jobs. Orion, for example, was able to open with the help of small business loans and incentives that are creating demand for clean energy technologies like wind power and solar panels.
That's why I've proposed a bigger tax credit for the research that companies do. And to give these companies the certainty of knowing there will be a market for what they sell, I've set this goal for America: by 2035, 80 percent of electricity should come from clean energy.
President Carter thought clean energy was promising back when there were long lines at gas stations in the 1970s. If someone had told the president then that clean energy would be less promising than investing in Internet search or social media companies, the president would probably have looked at that person strangely, if the president could even understand what the person was talking about. That's one of the things about investing — what might look like a "promising area" to one person might turn out not to be so, while areas that might not seem promising can turn out to be exceedingly so. The best way to sort out what's promising is not for the president to decide it but to let tens of millions of individuals allocate their own capital — not capital taken from taxpayers by force, but private capital.
As for "the certainty of knowing there will be a market for what they sell," that's just a recipe for mediocrity. Why should a company make its product any good if the government is going to force people to buy it no matter what it costs and no matter whether it solves anyone's problems better than existing solutions? When Apple launched the iPod, there was no government program offering the certainty than by 2005, 80% of music should come from portable MP3 players. When Ford launched the Model T, there was no government program offering the certainty that by some date certain, 80% of the transportation should be by horseless carriage.
The level of failure here by the Obama administration is pretty significant. Remember, this was the week of the State of the Union address. Some senior White House aide probably said to an underling at some point, "find me some clean energy company in a non-sure-thing state the president needs to carry for re-election in 2012 that we can visit to highlight the clean energy message." The best they can come up with is a firm part-owned by GE that's lost more than three quarters of its value over the past few years? And the best the president can do is show up there and promise to tax the rest of us to subsidize these guys ("bigger tax credit") and then force us to buy what they are selling? You almost have to laugh at it. This is "how America will win the future"?
