Wednesday, November 16, 2011

Anatomy of Political Distribution: Solyndra Scandal

Below is an example of the anatomy of political distribution

From the Washington Post (hat tip Professor William Anderson)

The Obama administration urged officers of the struggling solar company Solyndra to postpone announcing planned layoffs until after the November 2010 midterm elections, newly released e-mails show.

Solyndra, the now-shuttered California company, had been a poster child of President Obama’s initiative to invest in clean energies and received the administration’s first energy loan of $535 million. But a year ago, in October 2010, the solar panel manufacturer was quickly running out of money and had warned the Energy Department it would need emergency cash to avoid having to shut down.

The natural drive in politics has been to either generate votes or to expand/maintain political control over a particular turf. And political mandates of picking winners and losers results to conflict of interests.

The above article shows all these at work: conflict of interest, policy failure and the desire to win votes by shielding the negative effects of applied policies

Yet in politics, since there is no economic calculation involved or no discipline from profit or losses, government failures hardly gets the retribution or reckoning required which largely makes policymakers unaccountable for their actions and incentivizes them to keep repeating similar mistakes.

The net effect is negative externality or that society suffers from these.

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