Solyndra, Arizona-Style

Two years ago, when the Legislature considered reining in handouts to the solar industry by the Arizona Corporation Commission, the hearing room was packed with lobbyists opposing the move. Solar subsidies, they argued, were the cornerstone of the state’s job creation program.

Their poster child was Suntech, a large Chinese firm whose Goodyear solar panel factory was hailed as proof that government economic planning works. Indeed, when Suntech announced its plant in 2010, Gov. Jan Brewer proclaimed it the result of “the right incentive program to make business sense.”

Three years later, Suntech is shuttering the Goodyear plant and laying off its 43 remaining workers. But not before it pocketed $1.5 million in tax breaks from the state, $2.1 million from the federal government, and $500,000 in job training from the city. Goodyear also waived its plan review requirements and permit fees. Not for all firms, mind you, just for this one particular Chinese company with its grandiose promises.

People with a basic grasp of economics could have predicted the sad end to this story. When government subsidizes something, sure enough we get more of it. In this instance, we have a glut of solar companies competing to offer a product that is still not yet economically sustainable. At some point the charade ends and the taxpayers end up picking up the tab.

How about, instead, we create an economic climate characterized by low taxes and mild regulations that fosters innovative ideas of all kinds? When will government figure out that the market is far better equipped to determine winners and losers than a bunch of bureaucrats?

Apparently not soon enough. Arizona House Speaker Andy Tobin is sponsoring a massive new corporate subsidy scheme, H.B. 2646, that would allow insurance companies to divert tax money to a fund in which the state “invests” directly in chosen companies. Given the state’s dismal track record in predicting companies that will actually succeed, this seems a good time to hold tightly to our wallets.

Learn more:

Goldwater Institute: Dawn of a New Day at the Corporation Commission?

Goldwater Institute: Put Energy Policymaking Decisions Back Where They Belong