Biden Picking the Right Winners?

“Government shouldn’t pick winners” is the constant refrain from the “free market” crowd. Except when they want government to pick their chosen winners.

“President Trump has ordered Energy Secretary Rick Perry to ‘prepare immediate steps’ to stop the closing of unprofitable coal and nuclear plants around the country” was the lede of a June 1, 2018, New York Times article. The article went on to indicate how this might be done.

“… the Department of Energy would order grid operators to buy electricity from struggling coal and nuclear plants for two years, using emergency authority that is normally reserved for exceptional crises like natural disasters.”

In other words, Trump ordered the public to subsidize unprofitable coal and nuclear plants. Picking losers to be winners.

In fact, our entire transportation and energy system was shaped by the government “picking winners.” Mostly, those winners were chosen based on crony capitalism: Those who made the “investment” in campaign contributions, got the government to invest in their pick.

The railroad expansion of the West was built by government picking winners, through the Pacific Railway Act of 1862. In the 20th century, the government abandoned the railroads in favor of subsidies for private motor vehicles on a far larger scale. Those subsidies run to trillions of dollars a year, as I have written about before.

A wide range of such subsidies led us to the Climate Crisis we are in now.

What is less known is how President Biden is finally picking the right winners, based on good public policy, rather than based on corruption. As reported in a May 11, 2023, New York Times article.

As is well known, Biden’s “Inflation Reduction Act” (IRA) was largely about investing in the transportation and energy of the future. An important part of this is the Department of Energy’s Loan Programs Office.

Unlike Trump’s pick of the utterly unqualified Texas fossil fuel crony Rick Perry, Biden picked a successful sustainable energy entrepreneur to run this vital office. His name is Jigar Shah and he founded SunEdison, which innovatively financed solar arrays – making solar affordable without government subsidies.

The “free market” hypocrites like to point out the failure of a previous Loan Programs Office pick: Solyndra. There are many answers to this absurd point.

Notably, the same round of funding that went to Solyndra also went to help Tesla get started. It also bankrolled many early large wind and solar projects that were successful.

Secondly, Solyndra did not fail because of bad management or bad technology. It failed because other solar technology improved so rapidly that it was left behind. That is the nature of investing, as any investor knows. No sensible investor would put all of their money into one business. Instead, investors know to spread their investing among multiple competing businesses in a chosen sector.

Investors know that most startups fail. If just one investment succeeds in a big way, it more than makes up for the failed investments.

Shah is using his technical and investing skill to “back promising clean energy deals that can’t get conventional financing because commercial lenders lack the capability to vet them – scientific expertise that resides at the Department of Energy.” (Quoting the May NY Times article).

As explained by one loan recipient (Rob Hanson of Monolith), “The scrutiny you go through can be pretty intense – it takes years, they bring in teams to go over every little detail of our technology, our business plans. But at the end, you don’t just get a loan, you get validation from one of the most sophisticated technical organizations in the world, which is incredibly valuable.”

Picking winners is exactly what is needed to invest in the transportation and energy of the future. Winners that can lead us out of the Climate Crisis and toward economic success for our country.

I was not a huge fan of Biden when he ran in 2020. But I am now. His decades of experience down in the trenches of government are paying off in a big way. Bringing jobs of the future to poor Red State areas that were left behind…when our government picked the wrong winners, subsidizing fossil fuels.

Picking the right winners is a win-win-win for the planet and for the people of both Red and Blue states. We’ve become so accustomed to protesting bad actors and bad policy. Perhaps we need to recognize and reward Biden’s visionary actions for our future?