By HOPPY KERCHEVAL
MORGANTOWN -- WVU economics professor Russell Sobel, in his book "Unleashing Capitalism," wrote that capitalism succeeds because it keeps the economy focused on the highest-value targets in the marketplace.
"One important reason the economic system of capitalism is especially good at generating prosperity is because it does a good job at chasing this ever-moving target through the continuous process of entrepreneurship and discovery," Sobel wrote.
It's that constant and objective process that weeds out the least productive functions in an economy and directs resources to where they are needed most.
Governments, however, are forever fiddling with the process.
Politicians take it upon themselves to redirect scarce resources (taxpayer dollars) to selected businesses, industries and entrepreneurs through grants, loans and tax breaks.
Those decisions are typically based on politics and not economics.
For example, take the Obama Administration's $500 million loan to Solyndra, a solar panel manufacturing company in Silicon Valley.
Solyndra was described as a leading example of the president's initiative to develop clean energy technologies. There were plenty of smiles and optimistic oration when Vice President Joe Biden attended the September 2009 groundbreaking for the Solyndra factory.
But now the company is out of business, the taxpayers are stuck with the bill, and a Washington Post investigation shows the White House pushed through the loan from the Energy Department despite serious questions about the merit of the investment.
According to the Post, White House e-mails show "White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan and noting a looming press event at which they planned to announce the deal.
"In response, OMB officials expressed concern that they were being rushed to approve the company's project without adequate time to assess the risk to taxpayers."
There were other warning signs that were apparently overlooked by the administration.
The Post says emails within the Energy Department said that a "credit-rating agency predicted that the project would run out of cash in September 2011.
"Solyndra shut its doors on the final day of August."
If President Obama pushed money toward a pet project, and then orchestrated a media event to trumpet the benefits, he's following the grand tradition of politicians — Republicans and Democrats — who have done the same.
Ribbon cuttings with hardhats and shovels are a mainstay for politicians.
Rarely does anybody follow up to see if the projects ever amount to anything.
Solyndra was an exception because it was such a high-profile investment.
The tragedy is that economic experiments like Solyndra are done with taxpayer dollars, money taken from the private sector, where it is used more efficiently, and redirected by politicians in ways that suit their needs.
Moreover, politicians are woefully inept at outsmarting the market.
Does any administration really know whether a solar-panel company in California is going to make it?
Or whether it should make it?
What if Solyndra had a bad business plan, no market for its product, or just wasn't run well?
Obviously, the company had issues, and they were overlooked by politicians anxious for a photo-op and a feel-good story about green energy.
And that cost taxpayers $537 million dollars.
Kercheval is host of TalkLine, broadcast by the MetroNews Statewide Radio Network from 10 a.m. to noon Monday through Friday.
