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September 26th, 2011

There’s been a lot in the news lately about how much our federal government spends, and questions about whether  it spends it wisely.  Specifically, those who proclaim fiscal conservatism have recently called into question the benefit of using tax-payer money for environmental efforts, such as funding the EPA, providing grants and loan guarantees for clean energy projects, and supporting automakers that build more efficient vehicles.  (The recent media hype around the bankruptcy of solar panel-maker Solyndra certainly appears to lend weight to their argument, although that’s certainly more a case of corporate mismanagement rather than government/corporate cronyism as some claim.)

The logic goes that the government shouldn’t be in the business of picking winners and losers.  And that argument might make sense if the government only funded a single corporate entity for a single technology in any given sector.  But it doesn’t.  For example, in the automobile industry, the feds provide financial support to all of the domestic OEMs (and numerous players up and down the supply chaim) for projects related to electric-drive vehicles, efficient gasoline-burning vehicles, and lightweight technologies.  These projects aren’t picking winners, but are creating jobs as well as solutions that will promote energy security and environmental benefits for the long term.

So what happens when the Feds don’t step in?  Others do. And given the risk-averse mindset of investors in the current economy, the “others” are often from other places.  Like China. Where investors recently put up $125-million for lithium-ion battery maker Boston Power.  Who, as a result, decided to move its manufacturing facilities to China.

“American jobs” seems to be the economic topic most prevalent in the political discourse today.  And some of the battery makers who have received government funding have publicly stated that they would have built facilities overseas instead of the U.S. had they not received federal support.  Others – like Boston Power – obviously go where the money is.  And I don’t blame them.  But to say federal investment in new technologies doesn’t create jobs – a notion espoused by many of our lawmakers and pundits on the conservative side of the fence – is just nonsense.

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