Solyndra, California based solar panel company - Essay Example

It is one of the companies, given assistance by the government in order to counteract the Chinese efforts towards the manufacture of green technology. The company went bankrupt in august 2011. Cynics are using the bankruptcy of the company to prove that the country is not ready for solar energy. Before filing for bankruptcy, the company was given five hundred and thirty five million dollars from the economic stimulus package (Department of Energy). Due to its current status, the manufacturing company is up for sale.

The federal loans were part of the Obama administration stimulus program. The company used a new technology called copper indium gallium celenide (CIGS), in the manufacture of cylindrical panels, while competitors were using silicon. At first the company recorded high profits, but with plummet in silicon prices, and increase in prices of the materials they were using, started making losses. This situation was made worse by Chinese companies that produced solar panels at subsidized prices, due to low costs of production, thus flooding the market with cheaper products.

The costs of manufacturing solar panels using CIGS was expensive to maintain in the end, leading to increased losses. Consequently, the company shut down its operation, and all employees were laid off. There are several laws that apply in this situation. One of them is the Energy Policy Act of 2005. This bill was passed into law by congress and signed by President George. Bush in 2008. It is an attempt to curb energy problems by providing incentives and loans towards cleaner energy alternatives.

It has many provisions including subsidies for wind and solar energy production, to reduce environmental pollution. The loan provided by the federal government was guaranteed by the above act towards cleaner energy production mechanisms. The company later filed for bankruptcy two years after the bailout (Solyndra, 2011, 12). The managers of this company are likely to get millions of dollars in tax breaks, due to provisions in the above act. The question is whether the government ignored the red flags and funded a company which could be a fraud from the beginning.

The other is the American Recovery and Reinforcement Act of 2009. Sit was approved by congress and signed into law by President Obama in 2009. Its main aim is to save jobs including those in the “clean” energy industry. It draws from the Keynesian theory, which argues that during recession, the government should increase public spending, due to a decrease in private spending. Under the energy provision, the act allocated around eight and a half billion dollars for subsidies towards green energy solutions.

Milton Friendman was an American economist and a noble price winner who advocated for a free capitalist economy where the government has little or no control over the businesses. As such, there are no constraints. This is was an opposition to the existing Keynesian government policies (Friendman, 1980). He was also of the opinion that a person can do whatever they please as long as they do not break the law. He widely promoted the stockholder theory. Basically, this theory is for the opinion that a company’s main obligation is to its stakeholders.

As such a business or an organization should work towards maximized profits as long as they do not break the law. This is because the stakeholders have the most to lose from the bad decisions made by business managers. Because of this, a business will in the long run