Because it does such a poor job of explaining what a “loan guarantee” is, and how much the government really might spend, that $640,000 number is also misleading. All $38.6 billion of those loans would have to go bad for it to cost $640,000 per job created (assuming the 60,000 number). But the government expects to actually “spend” $2.5 billion in losses on the program. Maybe it will end up being more, maybe less. But it won’t be anywhere near $38.6 billion.

And the idea behind the program is not just to create jobs and help American companies, but to lower the price for renewable energy so we can use more of it. Electric-car battery prices are going down, as the Times points out. This is not a bad thing. It’s the whole point. Batteries are the biggest reason why electric cars cost more than internal-combustion ones. Solyndra itself was brought down largely by the plunge in solar-panel prices.

Another thing that I haven’t seen in many press reports, though the Post briefly touches on it: How likely is it that the government will actually lose the entire $535 million it guaranteed for Solyndra? The government has priority on payback according to this Wall Street Journal story. Does the company has some assets worth liquidating or might another firm swoop in and pay something for it? Bankruptcy doesn’t wipe a company’s value out, which is a popular misconception.

Then there’s the idea that the failure of one company proves that the government can’t allocate capital—as if every place it puts money goes bust. That conspicuously neglects the success of the government’s capital-allocation to General Motors and Chrysler.

More problematically, it assumes by implication that the private sector is always great at allocating capital, despite the fact that we’re living through a depression caused by the catastrophic failure of markets during the last decade.

Remember how the government had to allocate capital to folks like Goldman Sachs to save us from an utter meltdown caused by the fact that folks like Goldman Sachs had done such a bad job allocating capital?

*I wrote this thought on Twitter after I published this and thought it made sense to add it here.


Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.