Chinese solar manufacturers, heavily subsidized by the Chinese government though they are, are not completely immune from the laws of economics.  Faced with falling demand, falling prices, and growing inventories, they’re cutting production.  The follows on the heels of a number of high-profile failures of solar manufacturers here in the states.

True that the Chinese government, in its relentless mercantilism, was, and is, subsidizing solar heavily enough that three of their companies may survive the shakeout, whereas it’s possible none of ours will.  But in fact, they were just responding to a market that largely existed because of European and American solar subsidies in the first place.  The collapse of solar prices isn’t about new manufacturing techniques (yet), it’s about Europeans realizing that not only is the energy more than they can afford, so are the jobs, and they’re mostly going overseas, anyway.

The irony is that we’re still being told that we need to “invest” in solar because the Chinese are committed to it, and that must validate the idea.  It turns out that the Chinese were only invested in it because they figured to have us as their high-priced customers.   Not only were we funding both sides in the solar arms race, we were using the result to justify nonsense subsidies like Solyndra and LightSquared.  It’s like one of those experiments where the monkey reacts to itself in the mirror.  Only in this case, it was more like Lucy and Harpo pretending to fool each other.

Colorado, under former Governer Bill Ritter, began to pursue a “New Energy Economy,” chasing and subsidizing alternative energy companies, hoping to lure them to the state.  Ritter was elected in 2006, and the financial meltdown and succeeding recession created revenue shortfalls that limited the damage he could do.  The latest brouhaha over missing funds at the Governor’s Energy Office hasn’t done their cause any good, either.

The ideologues won’t be swayed, of course, but perhaps many of the more pragmatic politicians can be persuaded that these are bad bets for governments to be making.