The main reason that governments shouldn't invest is because they are utterly shit at picking winners—after all, their investments are made with magic money,
As another glaring example of just how utterly useless the state is at working out good investments, it's worth remembering that Our New Coalition Overlords™ are merrily spunking our cash up the wall on wind farms.
It's also worth reminding ourselves that, owing to the vagaries of the wind, these monstrosities currently are only providing some 25% of their rated power, and require 90% back-up from conventional power stations—if we rely solely on wind, the lights will go out. Fact.
Nonetheless, the government is investing in factories... Or, rather, they are pushing our money at massive corporations that are going to build factories.
... Britain celebrated more than £300m of investment in new manufacturing centres by rival manufacturers GE, Siemens and Gamesa. Following a boost from the government's Infrastructure Plan on Monday, GE said it would invest £100m in a manufacturing plant. Spanish firm Gamesa said it would spend €150m (£131m) setting up a worldwide centre for offshore wind, including a turbine factory; and Siemens said it would build an £80m wind turbine factory.
Hmmm. I'm not sure about "celebrated", but the Grauniad likes to put a positive spin on these things. Anyway, these companies are investing in new wind farms, and the government is providing "a boost", i.e. cash, in the form of capital, loans and, of course, the colossal subsidies that are the only things that make windmills in any way profitable.
But wait! What is this article actually about...?
Vestas, the Danish wind turbine manufacturer, said today it would close five production plants across Scandinavia and cut 3,000 jobs.
The group said the surge in demand for wind power it had hoped for in Europe had not materialised and it would have to shift production away from Denmark and Sweden towards Spain to protect profits.
It is closing four plants in Denmark and one in Sweden, including one in Viborg where it has been manufacturing since 1989. The factory moves follow Vestas' decision to move production of turbines away from the UK last year, when it closed its Isle of Wight facility.
It still employs 500 people in the UK, who are unlikely to be hit by the company's latest round of job cuts, but a spokesman could not it rule out. The company employs 250 research and development specialists on the Isle of Wight, and 250 other staff primarily at a sales centre in Warrington and a spare parts and repair plant in Bristol.
Right. So, a massive enthusiasm for building useless bloody windmills has not materialised because, presumably, everyone has realised that they are bloody useless.
So, just as Vestas is closing factories and shedding jobs, our government is providing "a boost" for other companies to set up windmill factories in this country.
Nice going, you morons.
A tip of the horns to The Englishman.
UPDATE: an interesting comment from Adam Bell...
... you've got this entirely wrong. Vestas make onshore turbines; notably 1.5MW and 3MW models. Siemens, GE and Gamesa are coming to the UK to build offshore turbines, which range from 6-10MW. Vestas doesn't yet have a player in this market, so isn't coming on board.
Demand for onshore has dropped in Denmark and Germany as all the good sites are taken up. Vestas is responding to the market by relocating its production facilities to places where onshore demand is strong, notably Spain and to a lesser extent the US. This is the market doing what it should.
Demand for wind and other renewables is still being driven less by environmental concerns than the very hard-headed realisation that it constitutes a useful hedge against rising gas prices. You know, as happens whenever Russia feels like Europe isn't paying it enough attention. As such, the economic downturn and the resultant lower commodity prices have decreased demand for renewables—but as soon as the economy picks up again that demand will return, most likely in 2013-4.
Food for thought?