Posted by: bmeverett | October 13, 2010

Friedman Watch 10-12-10


I really hate to do two Tom Friedman postings in a row, but I plan to respond every time he writes one of his awful energy columns. The latest was an October 12 op-ed in The New York Times entitled “Build ’em and They’ll Come.” Ironically, Mr. Friedman introduces this column by relating a conversation he had with Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. Singapore is Mr. Friedman’s cup of tea: modern, glitzy, high-tech and autocratic. A wit once observed that everything in Singapore is either mandatory or prohibited. You can only achieve that laudable goal when a country is properly ruled by people who know everything.

Mr. Friedman is aglow over Energy Secretary Steven Chu’s proposal for eight $25 million Energy Innovation Hubs – “mini-Manhattan projects” that will solve all our energy problems. The idea is that universities, national laboratories and private companies would pool their best scientific talent to compete for $25 M annual grants in the areas of smart grid, solar electricity, carbon capture and storage, extreme materials, batteries and energy storage, energy efficient buildings, nuclear energy, and fuels from sunlight. In other words, just get some smart guys together over a beer and anything is possible. Mr. Friedman refers to this idea as “moon-shot quality.”

The problem here is not that Mr. Friedman might be wrong, but that he might be right. Let’s consider for a moment what a “moon shot” means. In the 1960s and early 1970s, the United States landed 12 astronauts on the moon for a total cost (in today’s dollars) of about $150 billion or $12½ billion per astronaut. The Apollo Program was inspiring and exciting, but what exactly did it achieve? Do we now have commercial spaceflight, available to the average citizen? Not exactly. Three uber-rich people (Greg Olsen, Dennis Tito and Mark Shuttleworth) bought their way onto the International Space Station for a reported $20 million each. The rest of us, however, are still pretty much Earth-bound. Virgin Atlantic’s Richard Branson talks about offering people 15-minute suborbital flights at some time in the future for a mere $200,000. I remain a strong supporter of the space program for national security reasons, but I don’t pretend that it has offered much to the average person (except of course for Tang, the powdered orange drink favored by astronauts).

Getting smart technical people together under government sponsorship can help to solve certain technical problems. Never, however, has this approach produced a commercially viable technology. Consider supersonic flight, for example. In 1947, Chuck Yaeger of the US Air Force broke the sound barrier in the Bell X-1 rocket plane – a great technical feat by some bright and very courageous people. We are now producing our fifth generation of supersonic military aircraft. How many commercial airliners are now plying the skies? None. Why? Because this capability, so critical for the military, is expensive and not worth very much to civilians. How many people are willing to pay an extra $5,000 to fly from New York to London in 3½ hours instead of 6½ hours? Solving the technical problem doesn’t solve the commercial problem.

There’s no question that great minds meeting together can come up with some cool ideas, but cool ideas are not commercial technologies. If we want to build a huge solar power plant, and we don’t care what it costs, we can do that now. In fact, we are. Americans, however, don’t need electricity that costs 50¢ a kilowatt-hour when clean, efficient natural gas combined cycle can generate power at 7¢.

In the 35 years since the “energy crisis” of the 1970s, the US government has spent roughly $125 billion on energy research and development without producing anything of any commercial value. Some capable, hard-working people have done some good science, but the rest of us wouldn’t know the difference if that money had never been spent. Innovation does not come from government-sponsored think tanks. In the real world, a very small number of powerful commercial technologies emerge from thousands of ideas developed by individuals, sometimes in corporations, sometimes in garages. Like lottery tickets, most ideas never pay off, even if they sound really neat at the beginning.

Government is uniquely unsuited to playing this game. When private investors put money into R&D, they tend to focus hard on success and to be very hard-nosed about commercial prospects. If they can’t make their idea work, they either quit or run out of money. Not so the government. If Congress were foolish enough to fund the Energy Innovation Hubs, Secretary Chu’s energy grants would not go to the smartest people or to the ideas most likely to be successful. The money would instead go right to the districts and preferred constituents of powerful senators and congressmen. Once in place, these programs would be very hard to turn off, even if they failed to produce anything year after year.

Mr. Friedman implies that a few million dollars in government funds would provide an incentive for people to work on new energy technologies. The global market for energy supplies is on the order of $5 trillion per year. The commercial prize for truly successful new energy technologies – those that could provide consumers with improved performance and lower costs – is huge. Bill Gates has a net worth estimated at $54 billion, mainly from the development of Microsoft Windows. The rewards for a low-cost, high-capacity battery would be enormous – billions of dollars. The same is true for solar energy, carbon capture and storage and other energy technologies. The idea that a few million dollars of government “prize” money will create incentives where none exist is silly.

If we could create technology by having whiz kids sit around the table, why bother with solar energy and smart grids? Let’s go right for transporter beams, faster-than-light travel, anti-gravity shoes and telepathic communication.

My brother Ted Everett, Professor of Philosophy at the State University of New York at Geneseo, used to have a pet guinea pig. He wondered out loud one day if he could teach his guinea pig to fly by rewarding it when it was in the air and punishing it when it was on the ground. Sounds just like Mr. Friedman’s ideas. Why not set up a Rodent Aerospace Innovation Hub and give it a try?

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