Friday, July 30, 2010

You Can't Have Lemonade Without Squeezing a Few Lemons

On the Op-Ed page of today’s New York Times, automotive writer Edward Niedermeyer argues that the new Volt electric car from General Motors is a lemon because much of its development has been funded by the American taxpayer.  The car is expensive, has limited range, and seats only four.

All of this is true.  The Volt will be in limited production, and I suspect the main buyers will be über-environmentalists and collectors of exotic autos.  Even considering Niedermeyer's argument that the U.S. government has not yet divested controlling interest in G.M., taxpayer support of new green transportation technologies is the right thing to do.

The internal combustion engine has served the American automobile industry well over the last hundred years.  But as dirty locomotion approaches obsolescence, it is important that Detroit transform itself or risk being left completely behind by foreign innovation.

Over the past decade, the United States has been falling behind in the support of applied research and development.  American icons such as General Electric spend hundreds of millions of dollars at their R&D centers in places like India, Germany, and China.  Government-funded research has provided you with, among other things, the technology used in the computer that you are reading this on and the internet that brings you this blog as well as the nonsense on Sarah Palin’s Facebook page.   If America stands still, we move backward.

The days when a clever entrepreneur like Henry Ford could transform an industry are over.  Barriers to entry for new technologies are high, and in order for America to compete, government support is essential.  American innovation leads to American jobs that are desperately needed.

So let’s let GM build its lemon.  Think of it as a beta test for a better, more attractive green vehicle down the road.  Yes, we should question why we are subsidizing a Korean battery manufacturer for the Volt, but all in all, taxpayer R&D dollars in automotive technologies are a wise investment in our future.  And let's not stop there.  President Obama should announce an Apollo-like program to reduce our addiction to oil by 50% over the next ten years.  That is what the American spirit is all about.

Postscript:  Dollars to researchers alone will not stem the overseas migration of innovation.  America’s educational system has been attacked by deficit hawks and anti-science crusaders on the right.  We need to train more engineers and scientists and fewer bankers and hedge fund managers for America to regain its technological leadership in this century’s green economy.


  1. "The days when a clever entrepreneur like Henry Ford could transform an industry are over."

    Wow, I sure hope Steven Jobs gets the word before it is too late.

  2. Jobs and Gates were not the transformers - the government-funded space program that developed lightweight low power electronic circuitry were the impetus for the computer revolution. That's not to say that individual entrepreneurs can't have an impact, but for the most part, for-profit businesses are risk-averse and driven by quarterly earnings. Long term progress is fueled by government R&D. It will be interesting to see how Obama's commercialization of the space program impacts America's ability to exploit manned space flight. My prediction is that this is another area where the the leadership role will move from America to some combination of India, China, Russia, and Europe.

  3. I assume you would agree that, to the extent that government might be less risk-averse than private business, it is because they are spending someone else's money.