Chu’s Energy Research Hijack

February 26th, 2011 at 11:03 am | 14 Comments |

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Nobel Laureate and Secretary of Energy Steven Chu seems to have taken a page from early 20th century labor leader Samuel Gompers:  at every turn he screams for “more.” Even as the Obama administration and both parties in Congress pay lip-service to budget cuts (while doing little to enact them), Chu has taken to running around with a Power Point calling for his department’s budget to grow in almost every area of its operations. For all intents and purposes, Chu has a proposal to turn his department into a huge government-run research and development firm.  Although intended as an outline for growth, Chu’s lucid presentation can also be taken as an outline for slimming his department and cutting government.

The great bulk of Chu’s proposed spending increases and billions of dollars in new loan guarantees (off budget for now, but a taxpayer liability if they’re not repaid) go for applied research and product development. Chu’s department would work to put 1 million electrical vehicles on the road, build new nuclear reactors, establish new “Energy Innovation Hubs,” and open new “Energy Frontier Research Centers.” The Advanced Research Project Agency-Energy, which tries to develop innovative new energy-related products would also get a big boost in funding. So would efforts to improve the overall reliability of the electrical gird and weatherize individual homes (states still have millions of leftover dollars from stimulus-related efforts to do this.) Worthwhile or not on their own terms—and, certainly, some of the new technologies proposed for investment seem like decent ideas—there’s little reason to think that the government ought to be doing any of this. Since they have huge theoretical benefits–no fuel price fluctuations and little or no pollution in the traditional sense–any person or company that figured out an efficient, low-cost way to harness any “green” energy source would make billions of dollars.  Many of the nation’s largest and most profitable companies are in the energy business and have enormous incentive to do energy research themselves.

Taxpayer subsidies let the government decide where R&D dollars get spent.  Furthermore, quite simply, the government has never been any good at developing actual consumer products of any kind. While U.S. government labs and projects have helped in developing the underlying technologies that created everything from the Internet to nuclear power, the private sector has always done much better than the government in bringing new fundamental discoveries to market. Government efforts to develop much better, cheaper housing construction methods (Operation Breakthrough), gasoline substitutes (Synfuels), and a “car of the future” (Partnership for a New Generation of Vehicles) produced nothing useful at all but ran through millions of dollars. The handful of useful products to come directly out of publically financed institutions, like NCSA-Mosaic, the first useful web browser, have typically come from creative people working on projects they thought were interesting rather than the government-mandated task. Even if Chu’s DOE somehow succeeds in developing useful consumer products, the financial benefits of having created them will accrue only to profit-making corporations, not taxpayers as a whole.

All this isn’t to say that it’s possible or even wise to trim the federal budget by the entire $30 billion DOE spends. When the department secures nuclear facilities, cleans up environmental messes that the government itself has made, and does basic research, it is performing necessary government functions. Nuclear security is certainly a government responsibility and it’s likely that the $11.8 billion in proposed spending is worth it.  Likewise, it seems pretty cut and dry that the government should, indeed, spend most of the $6 billion or so it devotes to cleaning up environmental messes its own work has produced.  Finally, basic research—devoted to understanding the fundamental laws of nature without trying to solve any particular problem—has never been done at a large scale without public sector support. Thus, the $2 billion–a 24 percent increase–proposed for “basic energy research” is probably a decent investment. Of course, none of this spending is beyond question and some might be done better outside of DOE.  But even if one rejects the Obama administration’s proposed increases in all of these “necessary” areas and then cuts spending ten percent, that still leaves somewhere around $17 billion in truly necessary spending on current DOE projects. This is still a huge cut from the $29 billion Chu wants to spend.

A look at Chu’s DOE budget, in short, reveals two things. First, that there is, indeed, plenty of wasteful spending that the country would be better off without. Second, even a hugely bloated agency does carry out some valuable, core functions that probably shouldn’t go away.


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14 Comments so far ↓

  • zephae

    How does the title of this article have anything to do with the content? What is the “hijack” you’re talking about?

  • zephae

    “The handful of useful products to come directly out of publically financed institutions, like NCSA-Mosaic, the first useful web browser, have typically come from creative people working on projects they thought were interesting rather than the government-mandated task.”

    Okay, but where do these people get financing for those protects. How about making the money available via grants to try and find the best ideas instead of mandating from the top down? I think a couple of ideas, like optimizing the power grid, certainly sounds like something the gov’t should do as they seem like too large a project for a private group. You could farm out a couple others to non-profits o, but they still need money and the private sector has been a little reluctant to provide support in this climate.

  • TerryF98

    ” Since they have huge theoretical benefits–no fuel price fluctuations and little or no pollution in the traditional sense–any person or company that figured out an efficient, low-cost way to harness any “green” energy source would make billions of dollars. Many of the nation’s largest and most profitable companies are in the energy business and have enormous incentive to do energy research themselves.”

    So why are they not doing this? Answer NO PROFIT. If there was they would do it.

    Also Eli is using a medium (the INTERNET) that would just not exist if it were not for government research and funding. This article is dumb.

  • zephae

    “So why are they not doing this? Answer NO PROFIT. If there was they would do it.

    Also Eli is using a medium (the INTERNET) that would just not exist if it were not for government research and funding. This article is dumb.”

    I’m not sure the reason is no profit. I think it’s probably not enough profit for the investment, bad business plans, or that the gain is too long-term. All of those reasons still suggest a need for public investment, though, as many of the gains sited here have little market value, like pollution.

    As to the comment about the Internet, it sounded to me like Eli said it was a good thing that the government supported the development of the underlying technologies of the Internet, but the private sector made it a marketable product/medium

    • mickster99

      I believe you are talking pretty rationally with very good points.
      However I think the intent of the article is to yet again provide a rightwing stinging indictment of “big government” gone awry.
      Tyring to discuss policy alternatives, pros, cons’ etc. is as Barney Frank said “like talking to a table”.
      It’s better to consider this opinion piece a sort-of Breitbart Lite smear cum expose.
      I did enjoy your thoughtful responses though.

  • baw1064

    “Even if Chu’s DOE somehow succeeds in developing useful consumer products, the financial benefits of having created them will accrue only to profit-making corporations, not taxpayers as a whole.”

    Don’t those profit-making corporations pays taxes, employ people, and have the opportunity to export those useful consumer products?

  • ottovbvs

    Fresh from demonstrating that he has no understanding whatsoever of the nature of the mortgage market, Lehrer now demonstrates his complete failure to understand how govt developed technologies can be turned into successful products and services that are immense sources of wealth creation. Has he forgotten the non stick frying pan.

  • midcon

    I almost made a similar comment about teflon, but I reread the article and he seems to give credit, albeit grudgingly, to the research that produced teflon, that led to the commercial application of a non-stick frying pan. Still he misses so much more. The Internet in it’s manifestation has the same architecture that it was when the government pulled it all together. Sure it spawned thousands of commercial applications, but itself is a commercial application that we pay monthly charge to access. He also missed things like the NASA motion sickness patch, Meals Ready to Eat (MREs), Gore Tex, and on and on and on. Many of these products were develop for use by the government or government employees. Here is the source for a whole host of other products that resulted from government sponsored research. http://techtransfer.energy.gov/sciences

  • lariviere

    An interesting article, I’d like to see more coverage of government research on FF. Mr. Lehrer is right that the government has never been good at developing products, but his suggestion that government is ineffective at solving technological problems is gravely wrong. Every innovation in computer hardware before 1970 was Carried out by the federal government.

    • valkayec

      Mr. Lehrer is right that the government has never been good at developing products

      Wrong. The internet was originally designed by DARPA as were many other products now available on the commercial market. Moreover, many other products, from drugs to technologies, had their beginnings – and funding – from the federal government in sponsored research through universities and other private institutions.

      To say the federal government “has never been good at developing products” is an outright lie propounded by modern day partisan Anti-Federalists.

  • jerseychix

    Lehrer- Do you understand the idea behind basic research? Just because it doesn’t go

    point A (hypothesis) to point B (marketable product) doesn’t mean it is a waste of time/money. There was an awful lot of basic research in chemistry that lead to the semi-conductor. And that research was funded by the government.

    We reduce R&D at our peril. We already have to import the scientists who do it. Now you don’t want to do it at all. How depressingly short sighted. But what more could one expect?

  • Unsympathetic

    What the flip is the point of this thread? Of course most research doesn’t pan out. That’s why it’s called research. How can you seriously claim to be a Republican and not know that the private market DOES NOT DO RESEARCH?

    The only industry that bothered to privately fund research was pharma.. and you’ve done a bang-up job of eliminating that capability.

    Fact: Research of any kind on any subject requires government financing. There’s no way to “only do research that is profitable” – that does not exist.

    You need to get the idea that “something for nothing is possible” out of your head. The US needs an energy policy, because we need to END our dependence on foreign oil. (Note: simply “drilling” on US lands won’t actually solve anything.. it takes 10 years to get a functioning wellhead, and we’ll get 5 years perhaps before the wells completely run dry)

    How will the US move from where we are today to the implementation of a nationwide energy policy? BY FUNDING THE DEPARTMENT OF ENERGY.

  • Fastball

    Has the author ever heard of nuclear energy? The Internet? Laser angioplasty? Scratch-resistant lenses? Those and many other technologies emerged into commercial markets hanks to government-sponsored applied research.

    We should thoroughly debate federal R&D spending and subject it to close scrutiny, but the debate should be informed by facts, not polluted by overwrought ideology.