Public solutions or private enterprise?
Wednesday, November 14, 2007
Can the profit motive solve our energy problems? Management professor Stuart Hart of Cornell University, and physics professor emeritus Marty Hoffert of New York University consider that question with host Kai Ryssdal.
(Click here to listen to the broadcast)
TEXT OF DISCUSSION
KAI RYSSDAL: If it’s tough for a small town like Reynolds, Indiana, where everybody knows everybody, to try something new, where does that leave the rest of us? Stuck someplace, probably, between relying on private industry and depending on the federal government. We’ve asked two people who’ve given that issue some thought to join us today. Marty Hoffert is an emeritus professor of physics at New York University. Marty, welcome to the program.
MARTY HOFFERT: It’s a pleasure to be here.
RYSSDAL: And Stuart Hart is at the Johnson School of Management at Cornell University. Stu good to have you with us.
STUART HART: Thanks. Great to be here.
RYSSDAL: Marty, let’s start the first question to you. How much time do you think we have to solve this problem?
HOFFERT: In the next three decades we really are going to have to transform our energy generating system. This is around the entire world, not just the U.S.
RYSSDAL: Stu Hart, let me turn to you and ask you to put your entrepreneurial and professorial mind to work here, and examine whether or not business in America and worldwide could come up with a solution to this.
HART: Yeah, I think Marty’s absolutely right. We’re in the midst of the crash of the system. And it’s for exactly that reason that I think the corporate and entrepreneurial sector in particular — but I think also large corporations — are uniquely suited to this challenge, precisely because they can move quickly
RYSSDAL: Marty Hoffert, what do you think of that?
HOFFERT: I mean, as a practical matter, even large companies, for them to look at a new kind of technology, it would not be responsible to their stockholders if this is something that’s going to pay off in 20 years.
HART: I would say, though, that corporations aren’t as shortsighted, you know, as we often would make them out to be. Especially big companies. They’re thinking 50 years out. They are. And they’re making R&D investments with that in mind. Sure, they’ve got to be paying attention to nearer-term performance, and they very much do, but we shouldn’t sell them short in terms of their longer-term vision, either.
HOFFERT: Yeah, I think that we have to get specific if we’re talking about it. We’re going to need a whole new system of distribution and storage of electric power. We’re going to have to rebuild the grids of the United States and of the world. It’s not realistic to expect entrepreneurs to develop those technologies. That really has to be done by governments. And I think if you look seriously at where our technology has come from, at least since World War II, you realize the enormous role that government research and development has played in developing commercial aviation; in developing, for example, gas turbines, large-scale integrated circuits, computers, lasers, radar and even the Internet.
RYSSDAL: But Stu Hart over to you on this one. And the question is, isn’t the government, merely by its funding choices, making a pick here as to who’s going to win and who’s going to lose?
HART: My concern would be two-fold. As you suggest, the government does not have a particularly good history or track record of trying to pick winners. But perhaps even more importantly, it’s difficult here for governments, incumbent governments, you know large developed country governments, like the United States, to really lead in this dimension. And the reason is there is something called “policy capture” which tends to ensure that incumbent governments serve the needs of incumbents. And we have a large, well-funded, well-subsidized, well-protected fossil fuel industry and it’s very difficult for government to shake that, at least to shake it to the point where they become the driving force for moving us forward.
HOFFERT: Look, government supports an enormous range of technologies. The best analogy that I’ve been able to come up with is something like World War II. And that was a partnership between the government and industry, as was the Manhattan Program, as was the Apollo Program.
HART: Hey Marty? Marty, this is Stu. Can I interrupt just for a moment there? I think there is a really important point. It isn’t so much a lack of technology that we have today, it’s more a lack of imagination about how to actually put it into play. In my mind the way we think about incubating tomorrow’s energy system is in those places that doesn’t suffer from a currently, you know an unsustainable built-out infrastructure with great resistance to change. It’s in the developing world. It’s in rural Asia, in Latin America, in rural India. That includes China.
RYSSDAL: Well, Marty Hoffert, not to end on a sour note but, do you think we’re going to beat the train wreck?
HOFFERT: I don’t know. But I know that if we want our civilization to succeed, it’s got to become the highest priority in our menu of objectives politically.
Continue Reading “Public solutions or private enterprise?“
