June 2, 2012 at 7:30PM
by Jim DiPeso
One of the more commonly heard bumper-sticker slogans that passes for discourse on Capitol Hill these days is that "government shouldn't pick winners" when it comes to supporting energy R&D.
Baloney, Norman Augustine, a retired Lockheed Martin CEO, said in so many words at a May 22 Senate Energy and Natural Resources Committee hearing that explored energy technology innovation. Augustine, member of a high-powered business group advocating greater federal support for energy R&D, said "in the real world, government does and has to pick winners and losers every day."
And has since the earliest days of the republic. In helping to transform the U.S. economy from a rural backwater into an industrial civilization that has provided material abundance and a quality of life few would willingly give up, the federal government has picked winners in ordering the country's fiscal and monetary affairs, developing infrastructure, and supporting high-risk technology research.
When Alexander Hamilton persuaded Congress to adopt a plan for the federal government to assume the states' Revolutionary War debts and stabilize the young country's finances, he was picking winners.
When Henry Clay argued successfully for his "American System" to pay for roads and canals that would connect farmers with markets, he was picking winners.
Same when Abraham Lincoln signed legislation distributing land to farmers, establishing land-grant colleges, and authorizing the Transcontinental Railroad.
And when Theodore Roosevelt built the Panama Canal. And when Dwight Eisenhower pushed through the Interstate Highway System. And when John F. Kennedy decided the U.S. was ready to take on a mammoth, improbable project to put a man on the moon and return him safely to Earth.
In the 20th century, federal R&D supported medical breakthroughs, civilian nuclear energy, gas turbines, and the Internet that congressmen freely use to spread their message that the government shouldn't pick winners.
From a jaundiced point of view, all these accomplishments amounted to federal favors for the private sector. Winners were picked.
Ah, some respond, federal R&D that led, for example, to nuclear energy was legitimate because it was carried out for defense purposes. True, but in carrying out the R&D, the feds inevitably chose some technology pathways and rejected others. Those choices rippled out into the civilian economy. The use of light water reactors in U.S. commercial nuclear power plants is an artifact of Admiral Hyman RIckover's selection of the light water reactor for Navy submarines. There are other possible fuel cycles, such as the thorium cycle, but the U.S. left them by the wayside.
Since the federal government set up shop under the Constitution, the federal government has had a role in managing the economy and shaping markets. The proper extent of its role has been the topic of fierce debate and likely always will be. In Alexander Hamilton's time, Congress argued about debt and banking. Today, Congress argues about energy
which resources the federal government should advance, which it shouldn't.
A worrisome corollary of the meme that government shouldn't pick winners is that energy R&D should be risk-free. Exploring the unknown is inherently risky. Failures can teach important lessons. Publicly supported research explores promising but high-risk technology byways that the private sector cannot afford to explore.
A demand for zero risk is a demand for intellectual stagnation.
Augustine offered three important principles for guiding federal energy R&D. Promote competition among technologies, make decisions transparently, and hire competent people capable of making good judgments. That's not "picking winners." That's a great country expanding the frontiers of knowledge for the benefit of all its citizens.