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Carl Pope

Carl Pope

Posted: March 4, 2011 03:53 PM

Santa Barbara -- While the "Eco:nomics -- Creating Environmental Capital" -- conference is hosted by The Wall Street Journal, the anti-government bias that dominates the Journal's editorial page was slammed by speaker after speaker, beginning with venture capitalist Vinod Khosla. Khosla went after what he called "incumbent capitalism," in which government policy and incentives are designed not to encourage competition and innovation, but to protect entrenched incumbent interests, with coal, oil, nuclear, and utility monopolies being the most spectacular beneficiaries of this bias against innovation.

Dow Chemical CEO Andrew Liveris, who would seem to represent a well-entrenched incumbent company, then piled on. Liveris, an Australian, has a new book called Make It In America: The Case for Re-Inventing The Economy, which makes the case for bringing America back as a manufacturing power. Liveris concedes that -- for weird historical reasons -- the term "industrial policy" is too politically toxic to use, but that's what he's talking about. Challenged by the Journal's moderator on whether this won't simply lead to the government wasting money, Liveris pushes back hard, citing China and Germany today and Japan in the 1960s and 70s as models for government intervention that's essential for economic vibrancy.

"Around the world, countries are acting more and more like companies: competing aggressively against one another for business and progress and wealth. Governments are boosting business, creating a climate that attracts and rewards investment, spurs innovation and job creation, and appeals to companies that are less bound by national borders than ever before." Meanwhile, in the United States, we operate as if little has changed. Our faith in the wisdom of markets may be shaken, but not at a fundamental level.

Liveris is not the only incumbent CEO here calling for massive restructuring of the American economy based on government support for innovation. Dupont's Ellen Kullman warns skeptics that customer interest in the sustainability and greenness of products soared from 2005-2008, and surprisingly did not fall back with the economic crisis. William Clay Ford envisions a very different automobile market driven by electric vehicles. Clean tech entrepreneurs like Solyndra's Brian Harrison or Suzlon's Tulsi Tanti are blunt that unless the U.S. government provides stable policy signals for renewables, the supply chain will be driven overseas even more than it has been to date. The most cautious voice is probably AEP's Mike Morris, but even he concedes that his current inventory of coal plants will not be added to, and that he will undoubtedly retire his units below 500MW. Even Rio Tinto, a mining company with historical coal roots, has shifted its U.S. portfolio to adjust to a low carbon economy they think is inevitable.

Matt Rogers of McKinsey, who worked for two years at Department of Energy managing stimulus grants, says the program works: pace of research innovation in the energy sector is far higher than it was two years ago, but now these innovations face the challenge of working through the energy sector's historically innovation-resistant supply chains.

The sharpest edge to the tension between business and the Wall Street Journal's laissez-faire editorial policies came when Kim Strassel repeated her oft-stated concern that if the federal government acted like a venture capitalist and supported research in a wide variety of important but risky innovations, the public would turn against the program because some innovations would fail to pan out. Ray Lane of Kleiner Perkins shot back: "the American people would be fine with it, if you would write about what's really happening. It's the media, not the public, that is the problem."

It would have been most instructive for the new members of Congress to spend the day here, listening -- because it is very clear that the mainstream business community and clean tech innovators alike are terrified that the Tea Party's hostility towards the national government constitutes a serious threat to the American economy and the American future.

But wonderful as the conference was, I somehow don't expect its lessons to make their way to the Tea Party caucus in Congress via the WSJ's editorial pages. Indeed, the Journal greeted the last day of the conference by giving the business leaders assembled here an anti-government raspberry, leading with an editorial attack on EPA's proposed new regulations to clean up emissions from industrial boilers.

Business may be getting it. But reactionary ideologues are not.

 
 
 

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