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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The collusion of the Federal government with the banksters and corporations IS the problem.
We need the Tea Party's energy....THANK YOU, TEA PARTY FOR YOUR POLITICAL WILL!
The leadership in the US will find things are changing here also...not just in Egypt.
How can businesses and investors survive where there is no trusted source, where everything one reads could be a fabrication designed to perpetuate an illusion? Look out, here comes another black swan.
Well, then. Maybe somebody should tell that to the Koch Brothers. Somebody they respect should tell them that in a way they have to listen to. Far be it from me to defend the WSJ, but the problem here is that most of the big money WANTS the status quo, and after the Citizens United decision, they can buy it. The mainstream business community may be terrified of the Tea Party, but they aren't terrified enough. If they really want to bring stability back to the economy, let them put some of their money where it counts--in the 2012 campaigns.
Why can't the Koch brothers use their money to voice their political concerns? George Soros and Michael Moore seem to do that a lot. Or is it only those not on the political left should not be able to put their money behind causes they believe in?
Here's a better solution - get the government out of the subsidy and protective tariff rackets, for ALL players.
That way, the marketplace can determine which type of energy, cars, food etc succeed. The market place can best determine where to allocate precious investment capital. The market place can bring consumers and producers together to buy and sell as they see fit.
Why trust an ever changing 535 +1 elected Federal officals, who can't even decide on how to produce fiscal sustainablility in their own budget plans, to be better at picking "winners and losers" than the hundreds of millions of consumers making those very choices every day?
Industrial policy is not politically toxic for "weird historical reasons"; it's politically toxic because it is anti-democratic and anti-free market, and it is doomed to failure by its political nature.
Government must favor an open and free marketplace; it should not tilt towards producers or consumers, but instead play impartial umpire, protective of individual liberty and property rights. The more government politically intrudes in the economy, the more distortion it causes, misallocating resources and raising everyone's cost of living.
otherwise, all this does is give entrenched toxic oligarchs a HUGE market advantage which is not properly proportional to their societal, economic or environmental costs/benefits.
deal?
Do you have an analysis of the supposed proportional inequities to which you refer, or just a lot of emotional rhetoric?
Which producer forces you to part with your hard earned money? Is there no effective competition in the market place?
I will agree with you on one thing, the Randian ideals of self-responsibility and individual liberty are given little currency by the left...
; "On closer examination we find the [Imperial] Russian state was a vast federation of fifty thousand small peasant republics each busy with its own affairs, obedient to its own laws and even possessing its own tribunals of starotsas (elders). The Russian state was not undemocratic, on the contrary if anything, there was too much democracy.
What makes the peasant commune such a unique institution is the power that it had. Each commune was a completely self-contained unit, answering to no other authority than its own body of elected elders. All police functions were discharged by the communal authorities, all legal matters were dealt with by the same. Any damage to property, any criminal offence whatsoever, was dealt with at the communal level. All public works besides were also within the jurisdiction of the commune. It maintained stores of grain during famines and assisted poorer members who suffered during the lean months of the spring. It controlled the cultural life of the people as well as all education. It even built its own parish churches and trained many of the rural clergy. The commune maintained all schools and hospitals. In short, it was absolute." http://www.rosenoire.org/articles/Peasant_Commune.php
I call it as I see it on a solution for 44 million on food stamps and our unemployed population nearly double the population of Australia.
From your posts it is clear you are embarrassed to be American when you see a couple of U.S. soldiers being rude in a foreign hotel & "My husband and I find ourselves imagining secret 12 volt circuits and hidden batteries to circumvent vendors' narrow views. (of how you would like so save on energy costs)†But you surely keep yourself informed of what the very wealthy are up to.
My feeling is that American middle class Ivory Towers are not long for this world because of rapidly shrinking oil and food supplies and an ever expanding world population demanding an American standard of living. Those that will find the change to a world of few resources and billions of hungry, angry poor people without options most uncomfortable are those with no compassion for their plight & a smug certainty that they are better people.
I support you on the things you list as ways of reducing your imprint ecologically and economically. I have no love for Ayn Rand or Alan Greenspan and agree with you that they both had/have nothing valuable to contribute to America's survival & in fact have both caused considerable harm.
I do very passionately believe that we have to take back control of our land and our government. I believe that the government has usurped much of our wealth and power and uses our judicial system to enforce their theft of our resources. I think we will all fare better if we begin forming ourselves into resource sharing communities that grow our own food, manage our own finances, school our own children on our terms not government propaganda, create a financial system that benefits/serves us and defend our borders as our only military position.
We currently are caretaking a small farm and grow a few acres of organic vegetables while working on creating an example of the type of community I am speaking of. We have created a web site that describes our efforts to create such a community.
If I misread your comment then I apologize to you sincerely.
Truly
The institution of the peasant commune in pre-revolutionary Russia is one of the world’s unique institutions; and also one that is almost unknown. As Americans continue to work long hours for comparatively less pay, continue to see unions disappear, and see any kind of job security dissipate, maybe it is time to look at other models of economic organization.
It need not be said that the commune, for American historiography, is basically derided. This is largely for one important reason: the architects of liberalism and capitalism in Russia were the elite: the elite political and economic forces. For them, the commune was an irritant, a set of protections that permitted the average peasant a great deal of protections against exploitation. The destruction of the commune, then, was absolutely necessary for the Russian neo-Jacobins to impose constitutional capitalism on royal Russia.
One of the main reasons the liberal bourgeois in Russia hated the commune was that it sanctioned the traditional agrarian practice of only working about 2/3 of the year."
Overseas, in Greece and England and other parts of Europe, there’s been an indictment of American corporate predators, especially Goldman Sachs. They are being denounced as “financial terrorists†and discussed in terms of their links to various elite business formations like the Bilderberg Group http://www.consortiumnews.com/2011/022811a.html
America now has the same problem as the USSR did before it fell,,, Democracy turned to Plutocracy----which then turned into a cleptocracy,,, and no ones in jail..
What in this type of system would you trust?
Canada's Radio Act requires that "a licenser may not broadcast....any false or misleading news." The provision has kept Fox News and right wing talk radio out of Canada...
Who gets to decide the "truth"?
The best form of support for innovation would be an across-the-board reduction in taxes, a reduction in administrative red tape, the elimination of burdening Obamacare, and other rent-seeking charges against people who want to start a new business, hire some people, and innovate. Then let free efficient markets determine where capital and resources should be allocated to create new industries and new employment. All government intervention does is take resources from the private sector and redistribute them to politically-favored rent seekers, and it why there are so many established companies with their greedy paws out for a piece of the action. This is a recipe for disaster and will result in economic and environmental waste, all at the taxpayer and consumers expense.
Countries with high taxes, high regulations, and restrictive labor policies tend to be less innovative and less economically robust. China, Japan, Germany have never been strong leaders in these areas and I do not know why they would be held up as exemplars of government intervention at work. They are awful.
If anything, the intervention has slowed their economies down and wasted resources and stopped the from being strong in innovation. Definitely not a road to economic dwarfism that we want.
Kai
Please back that up with some supporting information as it pertains to this topic…if you can.
Kai
Thanks but no thanks!
Stated otherwise - no pay beats low pay?
‘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.’
Actually, I am surprised that Liveris did not mention, France, Poland, Bulgaria, Russia, etc. in the list of countries with high government intervention. That is because countries are worse off from government intervention as political favoritism, not economic factors, drives the decision on how to pick winners and losers, much to the detriment of the country, the economy, non-politically favored industries, and most importantly, the environment.
If one looks at any centrally planned economy or large government-driven initiative, you see tons of waste, especially human capital, financial capital, and natural resource capital. Why? Because politically-driven economies are not sensitive to the economic forces that would force them to be efficient. They are more concerned about keeping employment up than efficiency. They use resources poorly and, as a result, lead to the economic degradation of the planet.
Germany has an unemployment rate of 7%, the best it has had in decades, while all other economies are burning in Europe. They are a beneficiary of the weak Euro and capital flight to their nation as a safety destination. China, would be a lot better off today if it spent less money on wasteful State-Owned Enterprises. Both of these countries are doing well despite government intervention, not because of it. Japan is a basket case because of government intervention.
Kai
Of course, I would feel considerably more encouraged if these CEOs had also clearly stated the advantages to America that a strong workforce with guaranteed human and civil rights provide.
It didn't work out too well.