Thursday, August 11, 2011

So near but yet so far

LeBron points us to Daron Acemoglu writing at the HBR blog, saying that he makes "many good points". Indeed, I'd say of the 7 he makes, 6 are good to very good.

Focus on green technology, the next area that has the best promise of creating a platform for more innovation. Innovations in information and communication technology starting in the 1960s have had a transformative impact on the world economy by creating a platform upon which myriad other technologies and products could be developed. Green technology has the potential to cut carbon emissions, sure, but we also need to transform the way in which energy is delivered, utilized, and monitored. This necessitates innovation and significant investment not only in power generation but also in the electricity grid, in the transport system, and in homes and factories. The United States is lagging behind other countries in these activities. To regain leadership, we need both more and smarter subsidies to research in green technologies and a carbon tax that naturally encourages the use of cleaner technologies and triggers more research to seek such technologies.

First, what standard are we to judge the statement that green technology "has the best promise"? At least give us some reasons why. To me this is more of an article of faith to people than the product of any kind of cost-benefit analysis.

Second, Why does it matter where an innovation takes place? Ideas are public goods. If the Chinese figure out how to somehow make solar power cost effective, why shouldn't we just be happy and use the invention?

It's not about nationalism and competition between nations; innovation anywhere is good for every place that is able to absorb and implement it. It is the global amount of R&D and innovation that we should care about, not whether the US can "reclaim leadership", especially in an area where no one can make money without continual large subsidies.

About the only part of DA's quoted paragraph I agree with is that we should introduce a Pigouvian carbon tax. I'd like to do so in a way that's revenue neutral, but even if it isn't, a carbon tax is probably the simplest and one of the best things we can do for the environment.


John Thacker said...

Indeed, if China or other countries are heavily investing in one sector of technology, that actually means that the US should be more likely to consider investing somewhere else.

Gerardo said...

I read this piece and was struck by the same point. Is there any evidence whatsoever that "green technologies" aren't a rathole? Witness the Volt, for instance.

It seems to me that battery storage is the key to enabling renewables in a legitimate fashion, yet the technology frontier in storage is pretty primitive -- compressed air and pushing water uphill.

Anonymous said...

I would say eliminating the Environmental Protection Agency would be the best thing we can do for the environment.

Or outlawing light bulbs that contain mercury, for goodness sakes.