Saturday, July 24, 2010

US Senate happy to support Greentech - but not in an election year

It is no secret that China’s leaders are keen on making their country into a world leader in green technology. The subsidies being provided by both central and local governments for purchase of hybrid and electric vehicles and support to companies pursuing R&D in this area have been widely reported over the past year.

Now it seems the US government is beginning to wake up to the importance of this new industry and its potential to provide, not only a cleaner environment, but jobs and tax revenue in the US. This past week, a Senate committee approved a couple of bills to support greentech, bills that, if approved, would begin to devote a serious amount of government money to support of the industry.

The first devotes $3.6 billion to promotion of plug-in hybrid technology. The bill includes, among other things, $1.5 billion to go directly to plug-in research, and a $10 million prize would go to the first person or company who demonstrates improved battery technology that will carry a vehicle 500 miles without recharging. This bill enjoys bipartisan support, including an endorsement from Lisa Murkowski, a Senator from Alaska, a state that earns a large portion of its revenue from oil extraction.

Another bill would expand a $25 billion Department of Energy program that has already lent $8.6 billion to makers of battery powered cars, and also make the funds available to makers of commercial vehicles while lifting the $25 billion cap.

While some may question the wisdom of the US government’s involvement in “picking winners”, it seems that we may no longer question whether the government sees the need to help US business gain a competitive foothold in this industry against other countries (particularly China), whose governments are heavily involved.

(And, yes, the phrase “picking winners” is still deemed by many in America to be the only words necessary to put an end to all argument as to whether the state should be involved in business – despite the lack of evidence to support the assertion that “picking winners” is, in all contexts, a bad thing. I'll have to save that idea for a future post.)

But not so fast. In the same article that informs us of these bills, we also see the concerns that Senate Leader Harry Reid may not allow these bills to come to a vote in the Senate – despite their bipartisan support – because he sees energy issues as a potentially hazardous issue to touch during an election year.

Yes, once again, politics in the US stands in the way of our elected leaders doing what they believe to be in the best interest of the country. Just once, it would be refreshing to hear our leaders say, “to hell with my re-election. I just want to do what’s right for the country.”

But perhaps that’s too much to hope for. Fortunately for China, they don’t have anything like re-election to to draw energy and money away from the more pressing matters of delivering prosperity to the people.

Well, except for all those tens of thousands of people employed to police the internet. That’s a massive waste of money. But other than that…

Well, yes, there’s also that whole parallel party structure that mirrors and oversees the entire government. But really, how much can that cost?

Ok, yes, there’s also that bureaucracy that oversees all media and censors films and books. But, other than that…

Well, yes, ok, there is the People’s Armed Police and Chengguan who are employed to keep citizens in line since the Army and the regular police, and the secret police, and the plainclothes police aren’t enough to do that.

Oh yeah, there are also all those locally-hired thugs to keep petitioners from going to Beijing, and the thugs hired in Beijing to send the petitioners home.

Oh, and I almost forgot, there’s that whole bureaucracy that oversees religions (and picks their leaders for them), making sure they don’t get out of hand.

But, honestly, aside from those few things, China really has it much better than the US. They don’t have to waste all those resources on elections.

Too bad for the US.


  1. All of these decisions made by both the U.S. and Chinese governments have to do with political survival. That is what politicians are most concerned with, even those that don't have to bother with elections. So lets look at the selectorate, or individuals responsible for keeping politicians in office, and how the emergence of cleantech is affecting political choices.

    In the United States, being an elected official is tricky business. Because of large number of people in the selectorate, namely the folks who vote, keeping them all happy is difficult. That is why people in political office in democratic countries don't last that long. It also means that leaders are more hesitant when it comes to enacting controversial legislation, as it may loose them their jobs. However, once the decision is made to pursue certain policies, like investing in clean energy or plug-in cars, democratic governments usually stay committed for the long haul.

    Countries with smaller selectorates, such as China, may be able to enact better policies on paper, but because the number of people needed for politicians to stay in office is smaller than in the United States, it is easier to give supporters of the winning coalition within that selectorate private benefits (like economic purchasing incentives) that allow those folks to stay happy and continue to support those politicians. However, given the gap between the number of people in the selectorate and in the entire polity, these policies may not necessarily benefit everybody.

    Thus, while Chinese political leaders are very much gun-ho for cleantech right now, it is for them an avenue to maintain political support within their smaller selectorate. It does not mean they will ultimately be successful at delivering public goods (meaning clean energy) to everybody in China. The United States, with its larger and more diverse selectorate, still has the advantage.

    For more information on the Selectorate Theory, please see "The Logic of Political Survival" by Bruce Bueno de Mesquita et. al. Very interesting analysis indeed.

  2. Thanks for the interesting observations, Paul.

    While I agree that it's all about political survival, I think in this case, it's about creating the ideal conditions for survival.

    What I mean is that I don't believe for a minute China's leaders are all gung-ho about greentech. What they are gung-ho about is 1) creating more employment in China and 2) gaining a foothold in an industry before foreigners do which 3) brings more money to China. These things all work together to shore up support for the Communist Party.

    The second half of my post was intended to say that there are always tradeoffs made in any political decision. What the Chinese gain in efficiency of decision making, they lose in terms of resources needed to keep the lid on potential discontent.

    What the US gives up in efficiency of decision making, it gains in terms of personal freedoms and, I believe, innovation.

    So I could have extended this short article by saying that, the Chinese can spend all they want on greentech, but they still don't have the environment necessary to nurture innovation in this space. They are still at the mercy of foreigners when it comes to getting their hands on tomorrow's technology.

    That said, the US could certainly do a lot more, and I think we have Harry Reid and his fear of losing to a Tea Partier in November to thank for that. (See scathing articles in this past week's Economist and Business Week.)

    Thanks for the reminder about BdM's book. I think it can shed some light on my research.


Note: Only a member of this blog may post a comment.