The Beauty of Entrepreneurship, The Ugliness Of Government Intervention

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Several news reports over the past year of so have shown how beautiful and effective human initiative and entrepreneurshipcan be when attacking a problem, specifically, how to create tangible and viable alternative energy processes for the world. The following examples are just a few that demonstrate how powerful human curiosity and imagination can be when the government and the political class do not get involved:

– An Associated Press report from July 8, 2010 reported on how a prototype solar powered plane stayed aloft for 24 hours using only the energy its solar cells had generated and stored during the day light portion of its flight. The plane has 12,000 solar cells and uses no other power source at all. And the plane did not just skim or glide along the ground. It reached heights of 28,000 feet and top speeds of 75 miles per hour.

The article reported that the entire effort was privately funded with a total budget of about $95 million. There was no government interference, no haggling for funding, no political class intrusion, just a thirst to innovate and succeed.

Which brings up an obvious question? If the technology exists to power a plane for 24 hours, thousands of feet in the air, uses only solar energy , and has a top speed of 75 MPH, why can’t someone build a solar car that never leaves the ground, is used for at most a few hours at a time, and does not need to attain the speed of 75 MPH? More on this question later in the post.

– The June 6, 2011 issue of Business Week magazine contained a feature on entrepreneur Imad Mahawili. Drawing on the earthquake and tsunami tragedy of 2004 which killed over  200,000 people, Mr. Mahawili went about developing a small, inexpensive wind turbine that could provide electricity to rural communities and disaster struck areas around the world. He created a new company, WindTronics and developed a revolutionary product that converts wind into electricity.

The genius of his invention is that it is completely different from what one would expect from a windmill. Rather than having winds turn a three blade system that connects to an electrical generator, his product looks like a bicycle wheel with 20 nylon spokes, at the end of each is a magnet and stationary coil. His approach results in a more efficient capture of energy, estimated at two to three times as much as the traditional windmill design.

Each unit is small enough and light enough to be attached to a residential roof and five of them could fully power a typical home. He has cut a deal with Honeywell to start selling the units worldwide. Five units installed to make a home electrical company free would cost under $30,000.

While one University of California at Davis professor was quoted as saying he does not think the unit is as efficient as advertised, the beauty of this private effort vs. a government effort is that no taxpayer dollars are at risk. If the product is as good as it sounds, everyone wins, Mr. Mahawili, his company, the consumer, and the environment. If it is not as good as advertised, the only risk is on Mr. Mahawili and his company.

– Another energy article from Business Week, this one in the March 7, 2011 issue, reported on a portable energy source that was developed by a Michael Lefenfeld. In the course of trying to come up with a toilet bowl air freshener, he developed a revolutionary fuel pellet that is composed of a sodium silicide powder. When mixed with water, the hockey sized pellet releases hydrogen gas than many fuel cells use to create an electric charge. The powder is non-toxic and can be triggered by just about any kind of liquid.

While the technology will not be able to power a house or business, Mr. Lefenfeld is finding uses in powering electric bicycles via his  association with Pedego, a California electric bicycle maker and with a Swiss company, myFC, which will use the technology to power its battery chargers that can be used to charge small electrical products such as smartphones. Likely future uses are for temporary power generation in disaster areas.

Will this solve the energy crisis we face everyday? No. But the creativity of the approach and the results certainly show it can be a part of the solution going forward, saving energy in different ways that have probably not even been thought of it. And the best thing of all, it apparently did not require any taxpayer money or government support or hassle.

–  On a larger scale, consider some of the energy concepts that have been successfully implemented by Subaru in its Indiana factory. According to a June 6, 2011 Business week article, in 2002 the factory decided to set a five year goal of becoming the nation’s first zero landfill car factory. Details include the following:
 

  • Their plan required them to get to a 98% recycle rate of the factory’s waste while taking the remaining 2%  to a nearby waste-to-fuel operation which sells the created power back into the electrical grid.
  • They established an on-site broker who takes bids for factory paper, plastic, glass, and metals.
  • Within two short years they saw what a great deal this effort was turning into.
  • Every box and container is used over and over again, as many times possible.
  • Metal shavings are actually swept off the floor and saved for recycling.
  • Organic material is composted onsite.
  • They have an employee reward process in place that compensates workers who identify viable alternatives to be more energy and waste efficient.
  • Paint solvents are not thrown out but are filtered and reused.

The effort has allowed the factory to save over $5.3 million in its operations. Which has created a number of perks for the factory’s employees:
 

  • The factory has given wage increases for 22 years in a row.
  • It has saved an estimated $600,000 in health care costs from its ban on smokers on the work force, making its employees healthier human beings.
  • It has one of the lowest OSHA incident rates in the industry.
  • It has never laid off an employee.
  • Employees get free, premium health care coverage.
  • Employees get paid to volunteer in the community.
  • Employees receive personal financial counseling and can get a college degree on site from a Purdue University program.
  • There are ten applicants for every job that opens up.

What a great success story. Becoming waste free and energy efficient creates benefits for the community, the environment, the employees and the company. All done without government oversight, input, or intervention.

You can see where this is going. All of these recent innovations and breakthroughs apparently happened in spite of the U.S. Department of Energy. It does not appear they had anything to do with these innovations and changes to energy processes. In fact, it is doubtful any Americancould name or come up with any significant innovation, invention, or other initiative that the Department of Energy created that would help alleviate the nation’s continual energy crisis.

The Department has certainly not come up with a strategic energy plan since we still do not have a plan, decades after the Department came into being. And for this non-performance, taxpayers pay out about $14 billion a year to support this government entity.

About the only effort that the Department has been involved in that has gotten any press was the legislation that was passed a few years ago which required the country to start using fluorescent light bulbs in our lives vs. incandescent light bulbs. The flawed logic in this legislation was that the American consumer had to be forced to act for their “own good” by outlawing a product that had worked well for over a hundred years.

The logic trail went like this: fluorescent bulbs may cost more but they use less energy and will last longer, both aspects of which will offset the higher initial costs. The political class ran with this logic trail and are now forcing Americans to buy the more expensive bulbs. However, the Republicans in the House Of Representatives has introduced legalisation to nullify this law and let Americans make their own choice.

Which led Department of Energy Secretary, Steven Chu to recently comment: “We are taking away a choice that continues to let people waste their own money.”  Two things wrong with this inane statement:

– First, if the fluorescent bulbs are that good, wouldn’t smart Americans figure that out on their own and obsolete the incandescent bulbs anyway? Do we really need a government bureaucrat to tell us how to spend our money on light bulbs? Do we really need Mr.Chu to protect us and our money from ourselves?Plus, Americans should be able to waste their money, if they chose to, anyway they want.

And one man’s waste is another man’s need or desire. Many people would rather spend more of THEIR money for the incandescent bulbs, finding the older bulbs easier on the eyes. They may object to the potential for environmental danger since the fluorescent bulbs contain mercury and need to be specially recycled and not just dumped into landfills. Finally, they may have heard that the fluorescent bulbs do not last anywhere near as long as Secretary Chu and others have said they would, making the economic trade off argument far less dramatic.

– Second, and much more importantly, in the big energy picture, shouldn’t this issue be way down the list of priorities? Shouldn’t Chu and his leadership team be working on far more important and impactful issues than making sure Americans do not waste their money on a few light bulbs? All of the private market examples of energy innovation above have done for more with far less than Chu and the Department of Energy have done with their billions and billions of  budget dollars over the decades.

Which brings us to the really big question: do we really need the Department of Energy anymore? Did we really ever need it to begin with? If the Department has not made any significant, new, or worthy contributions to alleviating our energy crisis over the past thirty years or so, what makes us think that track record will change in the next thirty years or so? Especially if babysitting Americans’ light bulb purchases is a top priority of the Department.

Shouldn’t the Department’s leadership team and its multitude of research labs be more focused on converting that solar powered plane into a solar powered car? Shouldn’t they be more focused on finding ways to put windmills on top of Americans’ homes using breakthrough technology? Shouldn’t they be more concerned with duplicating Subaru’s energy success with every other U.S. factory? Apparently not, they want to talk light bulbs.

Given this non-performance, most Americans would probably terminate this government organization tomorrow and save the taxpayers the billions of dollars we misspend on this inert organization every year. Again, the private market is moving boldly ahead with innovation, the Department of Energy has not and probably will not move ahead in the near future and it will continually cost us billions of dollars for that non-progress.

Consider some quotes from other, very informed people and their take on the Department of Energy’s performance, mission, and research labs:
 

  • From MIT investigators: “If a technology is viable, then government is not needed. If a technology is not commercially viable, no amount of government support will make it viable”
  • From a business/academic investigative team – “The (Department of Energy) labs are not now, nor will they become, cornucopias of relevant technology for a broad range of industries.”

If the Department of Energy serves no viable role in technology and if their labs will never produce the breakthrough innovations we need to get out of this crisis (i.e. no “cornoucopias of relevant technology”), let’s shut it down and use the money to start paying down our national debt. We need to do that whenever in order to keep the lights on, regardless of what kind of lights they are.

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