"We need an all-out effort, a Manhattan Project, a man to the moon, to become less dependent on fossil fuel and the Middle East."
So said Representative Chris Shays (R., CT) following a trip that included stops in Iraq, Jordan, and Israel. Few would dispute the benefits of reducing America's reliance on energy produced in a politically volatile region. Democratic strategist James Carville reports that his polling currently identifies energy independence as voters' number-one national security concern, surpassing even the war on terrorism.
Congressman Shays's proposed strategy for achieving that objective, however, is more debatable. Successful though they were, the massive, government-directed initiatives of the past are inappropriate models for bringing about energy independence.
The Manhattan and Apollo programs were essentially vast engineering projects. They focused on specific, predetermined goals, namely, the production of an atomic bomb and a lunar landing. Scientists had already pointed the way by, respectively, splitting the atom and launching vehicles into space. The project chiefs were not charged with the more complex objectives of defeating the Axis powers or achieving broad technological superiority over the Soviet Union.
At present, no one can name a potential scientific breakthrough that would single-handedly end U.S. energy dependence on fossil fuels and the Middle East. It is not even clear that a wholesale shift toward domestic, renewable sources is a realistic hope. If significant strides are to be made, however, the solution will probably involve a combination of approaches, such as nuclear power, solar energy, biofuels, conservation, and amelioration of the environmental problems associated with certain domestic fuels.
Scientific advances on any of these paths could accelerate progress toward greater energy independence. A centrally managed program along the lines of the Manhattan Project, however, is not the mechanism most likely to capitalize on scientists' creative interaction. The top-down approach runs the risk of concentrating research in some ultimately unproductive area.
As a nation that has built a vibrant economy through market-driven innovation, the United States should not underestimate its diverse network of profit-seeking research organizations. Even if the major oil companies truly are implacable foes of alternative fuels, as conspiracy theorists contend, America has plenty of entrepreneurs with no vested interest in preserving the status quo. The failure thus far of market-driven efforts to produce a silver bullet for energy independence does not necessarily prove that the profit motive is unequal to the task. Perhaps it merely underscores how formidable the challenge is.
Let us imagine, though, that it is possible to make a persuasive case for market failure in the quest for greater energy independence. That is, economic studies might show that private research organizations, perceiving that they cannot capture enough of the society-wide benefits to recoup their investment, are devoting too few resources to the effort. That would give the government a valid reason for intervening. It would not, however, justify creating a centralized research behemoth in the style of the Manhattan Project. A better strategy would be to harness the power of many smaller, more nimble organizations.
The government's reflexive response to that suggestion will be an approach just one step removed from a Manhattan Project. Reluctant to relinquish control, Congress will allocate a massive research budget and begin awarding grants. Unfortunately, taxpayers can count on billions being wasted in the process.
Politically connected corporations will greet the launch of the grand patriotic effort with stepped-up lobbying. They will endeavor to steer the funding priorities toward their own business priorities. The big companies will persuade Congress to define their existing research initiatives as part of the battle for energy independence, no matter how tangentially related. Many of the dollars funneled into the project will have little prospect of furthering the mission.
A more cost-effective course would be to pay for results, rather than for activity. Congress could establish large monetary rewards for inventing specific, commercially viable methods of displacing imported oil. Separate bounties would be offered for breakthroughs in technologies such as wind power, geothermal, and oil shale. In exchange for the rich bounties, discoverers of non-subsidy-dependent approaches would surrender the rights to the public domain.
This sort of spur to technological progress was employed successfully in the eighteenth century by the British Parliament, which established a £20,000 award for a method of determining longitude within half a degree. More recently, the magazine Business 2.0 asked a group of venture capitalists and "serial entrepreneurs" to name business ideas they would like to develop. Their answers included a longer-lasting cellphone battery and an in-dash computer that projects data onto a car's windshield. The financiers offered inventors a total of $100 million worth of encouragement.
In creating monetary spurs for innovation, Congress could consult with disinterested scientific experts to identify the most valuable technological milestones. Realistically, it would be impossible to depoliticize the process entirely. Corporations would be unable, however, to load the specs with lucrative make-work projects.
Summing up, the fact that the Manhattan and Apollo Projects accomplished their missions does not automatically make them worthy of emulation for present purposes. If something beyond the ordinary profit motive is required to bring forth the means for greater energy independence, the government should follow two principles:
Martin Fridson is author of Unwarranted Intrusions: The Case against Government Intervention in the Marketplace (John Wiley & Sons, Inc.).