30 January 2011

President Obama and the State University of Baloney

It is instructive to juxtapose two recent news events to consider which is more likely to cause harm.

In his State of the Union address, President Barack Obama issued the latest revision of his energy policy. He wants the government to inject itself even more than it already does into the energy business; the government, according to Mr. Obama, must "invest" more in "clean" energy by spending massively on research and incentives. (Translating this from Obama-speak to English, it means that the government must divert funds from free, productive enterprises to non-productive programs that are either popular with environmentalists or promised to special interests favored by the administration and lawmakers.)

"This is our generation's Sputnik," Obama trumpeted.[1] The logic is obvious, at least to Keynesian true believers: The solution to the crushing national debt with which Obama and his predecessors have hopelessly buried us (along with our descendants) is . . . to create another space race. The oracles of the Obama brain trust promise that if only we trust the government, we will "become the first country to have a million electric vehicles on the road by 2015." Actually, President Obama could have boasted more impressively that thanks to the marvels of Bush-Obama spending habits, we are quite likely to have 300 million bicycles on the road by 2025.

Meanwhile, at the University of Bologna, a pair of scientists claimed to have concocted a (relatively) practical cold fusion device. Naturally, this was met with skepticism, particularly considering the history of cold fusion claims. (Remember Fleischmann and Pons in 1989.) According to a report, Andrea Rossi and Sergio Focardi "announced that they developed a cold fusion device capable of producing 12,400 W of heat power with an input of just 400 W."[2] Supposedly, they performed a demonstration in front of about fifty people, a fact which taken by itself doesn't really say much, considering that Penn and Teller regularly fascinate thousands with somewhat more beguiling illusions before explaining how the tricks were done.

I have absolutely no way to judge the merits of the scientists' claims. The purpose of my bringing it up is that it serves as a useful reminder of how advances are actually made in the civilized world, and how bogus claims don't live very long in a free market. If there is any promise to this research, there is no shortage of private, profit-seeking individuals to invest in it. If cold fusion research ever succeeds, the investors will profit (fantastically, I would guess); if the research fails, the investors lose their own money, not other people's money. If the scientists produce fraudulent reports of progress in order to bilk investors, they can be prosecuted. Above all, no force is exerted upon anybody--scientists, investors, or people who do not wish to invest.

Observe how in every aspect of this scenario, government intrusions can serve only to destroy or hamper progress.

* If there is a potential profit to be made, no government is needed or wanted to call attention to it. Private individuals or corporations will decide to invest in exactly the proportion they judge to be worthwhile.

* Investors risk their own money, and deserve the rewards or punishments accordingly. The government accomplishes only two things when it "invests": (1) it forces some people to pay for others' mistakes and (2) it robs the earnings from private individuals who either would have spent their money elsewhere or would have invested that enterprise anyway.

* Government involvement in any capacity--encouraging investment in this area, discouraging (or forbidding) investment in this area, or encouraging investments in other areas--forcibly distort the market. The adverb "forcibly" is not an exaggeration or metaphor; it is precise. The only thing a government "brings to the table" is a gun.

* In a market free from government intervention--that is to say, free from force-- any research,including cold fusion research, must soon produce a result. The meaning of "soon" is up to the investors, who must balance the timeframe along with other factors when judging the return on their investment. Only when the government is involved can fraudulent or unprofitable pet projects continue without producing anything.

In his State of the Union speech, Mr. Obama delighted his audience by taking an easy shot at "Big Oil."

We need to get behind this innovation. And to help pay for it, I'm asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. (Applause.) I don't know if -- I don't know if you've noticed, but they're doing just fine on their own. (Laughter.) So instead of subsidizing yesterday's energy, let's invest in tomorrow's.[1]

This single passage is packed with so many blatant lies and logic problems, I would hope that at least ten percent of the audience would stir uncomfortably at our commander-in-chief's disingenuousness. The notion that oil companies, who have been plundered, hampered, and restricted by the government for over a century, are "on their own" is utterly ridiculous. Tax breaks--which mean that the government seizes less money than it would have otherwise--do not constitute a cost, but only let people keep the money they earned. The fact that tax breaks apply force to favor some companies or industries over others is true, but is obviously a result of the governments' meddling. And insofar as oil companies are subsidized, even if that is true, it is by definition the governments fault; they are the ones who do the subsidizing! (I highly recommend reading Alex Epstein's excellent work in this area at the Ayn Rand Center for Individual Rights. See NOTE 3.)

In any case, if the cold fusion claims from the University of Bologna turn out to be false or mistaken, nobody who hasn't invested will pay a penny for it--unless, of course, the research is prolonged by grants from the Italian government. When the president's formula for energy progress--massive state intervention--fails, it will inevitably (and absurdly) be blamed on freedom and "greed," providing the pretext for still more government power grabs.

Which of these is the greater evil?


1. "Remarks by the President in State of Union Address," transcript published on White House web site, 25 Jan 2011, http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address.

2. Lisa Zyga, "Italian scientists claim to have demonstrated cold fusion," PhysOrg.com, 20 Jan 2011, http://www.physorg.com/news/2011-01-italian-scientists-cold-fusion-video.html.

3. See, for example, the archives at the Ayn Rand Center, http://blog.aynrandcenter.org/author/aepstein/.

Also: Alex Epstein, "The 6 Myths About Oil," http://www.foxnews.com/opinion/2010/12/29/myths-oil/.


HaynesBE said...

An economist commenting on a yahoo discussion group had this to say about the "Sputnik moment":

America's "Sputnik moment"
So said the President last week. The irony of his statement is surely lost on him. While it's true that the 1957 Sputnik launch roused the country and gave rise to new emphasis on science and engineering education, it's also true that the Soviet missile capability and its industrial might in general were vastly overstated. Thus one of the issues that got Kennedy elected in 1960 was "the missile gap" which turned out to be entirely fictitious.

Obama, like all politicians, loves to play on fear as a way of garnering ever more power for himself and his pals. A little knowledge of history can inocculate us against such fears.

Warren C. Gibson

Liberal Stupidity said...

Beautiful marriage of the two subjects in your title! Excellent article. I will say that Obama has a PHD at the University of Baloney...