05 November 2010

Rand Paul's Innovation Myopia

The Washington Post reports today that Rand Paul (R-KY), newly elected to the Senate from the Tea Party, is opposed to government innovation in energy:
[Paul's] campaign Web site made it clear where Paul stood on using government funding and regulation to alter the U.S. energy supply.

"Any energy source that really meets the needs of the American consumer would not need the government to subsidize it," the Web site said, arguing that such subsidies distort the free market for energy and encourage companies to advance their interests through lobbying instead of innovation. "Just as we don't subsidize laptops and iPods, we should not be subsidizing solar and wind power."
This statement is right up there with "The government should keep its hands off my Medicare."  iPods can in fact directly trace their existence to government investments in innovation.

W. Patrick McCay describes this relationship in a paper titled, "From Lab to iPod: A Story of Discovery and Commercialization in the Post–Cold War Era."  From the abstract:
The 1988 discovery, made simultaneously in two European laboratories, of giant magnetoresistance (GMR) became the basis for the Nobel prize in physics two decades later. Companies like IBM rapidly commercialized the discovery, which paved the way for major advances in data storage commonly seen in computers and portable music players. GMR also helped catalyze a new field of research known as “spintronics” and provided a rationale for a major global investment in nanotechnology. This article examines the process through which a basic physics discovery was made and then commercialized. In this narrative, military agencies and commercial firms acting as “institutional entrepreneurs” fostered the growth of spintronics (and nanotechnology) in the post-Cold War environment.
You can thank DOD for your iPod, iPhone and iPad.  And US government subsidies and partnerships with the private sector, otherwise known as investments in innovation, played a central role.  This doesn't mean that every subsidies is worthwhile, but it does suggest, contrary to Paul's assertions that some in fact are.  Energy is one such area where government investment in innovation makes sense.

Forget about Paul's views on climate science, the fact that he does not appear to know how government works is much more troubling.  More on this next week.