Fellow blogger David Foster of Photon Courier had an interesting comment to one of our posts last week that dealt with the auto companies asking for loans… err bailouts… to supposedly help them re-tool factories and develop new energy efficient technologies. As he put it,
A fundamental assumption of the political classes seems to be that any *new* technology must be produced by the same companies that were leaders with the *old* technologies. Had this approach been applied to the Internet (remember the "national information infrastructure"?) we would have given huge subsidies to AT&T and IBM so that they could develop some Frankenstein monster of a telecommunications technology. In reality, the old-technology leaders are almost never the new-technology leaders. Innovations in vehicle propulsion are likely to come either from startups or from established companies in different businesses. Why should we subsidize GM instead of GE to develop electric cars? GE knows quite a bit more about things electrical, especially since GM mindlessly disposed of the locomotive division.
That’s a great point, and one that to my knowledge has not been brought up in any of the articles I’ve read. Why should we assume that GM, Ford, or even Toyota for that matter, should create the future car? When there are hundreds of startups struggling to develop new transportation, engine, and power technologies, why should we subsidize (bailout, whatever) a large company? Especially one that has a demonstrated lack of leadership?
Would we have wanted a typewriter company to create the first computer? The myriad of yellow page printers to dive into search instead of Google?
Is bailing out GM a form of forced kaizen… incremental improvement… instead of the radical kaikaku innovation we need at this point?
Perhaps a better use of the $25 billion "loan" would be something along the lines of an "X-Prize" for transportation power efficiency. Or even 25 $1 billion X-Prizes for the various facets of the problem. I bet there would be quite a few innovative startups diving after that level of coin.