Corporate Socialism, Intelligently Applied

By Warren Brown
Sunday, September 28, 2008

I wish to amend my support of the domestic automobile industry's request for a $25 billion federal loan.

The money should be given. It is an investment that will yield more favorable economic results than the Treasury Department's plan to take $700 billion out of taxpayers' pockets to buy bad bank debts.

But the loan to the car companies to produce more fuel-efficient cars and trucks should contain a provision that promotes competition. The best way to do that is to give part of that $25 billion -- approved in last year's energy bill but still unfunded -- to small, innovative companies such as AFS Trinity Power of Bellevue, Wash.

AFS Trinity is a privately owned company specializing in the research and development of energy storage devices -- batteries, flywheels and ultracapacitors that can be used to electrically power cars and spacecraft.

Because it essentially is dedicated to research, AFS Trinity is more wedded to the pursuit of solutions than it is to rolling out the next hot car. That is a good thing.

Solutions-oriented companies are less prone to say "we can't" and more likely to ask "what if?" That mentality often is the difference between bold, paradigm-changing innovation and compromised technology dressed up to look new, the latter being a technique often used in the automobile business to enhance the retail value of putatively advanced vehicles.

On the other hand, many genuine contributions to the automobile have come from outside the laboratories of original equipment manufacturers like General Motors, Ford, Chrysler and Toyota.

For example, there is the intermittent windshield wiper, designed to adjust its sweep to various precipitation forms and loads, invented by a lone engineer, the late Robert Kearns. Advances in airbag technology have come from independent research and development organizations such as SRI International of Menlo Park, Calif. Some of the best and most innovative research on electric cars is being done outside Detroit by companies such as AFS Trinity, AC Propulsion, Fisker Automotive, Global Electric Motorcars and Tesla.

Small companies and lone inventors have often taken the lead in systems innovation. These companies and individuals need to be identified and supported. Their thinking, research and work could determine success or failure in our nation's bid to reduce its dependence on foreign oil.

Critics claim that federal funding of businesses in trouble and those in transition amounts to a refutation of the concept of free enterprise -- a system in which businesses rise or fall on their ability to generate, maintain and wisely invest market-derived capital.

Bailing out broken banks and troubled mortgage and financial companies, and lending money to car companies that have made more than their share of mistakes, amounts to corporate socialism, critics say.

I counter that that corporate socialism, intelligently applied, makes sense. In the case of the proposed loan to the automobile companies, that intelligence is best exercised by supporting multiple engines of innovation, including those companies operating outside of the economic and political purview of Detroit.

If that means less money for Detroit, so be it. Perhaps a shortfall would push the domestic car companies to think more carefully and act more wisely in their quest for cleaner, more efficient cars.

Rarely has the federal government undertaken to help a targeted industry move forward with a massive infusion of tax dollars. It is good that the government is contemplating doing that now. Success in that endeavor could lead to more jobs, cleaner cars and trucks, and less dependence on fuel from countries that wish us harm.

But Detroit should not get all the money. Over the years, I've been impressed by the ability of smaller, substantially less-capitalized companies to out-think and out-innovate their supposedly superior rivals in Detroit. Those companies -- and, if and where possible, certain individual inventors -- should be included in the automotive industry's loan program.

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