The Invisible Hand Needs Some Help
Mike Treder
2008-05-21 00:00:00
URL

SmithNow, consider this...

A recent article from The New Yorker asks, "Is the world’s food system collapsing?"
Endless innovation has now generated a series of demands that are starting to overwhelm the market. [Paul] Roberts depicts the global food market as a lumbering beast, organized on such a monolithic scale that it cannot adapt to the consequences of its own distortions. In a flexible, responsive market, producers ought to be able to react to a surplus of one thing by switching to making another thing. Industrial agriculture doesn’t work like this. Too many years—and, in the West, too many subsidies—are invested in the setup of big single-crop farms to let producers abandon them when the going gets tough.
On another subject, Sir Nicholas Stern says:
"Climate change is a result of the greatest market failure the world has seen. The evidence on the seriousness of the risks from inaction or delayed action is now overwhelming. We risk damages on a scale larger than the two world wars of the last century. The problem is global and the response must be a collaboration on a global scale." Delivering the Royal Economic Society (RES) public lecture in Manchester, ahead of next week's world summit on climate change in Bali, Sir Nicholas said targets and trading must be at the heart of a global agreement to reduce greenhouse gas emissions. "The problem of climate change involves a fundamental failure of markets: those who damage others by emitting greenhouse gases generally do not pay," said Sir Nicholas.
Meanwhile, according to the BBC:
Between a quarter and a third of the world's wildlife has been lost since 1970, according to data compiled by the Zoological Society of London. Populations of land-based species fell by 25%, marine by 28% and freshwater by 29%, it says. Humans are wiping out about 1% of all other species every year, and one of the "great extinction episodes" in the Earth's history is under way, it says. Pollution, farming and urban expansion, over-fishing and hunting are blamed.
In a fast-growing, fast-changing, globalized world, is the invisible hand of the market failing us?

From food production and distribution, to global warming and climate change, and to drastic declines in wildlife, the leading indicators are ominous.

Obviously, these are all huge problems, and each is a difficult challenge on its own. Then consider that each one of them interacts with the others, usually making them worse. Moreover, any proposed solution to one problem must be assessed not only for its particular merits and costs, but also for its secondary effects on other problems.

Makes your head hurt, doesn't it?

We believe that a combination of scientific research, technological advances, and new systemic paradigms will be required. Relying only on market solutions, or only on strict government-imposed regulations, or only on the intervention of powerful new technologies is unlikely to result in a successful outcome. The market, civil society, and governing bodies all have a role to play, and each must be fully engaged in healthy collaboration with the others.

With regard to energy issues, Michael Berger of Nanowerk has issued a clarion call demanding a "nanotechnology Apollo Program for clean energy":
It wasn't market forces that landed a man on the moon; and it wasn't market forces that led France to build a nuclear energy infrastructure that now enables it to generate some 75% of its entire energy needs from nuclear power (just an example of what energy policy can do; let's not get into a discussion here of nuclear energy, though). But somehow, the leading political and industrial forces in the United States – together with China the largest emitter of greenhouse gases on the planet – think that a task so fundamental and massive as fighting global warming and environmental pollution should mostly be left 'to the market'. Unfortunately, it’s just a matter of economic reality that 'the market' will not invest in new energy technologies on a large scale until existing ways of producing energy become more expensive than producing alternative energies – which at the moment they aren't.

As is the case with almost all emerging technologies, government initially lends a helping hand before the technology becomes a viable
commercial proposition and the market takes over (remember how the Internet got created?). In the case of future clean energy
technologies, it appears that this 'helping hand' needs to be massive and swift. It's not so much that clean/green tech wouldn't develop over time on its own. But it's against the backdrop of accelerating global warming that it becomes a top priority that requires massive public resources. . .

Without going into the ideological discussion as to whether global warming is man-made or not – shouldn't we be doing anything humanly possible anyway to reduce the amount of greenhouse gases in the atmosphere to reduce the catastrophic effects of a warming planet?

There are basically four ideological camps that compete with each other in proposing the best solutions: At one end of the extreme are environmental groups that argue that we need stringent environmental laws and heavily tax all greenhouse gas emissions. At the other end are free-market proponents who believe that an unregulated capitalist system will self-correct and that industry will develop the necessary technologies and become 'green' over time because it’s in their own interest. In between there is a smorgasbord of – mostly uncoordinated – activities by state and local governments, grassroots campaigns, investors and entrepreneurs to provide small, local and partial solutions. And finally, there is a broad but loose coalition of scientists, interest groups and governments who propose that the best way out of our climate problems is massive international agreements (such as the Kyoto protocol) where governments voluntarily agree (or not, as is the case with the U.S. and China) to reduce harmful gas emissions by certain amounts within specified timeframes.
G7oil

While European countries have shown that a mix of all of the above works in moving their societies away from oil and towards renewable and clean energy sources, it is far from being enough to slow down the carbon dioxide increase in the atmosphere.

Realizing that existing solutions are not good enough, there is a small but growing number of voices that, in contrast to heavy regulations or the hope for self-regulating markets, propose a third way out of the energy crisis. Akin to the Apollo Program that landed a man on the moon, they put forward the idea of a massive, publicly-funded and technology-led project that will result in breakthrough technological solutions that can be implemented on a large scale and in a relatively short time.
I've already quoted quite a lot of this strong op-ed piece from Michael Berger. I won't include the excellent summaries he provides of  nanotechnology's potential role in creating clean energy, helping with energy storage and transport, or in reducing consumption (I suggest you read it all), but I will add this excerpt from his conclusion:

There is no doubt that nanotechnologies could provide the solutions to our energy problems, not today, and not tomorrow, but with a massive, coordinated and international effort, a 10-20 year timeframe seems not unrealistic.

Today's various national nanotechnology programs fund their vast hodgepodge of research initiatives more from a viewpoint of basic research (or, in the case of the U.S., military wish lists) than with a focus on commercial implementation – in the process scattering
funding resources by trying to cover each and every potential application.

Instead, the leading dozen or so nanotechnology nations should get together and commit to a concerted and massively funded 10-year program to develop commercially viable, clean energy solutions based on nanotechnology. Rather than have bureaucratic government departments oversee the effort there should be a new agency – much like the can-do organization that NASA was in the 1960s – to drive this effort forward in close cooperation with academia and industry.
Note that Michael is asking for a coordinated international effort, much like what CRN has called for. Note also that the program he proposes does not focus specifically on molecular manufacturing. We have little doubt, however, that with the vastly increased research and development entailed in this plan, atomically-precise productive nanosystems (the immediate forerunner to desktop nanofactories) would be a logically expected outcome.

How much would it cost?  Michael suggests $100 billion as a reasonable budget. That's very close, in fact, to what the U.S. spent on the Apollo program in the 1960's -- about $135 billion in today's dollars. A lot of money, yes, but when spread over a decade and with several countries contributing, it's quite affordable.

Why should we do it? One good reason is clean energy production, as discussed above.  Another is beginning to ameliorate the effects of climate change. Additional benefits include answers to growing water and food shortages, reductions in poverty, and major medical breakthroughs, to name a few. Finally, if we are able to organize an international collaborative effort that achieves molecular manufacturing before anyone else, this benign monopoly could help us avert the dangers of a nanotech arms race.


We hope this idea will gain momentum in the months and years to come. The longer we delay, the more we'll miss out on the opportunities, and the further we'll have to go to catch up on the growing problems we see around us every day.

Once the program does get started, we'd strongly urge that a major amount of funding and effort -- preferably equal to the amount spent on technical R&D -- is dedicated to understanding all the implications of nanofactory technology and preparing for its introduction so as to minimize the risks and maximize the positive outcomes.