Tech Pork

Remember the digital TV converter box subsidy? Last July, the Department of Commerce released for comment some fairly sensible rules for administering the program, given the constraints set out by Congress.

The deadline for public comments was this Monday, and–to no one’s surprise–quite a few commenters wanted more money. The broadcasters and TV manufacturers, for instance, complained that the program would be limited to households that do not have cable TV. “No television left behind,” was the unstated theme, as they expressed concern over disconnected televisions in basements across America.

A coalition of retailers–including firms such as Wal-Mart, Best Buy and Circuit City–supported this position. They argued for “leaving such issues to the marketplace, by letting those citizens who believe that they need a Converter apply for a coupon to get one…” This is indeed a novel reading of Adam Smith. Everyone who wants a subsidy should get one. It’s a variant of the invisible hand: outstretched and palm up.

But the retail stores didn’t stop there. They also argued that they should be directly compensated for accepting converter box coupons. The “investments, expenses, and risks,” they maintained, should not be placed “solely on the backs of retail vendors who come forward to participate in this program.”

Let’s recap. The DTV program will cause millions of consumers to drive over to their local Circuit City or Best Buy or Wal-Mart, coupon in hand, to buy converter boxes. The stores can charge whatever they want for these boxes. They will also be reimbursed by the government for the face value of the coupons. A fair number of these consumers–once in the able hands of the store sales staff, will no doubt end up buying brand-new digital televisions from the retailer instead of a puny converter box. And the stores want to be paid for the burden of handling all this additional business?

Nice try. But the argument is utter nonsense. The retail industry lobbyists should be congratulated for their creativity–and perhaps nominated for some lobbying chutzpah award. And then sent away empty-handed.

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Are you good at geography? If so, you may enjoy the small geography quiz buried deep inside of the telecommunications bill now pending in the U.S. Senate. Hidden on page 121 is a paragraph directing the FCC to expand universal service payments to “insular areas, including any insular area that is a State comprised entirely of islands…”

Can you name all the states that are comprised entirely of islands? No, Rhode Island isn’t one of them. As it turns out, the list of states covered by this provision is quite short:

1. Hawaii.

And, by total coincidence, a senator from that state–Daniel Inouye–is the co-chairman of the Senate Commerce Committee–which wrote the bill.

Continue reading →

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Dan Gillmor calls out libertarian exec TJ Rodgers for his “hypocrisy” in entering the solar power business, a business that’s heavily subsidized by the government. Supposedly it’s “phony libertarianism” to rail against big government while participating in an industry that benefits from government largess. That doesn’t seem right to me. As the article puts it:

The solar-cell industry is reliant upon government subsidies, to the consternation of Mr. Rodgers, an outspoken libertarian.

“The culture that got built is what I call a grant culture,” he said. “They’re all pitching to the U.S. government, looking for funding.”

Such criticism aside, the subsidies are in place, both in the United States and Europe, and Mr. Rodgers is ideally positioned to capitalize on the government support he has long railed against. “I can make a good profit for my shareholders,” he said, “and provide a lot of good eco-stuff to the world as well.”

The paradox is that Mr. Rodgers, 58, who has long been a free-market iconoclast, even by the tough-guy standards of the valley’s chip industry, may end up striking pay dirt by moving from the cutthroat world of computer processing power to the more sensitive realm of solar power.

It doesn’t mention whether his company is getting subsidies directly from the government, or whether the adoption of solar power is merely being driven by subsidies to his customers. If it’s the latter, I don’t really see how that’s hypocrisy. Solar power is a perfectly legitimate business, which would exist (albeit in somewhat smaller form) in the absence of government subsidies. As long as Rodgers isn’t himself actively pursuing government handouts, I don’t see why he should be expected to avoid the sector entirely merely because some of his customers are getting them.

More to the point, the long-run success of the solar power industry will be driven by the underlying economics of the energy market, not government handouts. If the cost of solar panels drop to the point where they become an economical alternative to the grid, (or the price of other energy sources continues to rise), there will suddenly be a huge market for solar panels. The government handouts obviously don’t hurt, but they won’t be what makes or breaks the effort. Libertarians have as much right to compete for that market as anyone else.

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Once again, some comic relief from France. A year ago, I wrote about French efforts to create a French search engine for the Internet, a kind of Gaullist Google. The idea, presumably, was to create a search tool consistent with French rather than Anglo-Saxon values. (And I thought Google just let people find what they are looking for.)

It all sounded like a bad joke. But, according to a a report today in MIT’s Technology Review, the French government is still serious about the project, and last week made a grant to Thomson, the French electronics manufacturer, to develop the product. The 90 million Euro grant was one of many given to big French companies for high-tech products.

“It is essential,” said French president Jacques Chirac in announcing the grants, “for us to rediscover a taste for risk and pride in innovation.” But he has certainly chosen an odd way to achieve that–government grants to large corporations. Meanwhile, some observers noted, France’s (less politically powerful) start-ups remain starved of capital.

It’s a good sign that France’s leaders are asking why Europe has yet to produce an infotech success story like Google,” the article quotes French IT consultant Alexis Mons saying. But, he says, the top-down approach is the wrong one. As he puts it: “There is no innovation iin innovation management in Europe.”

The bottom line, according to Bernard Buisson, coauthor of a recent book on innovation: “Instead of enabling the creation of new companies, the [French] state is going to waste several billion euros in large projects that won’t deliver.”

The French government wasting money on large projects that won’t deliver? Stop the presses. We have news here.

Somehow, I suspect Google isn’t worried.

(Oh, by the way, the title of this post was translated into French by, of course, Google’s translator tool.)

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Joe at Techdirt weighs in on our alleged need for a “Manhattan project” on alternative energy:

Charles Cooper of News.com is upset that on President Bush’s recent trip to Silicon Valley, he didn’t speak with more substance on how technology could help ease our energy problems. Specifically, Cooper would have liked to see Bush call for a new Manhattan Project, this time focusing on alternative energy. First of all, he should know that you can never get much more than rhetoric from a politician. Second, we don’t need another Manhattan Project–the market is already taking care of that. VCs are pouring record amounts into energy technology, none of which required the President’s approval. There’s even some reason to believe there’s overinvestment in new technology, which could be bad for VCs, but great for the economy on the whole. While centrally planned projects might be appropriate for military applications, a pending proposal to provide prize money for hydrogen breakthroughs is much more intriguing. As in other areas, getting people to compete for prizes and profits is a better solution than just throwing a bunch of money at them.

An even broader point is that it’s not even clear what the goal of a “Manhattan project” would be. With the original Manhattan project, we had a very clear goal: blow stuff up by splitting the atom. But it’s likely that improving energy efficiency will take a lot of small technological advances that will gradually reduce our energy consumption and/or increase our energy supply. We have lots of renewable energy sources already, the problem is that none of them are economical. So the most important constraints are economic, not scientific or technological. Those aren’t the kinds of problems you can solve by putting a lot of smart people in a room.

I think you’d have the same kind of problem with a hydrogen prize. The criteria necessary to make hydrogen technology viable are complex, and it’s not even obvious that hydrogen is going to be a viable technology in the first place. Add in the likelihood of special interest lobbying, and what you’re more likely to do is to give a whole bunch of money to some company that develops a technology that meets the specs but isn’t actually useful for anything.

And in any event, if hydrogen technology is a viable alternative to fossil fuels, there’s already a massive pot of gold called “profit” for whoever figures it out, so it’s not like there’s a need for additional incentives.

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