Authors: Gary Shapiro
This requires more than government subsidies. Subsidies are what you give when you’re pretty sure what you’re subsidizing isn’t a real industry. It’s like our ethanol subsidies. But the further we get toward the critical moment when the world’s oil resources dwindle and oil prices increase, the further we get to America’s fall. Our energy needs require oil. The United States consumes more than twice as much oil as the next most consuming nation (China). When the spigot runs dry, we will be in a world of hurt. We have mistakenly come to assume that we’ll figure out something when it’s urgent. As Winston Churchill once supposedly remarked (insultingly, but also approvingly), “You can always count on Americans to do the right thing—after they’ve tried everything else.”
Now this might be true. But we seem to have taken Sir Winston’s summation too much to heart. As Americans, we like to think that, in the end, we’ll figure it out. We have before; we will again. As much as our history bears this out, we should also consider the exceptions to the rule. Slavery? We had eighty years to figure that out, and when we finally got around to it, we nearly destroyed ourselves. Our position before World War II? We were dangerously ill prepared to fight a technologically advanced enemy, never mind two at the same time. We know the end, so it’s hard to appreciate just how precarious our situation was in early 1942. We had no serviceable Navy (destroyed at Pearl Harbor), we had terrible tanks, and we could barely muster a decent army (read about our travails in Northern Africa).
In both cases, we prevailed, but by the skin of our teeth. As Wellington said of Waterloo, it was a close run thing. I think we’d rather have not fought the Civil War to end slavery nor seen so many American lives lost in World War II before we figured out how to fight a war.
In any case, we are nearing the point in our energy needs where doing nothing is no longer acceptable. Our concern with the Middle East is in part a result of our dependence on its largest export. If you don’t agree, ask yourself why we aren’t as concerned with the devastation of Africa. The whole continent is destroying itself, yet somehow Africa’s concerns aren’t in our national interest. Now it’s not just the United States that is obsessed with the Middle East; the rest of the civilized world depends on the oil as well. But that’s why it’s our time to lead.
The reality is that our dependence on foreign oil is an economic concern, it’s a national security concern, and it’s an innovation concern. We must cut our reliance on overseas oil for at least three reasons: economics, foreign policy, and innovation.
The first reason is economic. Every dollar we spend on overseas oil is a dollar of outflow not supporting American business or jobs. This outflow of currency without creation of U.S. jobs is harmful to our nation. Like the newspaper industry, the oil consumption industry uses an outmoded business model. Technologically speaking, it’s inefficient to find, produce, and deliver oil, especially when we know how to get energy by more direct, if not economic, means.
Second, our reliance on imported oil affects our foreign policy. It’s come to the point where this assertion is no longer a partisan issue. In his 2008 bid for the presidency, John McCain railed against our dependence on overseas oil. Congressional Republicans rail against it today. No one thinks that to have an economy entirely dependent on a volatile region of the world is good policy. It’s like having your supply source at the edge of Niagara Falls.
The third reason is for innovation. In a previous chapter, I mentioned the atomic bomb and the moon shot policies of the United States. Of course, I mentioned them as exceptions to the rule that government can’t promote innovation. But I also said that both those attempts were done in times of national crisis, and that helped spur a very rare successful collusion of government and the private sector. We are in such a moment with energy today. With a national commitment to rid ourselves of oil dependency, the private sector can and will find alternatives. But we need to be smart about it.
Relying on fuel-efficiency mandates on car companies and unrealistic assumptions about renewable sources of energy is not a strategy. It’s a halfhearted attempt by politicians to prop up a donor industry or generate good headlines. It’s uncoordinated, it’s unsophisticated, and it’s unrealistic. Putting pressure on American companies, such as with cap-and-trade mandates, is a recipe for disaster. It punishes instead of promotes.
However, we can eliminate reliance on overseas oil by 2025 by taking concrete steps:
The president must challenge Americans.
This is the man-on-the-moon challenge that Kennedy issued. We need a deadline, and we need a national plan to get us there, with measurable deliverables and consequences for failure. The president should follow up by announcing that each state’s oil usage will be measured and that those with the highest percentage drops will be recognized and rewarded
We must build new nuclear power plants.
We need more electricity: estimates for usage of many hybrid and electric cars assume a stable electricity source. If France can get 80 percent of its power from nuclear, so can we. The anti-nuclear movement,
which unfortunately still holds sway in Washington, is based on thirty-year-old presumptions and spectacular failures, like Three Mile Island and Chernobyl. Nuclear energy is safe, carbon-neutral, and cheap, when we get the plants built. But our regulatory process is designed to delay and impose huge costs on every new nuclear project. The U.S. process takes decades, and has crippled our nuclear industry. Japan, Korea, France, and others have much shorter planning and construction cycles.
We must continue to pursue renewable energy sources but be realistic in our estimates.
Solar, wind, and saw grass are nice, but their ability to replace existing energy sources has been exaggerated. We should still encourage their development through tax benefits, but we need an honest assessment of their potential to help us set realistic goals.
We must incentivize Americans to buy cars that use less gas.
I’m not generally in favor of higher taxes just because if you want less of something you tax it. But that’s why it makes sense to institute a higher gas tax. This is only punitive if you drive a gas guzzler. Gasoline taxes should be increased five cents every six months for the foreseeable future. This will encourage Americans to consider fuel efficiency in their car purchases over the long term. It will also influence where they choose to live over the long term. Proceeds from the gas tax should be invested in alternative fuel source technologies and in infrastructure. The anti-tax brigade should recall that President Reagan raised the gas tax to pay for infrastructure.
We must encourage people to move closer to their jobs.
My company offers any employee $25,000 if the employee buys a home in the county where we are located. The purpose of
the program is to save energy, to get our employees to spend less time commuting, and to establish loyalty. The $25,000 is in the form of a three-year, forgivable loan. Even without the tax benefits, the program is successful and appreciated, and a good recruiting tool to attract employees. Imagine if this loan were tax-free income—many people would move closer to their jobs. Plus real estate agents would be quite busy.
We must encourage telework.
Not every employer has jobs amenable to telework, but many jobs are, and they should be encouraged. This means formal programs, restricting employer liability, providing the equipment and tools, and deploying broadband and leadership at the top. Major weather events such as snowstorms have proven that many employees can and should be encouraged to spend some time working from home.
Jim Traficant was undergoing his second liver transplant when the thought struck him,
There has to be a better way.
He had had a fast recovery following the procedure, but it wasn’t long before complications arose: His body was rejecting the new liver. He was rushed back to the hospital, where he remained for a month and was kept alive with expensive life-threatening treatments.
When he got home, the rejection happened again. He repeated his ordeal once more. After another month in the hospital, where he was treated with experimental medication, Jim returned home and began to study his medication and blood work results. This led to a breakthrough. He was able to identify an algorithm that could predict when rejection would occur. When his body rejected the transplant a third time, Jim was prepared. Based on the results of his work, Jim was able to avoid another hospital stay with the proper medication.
The better way Jim realized was in the data—the health information. It was the key to proper medical treatment. What astonished
Jim was that his doctors weren’t so much interested in the data as they were interested in treating the problems that arose. In other words, Jim’s treatment was reactive rather than proactive.
This didn’t make any sense to him. He knew there were reams of data on his condition and on others like him. Why couldn’t we use that data, as a physicist uses equations, to predict a future event? Jim wanted to find a way to put the “science” back in medical science. For too long, he felt, medicine has behaved more like an art: You feel your way around until you hit upon the solution. That might work for a painter or writer, but it doesn’t work when lives are on the line. As many as 98,000 Americans die each year as result of medical errors, with up to 7,000 of these deaths attributed to adverse drug events from medication errors. That’s a crisis, and Jim was determined not to allow himself to become another statistic.
These days Jim Traficant is the vice president of Harris Corporation’s Health Care Solutions business. One of Harris’s principle projects is developing the CONNECT system, which is an opensource software that allows health-care providers to exchange patient information seamlessly. It acts much like a Wikipedia page—connecting your information to every other conceivable page of relevant information. The U.S. government has incorporated CONNECT in many of its departments, such as the Social Security Administration and the Department of Veteran Affairs, to establish interoperability between agencies and to improve care. This all resulted from Jim’s insistance as a patient on the edge of life: there had to be a better way.
If I could think of a credo for innovation, I probably couldn’t do better than that: Finding a better way is the heart of innovation. It’s recognizing a need, knowing the tools at your disposal, and
creating
that better way. Jim found a better way, and today thousands of patients are better off because Jim wasn’t willing to accept the status quo.
And now CONNECT is revolutionizing the way we think about health care. It’s lowering costs and improving patient care, leading to fewer medical error fatalities. That’s innovation at its best.
But there’s a flip side to this health-care coin. The Obama administration’s health-care reform law made greater interoperability between government agencies a priority. It has helped establish CONNECT as the gateway to reforming our entire health-care system—for the better. But the law is also a classic example of the government trying— and failing—to use government as a stand-in for the free market.
For instance, the government cannot reduce costs—in any industry— without having prices rise somewhere else. Only the free market can do that. But that’s not my biggest beef with Obamacare. Rather, my concern begins with how this whole bill of pie-in-the-sky promises was created in the first place.
What all Americans should be upset about is how both parties turned an appropriate national debate on the health of Americans into a unregulated scrum in which brute force, deception, and backroom politics resulted in bad legislation. The absence of real substantive discussion or any attempt to agree on the facts led to the party-line passage of a huge, little-understood spending program.
First, calling it health-care “reform” was totally deceptive. The bill’s focus was obtaining coverage for working poor Americans who do not presently have health-care coverage. Most of the bill prescribed a method of defining the coverage and then imagining creative ways of paying for it.
Second, a central premise of the debate was that somehow Americans now have inferior health care compared to the rest of the Western world. Statistics on infant mortality, birth weight, and
life expectancy were used to “prove” that Americans paid more for health coverage but got less in return. Yet those statistics say more about American society than they do about American health care. Compared to the rest of the developed world, more underage women have babies in the United States; compared to the rest of the developed world, Americans are fatter. While we can regret these facts, we cannot say they are the result of America’s inferior health-care system, so using them to argue for health-care reform is disingenuous. These are lifestyle choices that American make, and they cannot and should not be viewed as caused by the health-care system.
In fact, by measures that don’t consider lifestyle, such as cancer detection and cure rates for most diseases, the United States is the best nation in the world for health care. There is a reason the world’s wealthiest individuals with life-threatening diseases flock to the U.S. for treatment: We have the most successful and innovative treatments. So the premise of “reforming” health care was flawed.
Third, the debate was most memorable for its lack of facts. In July 2009, President Obama charged that a surgeon gets paid $50,000 for a leg amputation. In fact, as the American College of Surgeons pointed out the next day that Medicare pays a surgeon between $740 and $1,140 for a leg amputation. This payment also includes the evaluation of the patient on the day of the operation and patient follow-up care that is provided for ninety days after the operation.
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