Eliot Spitzer on Transformation and Stimulation
Former New York Governor Eliot Spitzer gives us a look at the kind of stimulation he would give the economy in Slate:
The incoming Obama administration and Congress are planning a huge fiscal stimulus package. They hope that such a stimulus will catalyze an economic turnaround and be a cornerstone of a “New New Deal.”
Here is where the New Deal analogies are instructive. The New Deal probably didn’t pull us out of the Depression; World War II did that. What the New Deal did was redefine the social contract—perhaps just as important an outcome. The ultimate significance of the Obama package may be not its short-term demand-side impact but rather its capacity to transform our economy and, in turn, some of the fundamental underpinnings of our society. This introduces the second major problem: The “off the shelf” infrastructure projects that can be funded immediately and provide immediate demand-side stimulus are almost by definition not the transformative investments we really need. Paving roads, repairing bridges that need refurbishing, and accelerating existing projects are all good and necessary, but not transformative. These projects by and large are building or patching the same economy with the same flaws that got us where we are. Our concern should be that as we look for the next great infrastructure project to transform our economy, we might rebuild the Erie Canal and find ourselves a century behind technologically.
So Spitzer thinks the economy needs to be transformed into something better. Does he propose that we forge ahead in an environment that allows the free market and the awesome intelligence of millions of American citizens to find the way forward? No. He proposes that government picks winners and losers in the new economy. Here is perhaps the most idiotic example:
Second, the most significant hurdle to beginning the shift to nongasoline-based cars is the lack of an infrastructure to distribute the alternative energy, whether it is electricity—plug-in hybrids—or natural gas or even hydrogen. Once that infrastructure is there, it is said, consumers will be able to opt for the new technology. If that is so, let us build that infrastructure now: Transform existing gas stations so they can serve as distribution points for natural gas or hydrogen, build plug-in charging centers at parking lots, and design units for at-home garages. These would, indeed, be transformative investments.
Where should the debunkulating begin? First, gas stations are private property. It’s rather hard to transform private property in a government program without being thuggish about it.
Second, massive deployments of immature technology hamper genuine progress. Building out a massive electric car infrastructure based on current battery technology would be an environmental and economic disaster. Today’s batteries are not only inefficient, they are harmful to the environment to produce and dispose of. They also are not suitable as a replacement to gasoline as an energy storage medium for cars because of weight, charging time, and energy leakage over time.
Ultracapacitors, on the other hand, are suitable for automotive use. EEStor has just patented a capacitor that provides the same performance as a Tesla roadster battery while weighing one-third as much and having a charging time of seconds when enough power is available. They also require a different charging system for the full benefit of the technology to be realized.
Instead of enabling a greener, high-tech future, Spitzer’s transformative plan would put it farther out of reach. This consequence is not peculiar to Eliot Spitzer planning the economy, of course. It comes with all forms of centralized economic planning. No human is intelligent enough to make efficient economic decisions for large groups of people. The amount of information and understanding needed to pick technologies that will most efficiently meet the needs of people who will use them is staggering. Not only must all the technologies be thoroughly understood, but so do the needs of the people who will be using them.
The free market solves this problem by changing the scope of the decision. Instead of trying to figure out the needs of millions and picking one technology, a free market offers several technologies and allows buyers to consider only their own needs. While not everyone buying technology thoroughly understands what they’re buying, they do know what they want out of it. Sometimes this leads to a clear winner, while other times it leads to a continued selection of technologies. Eventually, dissatisfaction with the choices allows a new idea to take hold.
This process is vital to the continued health of the economy, yet interfering with it is exactly how Spitzer, Obama, and the left want to stimulate the economy. Thanks, Mr. Spitzer, but what you’re offering is stimulation we don’t need.