What "United" in the name of the country stands for? We appear the only fools in the community of nations consistently giving away the family jewels while happily preaching to the "market forces". Everybody envies/praises Germany ... can anybody explain while they still making the main lines of BMWs, Mercedes etc in-country, are they stupid and don't know that they are supposed to outsource, outshore out-everything because "the market forces" demand that?!
Fortunately for us in the US, the government *is* the people. And if the people don't like what their elected officials and their bureaucrats dream up, the people push back.
I remember the first time this really struck home with me was with the whole debacle concerning funding for the Boeing SST (supersonic transport). Ca. mid to late 1960s. Same thing there. If SSTs were such a great idea, Boeing would not have needed government funding.
As you say, without the government funding, they would go to the private sector. E.g., to venture capitalist firms that go to great pains and great risk when they provide funds, and then work hard to see that their projects succeed.
Actually as a citizen of country who elected officials, you gave consent ... just like you gave consent to public transportation you may never use, etc. There are many public transit systems that have terrible levels of ridership, but you don't see people up in arms even though the "loss" is likely greater than A123.
If A123 did not get government money, they would have gone to the private sector and you may have found their technology owned by a foreign entity (still may?) who many years from now will be selling it back to you at many times its worth.
The reality as well is that the world is not exclusively a free market economy as much as we would like to believe it is. Governments regularly provide enormous amounts of subsidies to industries that are considered important .... think Boeing and Airbus. What about the massive low interest loans that China provides? What about the massive subsidies to the oil, gas and coal industries.
The point is you can try to play "fair" all you want, but when you don't make the rules for the game ....
Battery storage is a highly strategic technology. It does need to be nurtured. Businesses fail all the time and the government already provide massive subsidies for this, it is just doled out millions of times in small volumes so it does not make for as interesting news.
If products such as batteries or EVs are "a good idea to push," then the market place will push them. Which means specifically, people with money, who understand the problems and personally take the risk, will put that money behind the "good idea."
If government wants to fund basic research in battery technologies, e.g. as grants to universtities, I wouldn't have a problem with that. That's because such long term rewards *may* indeed be hard for industry to fund adequately.
It's always easy to claim that something is a "good idea," when you're throwing other people's money at it. Without their consent.
I don't know what was the nature of the funding in this case, but often government provides 'loan guarantees' which are like insurance on the loans the company gets. That was for instance the case with Solyndra.
Some of those investments succeed, in which case government doesn't pay anything; some fail, resulting in taxpayer being on the hook.
The point is, it's silly to call this a bad risk--it's understood, that's how the system works. You could argue whether the direction of the efforts being supported makes sense---but energy management such as batteries and solar power seem like a good area to push.
"The problem with market based economies is that they are poor at providing things for which a price tag does not exist. Investors expect returns."
Don't think so. Market forces have always been quite good at developing products for which they can predict a relatively near-term demand. Market forces are unlikely to think out decades ahead, though, and that's where government funding might make sense.
Conversely, government funding of pet projects is notoriously oblivious of practical realities. And it's not surprising, when individual politicians and bureaucrats make decisions on the spending of millions of dollars, without taking personal risk in doing so, and very often without detailed knowledge of the subject matter.
Count me squarely among the "government shouldn't be picking winners and losers" crowd, on this one too.
I can accept government investing in education, in basic research, in space exploration, and other such endeavors. But battery technology, electric cars, and solar panels are an entirely different matter. These are products. Products that the market can certainly develop on its own, if it sees demand and credible opportunity (meaning, technology that credibly applies), without having to cater to the facile slogans of politicians.
The common term for this is, "throwing good money out after bad." The shame of it is that the voting public sees overly activist but knowledge-challenged polticians as being "leaders," rather than understanding that their motivation is only to garner more votes. The only remarkable aspect of these recent failed experiments has been how fast they completely went under. Even before many of the politicians that pushed the ideas even left office. How rude of them!
Yep. I've seen a fair number of startups whose business plan seemed to be "Get ourselves out there, establish our identity and technology, and grow to the point where we become an attractive takeover candidate for a bigger outfit that wants to add what we do to their portfolio".
I think something like that was likely if A123 *hadn't* run out of money first. In this case, the question tends to be "How big do you have to be, and what sort of resources do you have to have to make a go of what you're trying to do?" The answer is bigger than they were and with more resources than they had.
They might have done better to recognize they *were* best suited to be an acquisition candidate instead of trying to go it alone. Their technology has a much better chance of being further developed and adopted in the hands of somone like Johnson.
That point is worth making for the sense that the technology may someday be beneficial.
However, the "...worth the risk" statement and assertion that we will need stored power are very subjective and taint the article. Most everyone cheers when humanity advances by some measure, but the worth can be measured by how many voluntarily give their support ($) to the endeavor.
My point was that the battery technologies that A123 brought out of an MIT lab and into production have a better chance getting to market if Johnson Controls succeeds in acquiring A123 assets. As pointed out above, this happens with startups all the time.
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