Okay, so I've been away from this blog for a long time, and I'm yet to finish the "what I like about Venture Capital" series. But this one is just really timely, and I'd either do it today or not do it at all!
I've just been reading a piece from Scientific American in which they asked the two US presidential candidates where they stood on topics such as Innovation and Entrepreneurship, Scientific education and R&D, Energy, Water and other environmental concerns. And the candidates answered. Or at least their staff did. Interesting reading – find it here.
Now, to some extent, it's what you might expect from two campaigning candidates. The answers from the President in office tend to be shorter and in praise of the accomplishments of the current term, and how those good deeds will be continued and strengthened in the next one. The replies from the defying candidate tend to be longer and more elaborate, as they first have to deal with how bad the current policies have been, and then describe what the new presidency would, or will, do differently. And frankly, to the vast majority of us used to more diverse and sometimes extreme multipartidarism, it's not always easy to discern very dissenting points of view between the two.
A good example is their answer to a topic as important as the role of innovation and entrepreneurship. Both candidates agree that it plays a critical role in economic development, which is not surprising in a country that has historically spawned so many large and successful companies from their founders' garages; Romney's side does give a more articulate description of measures that would contribute to making the US regaining its edge – some of which are good practices that some countries could learn from, and some actually have, such as fostering the immigration of talent. I don't know enough about the candidates' programmes to state that Obama's does not contain equivalently important measures, but the fact is that his answer is not as rich as his competitor's.
However, there is one aspect, or one set of aspects, in which the two candidates differ significantly, and that is climate change and energy.
Let me first say that, while I naturally have my own personal preference – as a non-voting, non-American citizen – on the next US president, it's not my intent to represent that or take sides in here. Let me also say that I'm not an environmentalist. But bear with me, specifically on the topic at hand.
Romney's side accuses Obama's of blindly trying to slash carbon dioxide emissions through various mechanisms. Specifically, it accuses Obama's administration of "playing the role of venture capitalist, pick winners and losers" and unwisely spend the US taxpayers' money in the investments made – in a clear reference to mediatically-failed "green" companies such as Solyndra and A123 – with a questionable impact on the environment. In their view, the "lack of scientific consensus on the extent of the warming, the extent of the human contribution, and the severity of the risk" does not justify the investment in clean energy and the type of green innovation that puts at risk the large industries of oil, gas and coal, as well as new investments in nuclear energy. Moreover, the defying candidate contends that "the problem is called Global Warming, not America Warming" and hence it is not America's duty to take action when developing countries are responsible for a larger and growing portion of the world's emissions.
That, to me, is hard to understand. Firstly, it is a fact that there is no scientific consensus on the causes and effects of Global Warming. But is that cause for inaction? Isn't the mere hypothesis of Global Warming a good enough reason to take preventive measures and adopt a more sustainable way of life while we're at it? If the defendants of the Global Warming theories are right (and frankly it's hard to believe in a concerted conspiracy theory or in global paranoia on this one) the costs of doing nothing are just too high. No doubt, continued debate and investigation is required to truly identify the magnitude, the timing, and the addressable causes of global warming, but I for one think it's madness to sit on our hands and continue doing what we've been doing when there is a possibility that that has a direct impact on the quality of life of the next few generations. Now, whose responsibility is it to take the initiative to address this possibility? Well, there is a reason why developed countries are developed and that's partly because they underwent tremendous industrial development stages, that the developing countries are still going through, and need to go through if they are to become developed. So the mentality of "not our problem" from one of the more developed countries in the world, and one of those with the more adequate resources to tackle the issue just strikes me as short-sighted and self-serving.
It is understandable that the argument from a candidate to the US presidency needs to take into account the interests of the American economy in the first place, and Romney does build a sound and very articulate argument in defense of the jobs associated with fossil fuel energy. He defends a view that "economic growth and technological innovation [...] is the key to environmental protection in the long run", which is reasonable, but the key difference between the two candidates in this respect, I guess, is on where that innovation needs to take place. Innovation in more efficient consumption of fossil fuel is, by all means, very important as it will certainly minimize and postpone the problem, an that is unquestionably important; but innovation in clean energies is critical in the long run, and if the more developed and capable countries don't want to play a role in it, then who will?
Like I said, I am not an environmentalist. But I like technology and I'm a defender of the power of innovation and entrepreneurship in economic development. And Clean Tech has been an important engine of innovation and scientific development and its application to the real world. Backtracking on that trend would be, well, ... the opposite of progress.
True, the choices of the green technology companies that were backed by the federal government have had some spectacular failures that cost money to US taxpayers. I have no idea on what were the criteria behind those choices, and whether there were some self-serving interests behind them, as the opposition seems to suggest. No doubt that the large media coverage they received because they had received government money was harmful for their respective industries as a whole. At the very least, the whole thing begs the question as to whether governments should indeed have a direct investment responsibility in companies, or whether they should rely on private professional investors to deploy government money, matched by private funds. But if indeed the Obama administration took a VC approach in its direct money deployments, then we must not forget that a significant portion of VC investments are bound for failure. It's the nature of the business and moreover, failures do tend to be known sooner than the few successes that make a good Venture Capital fund. So it's really hard to say, without a lot more information, that the very visible failures of those direct investments represent a failure of the policy of investments in clean energy. Aren't there other companies out there, that have received those investments, that are doing ok, with the potential to become successful, and more importantly, impactful companies?
Anyway, tomorrow is Election Day in the US, and we'll see how it turns out. Right or wrong, a victory from the Republican candidate has the potential to be detrimental to the progress of Clean Tech development in one of the countries that has historically been more active at it, and hence an important change of direction in how the world sees and addresses this important issue.
Thanks for reading.
Thanks for reading.