Monday, November 23, 2020

The government's ability to accelerate innovation, and production

I've been reading the broad blogosphere for a very long time (since 2001 or so), and so I'm familiar with a lot of the old players. While there are very few of the original players who are still solely blogging (like Derek Lowe, for example), I am amused at the trajectories of progressive bloggers Ezra Klein and Matt Yglesias, both of whom departed Vox recently, Klein for the New York Times and Yglesias for his own website on Substack. I've been reading Yglesias for a very long time, so it's not a surprise to me that he's returned to one of his favorite themes - that government money can effectively spur new R&D:  
The Pfizer people made a big deal out of the fact that their program wasn’t technically part of the Operation Warp Speed effort that the Trump administration put together. But they are very much part of the program where both the US government and the European Union made large advance agreements to purchase vaccine doses. That guarantee makes a big difference to any private sector undertaking.

And to me it’s a proof of concept for the kind of thing we could be doing in the clean energy space. Say an electric car that meets such-and-such specifications would get guaranteed orders to serve as government fleet vehicles. Or pre-commit to buying electric buses for schools and transit agencies. Nuclear micro-reactors for use on military bases or as backup systems for hospitals. The assurance that a market exists is a big stimulus to private investment, and when strong social consensus exists that innovation would be beneficial, we can get it done....

...So while we both could and should mount a vaccine-esque push for clean energy research and deployment, we so far have not. Hopefully, that will change as more people look at the success of the pharmacological aspects of America’s Covid response and see that directed research programs really do work.

Of course, I quibble with his argument. I think the term "directed research programs" need to be defined before we can agree they "really do work." Is Operation Warp Speed such an example? I'm not so sure, but I cannot deny that advanced purchase agreements are a powerful incentive. God willing, we'll all be arguing this in 2022 in person, but it's hard for me to think that if Pfizer didn't have such an agreement with OWS, they could have still made an agreement with the United States government once they knocked on the door with positive clinical results. Of course, that it's Pfizer (with its $52 billion annual revenue) plays a role - not too many other companies could have self-financed such a venture. 

Regarding his clean energy thoughts, I think such agreements are both science- and economics-dependent. If Elon Musk showed up with an electric school bus that cost $2 million per, would that be viable? It wouldn't - and it takes quite a bit of new science and new engineering to get a competitive price, and I'm not sure how much faster a guaranteed market would really drive said development. Also, how politically viable would such a guaranteed market bet? 

On the other hand, this New York Times writeup of OWS' ability to get logistics stuff done is pretty impressive: 

When Moderna discovered this summer that an air handling unit for its factory could not be delivered over a weekend because of Covid-19 limitations on interstate trucking, the major’s team stepped in. Warp Speed officials arranged a law enforcement escort to accompany the massive piece of equipment from the Midwest to its Massachusetts manufacturing plant.

The team again sprang into action when Moderna discovered that a specialized pump, needed to make the first batches of vaccine for the clinical trials, was marooned in a rail car and was not going to be delivered on time. Federal workers tracked down the train and rummaged through it until they found the pump.

“They put it on a plane, and it arrived on time,” Mr. Andres, the company’s operations chief, said.

The interventions, he said, were “absolutely instrumental.”

Getting yourself moved to the front of the line by the power of the state isn't anything to be sneezed at. (Railroads? How did that happen? Those guys are impossible to work with, I've heard...)

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