By Brent Budowsky - 05/19/09 04:13 PM EDT
The president’s plan to increase fuel-efficiency standards for cars is a pop gun compared to the plans of a Chinese company called Build Your Dreams, profiled on Monday evening’s NBC news, to advance the electric battery and mass-market electric cars in the United States as early as 2010.
A proposal to increase fuel efficiency to only 35 or 40 miles per gallon in seven years fails the test of JFK boldness and will be irrelevant to the global automotive industry.
Foreign competitors will far surpass the new standard well before it comes into effect, while speculation and the law of supply and demand will rocket oil prices higher and higher.
Don’t believe me. Believe Warren Buffett. He has bought a 10 percent stake in Build Your Dreams, the foreign company bidding for the JFK mantle of leapfrogging current technology.
As The New York Times story covering Buffett’s investment in Build Your Dreams noted, the implications of the electric battery have great impact far beyond the car.
The electric battery offers the promise of giant increases in storage capacity for solar and wind energy, increasing the commercial feasibility of both sectors and their power at times when the sun doesn’t shine and the wind doesn’t blow.
The naming of Utah Gov. Jon Huntsman (R) as U.S. ambassador to China is a masterstroke that promotes one of the rising stars of national politics and one of the most innovative governors in the nation.
Huntsman is five-star and first-rate. He speaks the language the Chinese speak, envisions the future that the Chinese might envision, and believes in a Jack Kemp-like strategy of innovative private capital driving progress in ways that are both progressive and conservative.
Similarly, the decision of Buffett to buy into a Chinese firm pioneering advanced electric batteries and cars coincides with Huntsman being named ambassador to vault China to center stage on a far wider playing field of discussion.
There are few better leaders than Huntsman and few better investors than Buffett. Like that old E.F. Hutton broker commercial: When they talk, I listen.
Yes, there are important matters of human rights and capital flows, diplomatic and military cooperation and competition and the future of global bond markets and currencies.
But: Buffett’s decision to invest in a Chinese firm with a vision of autos and energy that is light-years beyond the comparatively tiny vision of the president’s latest fuel-efficiency plan should take our analysis of capital, technology and China to new levels.
Will Build Your Dreams succeed, as Warren Buffett bets it will, in a leapfrog triumph of battery technology leading to giant advances in the automotive sector and advances for solar and wind energy?
What will happen to the American auto industry and its investors and workers? Will Congress enact protectionism to keep out revolutionary fuel-efficiency cars if customers want to buy them from a Chinese company when our new fuel-efficiency standards will be left in the dust?
Will innovative American firms, fueled with venture capital, private equity and Wall Street investment, bid to meet the challenge from Build Your Dreams and compete on the playing field of the future, which increasingly is now?
Will our government offer incentives and rewards for those who take the risk of these investments? Will American trade negotiators seek an end to certain Chinese practices of protectionism and forced co-investments that impede American exports to China?
While many government programs and standards are highly desirable, the history of capitalism is clear:
The real driver of historic technological change, economic progress and great waves of new jobs are companies that transform industry with new-generation products, and transform nations as those products create generational progress.
The great battle is not between government and business.
The great debate is not about the latest Republican flim-flam about socialism.
The economic battle of our time is between money of speculation that does nothing for the nation and leads to endless cycles of boom, bubble, bust and bailout versus money that finances the future, builds the nation and changes the world.
Don’t believe me. Watch Huntsman, believe Buffett, and keep your eye on Build Your Dreams.
Budowsky was an aide to former Sen. Lloyd Bentsen and Bill Alexander, then chief deputy majority whip of the House. He holds an LL.M. degree in international financial law from the London School of Economics. He can be read on The Hill’s Pundits Blog and reached at