Paper: Chasing a Moving Target with a Slow Process

By Pierre Haren, Yves Bamberger, Laurent Gouzenes, Christian Deutsch

A modified version of this paper originally ran in RealClearWorld.

On May 25, 2022, US President Joe Biden delivered a graduation speech at the US Naval Academy. In his speech, he repeated what China President Xi Jinping had told him as he was congratulating him for his election: “Democracies cannot be sustained in the 21st century, autocracies will run the world. Why? Things are changing so rapidly. Democracies require consensus, and it takes time, and you don’t have the time“.

The emergence of new disruptive forces such as global warming, an increasing need for low-carbon electricity and the de-globalization movement will profoundly alter the worldwide production and flow of goods in the coming decade, triggering important needs for large infrastructure projects. We must ask ourselves how western democracies will rebuild the ability and the speed to plan and act on these massive infrastructure investments.

To compete with autocracies, we believe democracies should create organizations akin to MITI, Commissariat au Plan, DARPA, etc. that have the long-term mandate, the clout, the competencies, and the funding to conceive and undertake sustained “industrial policy” programs to build the crucial infrastructure we will need in energy, transportation, micro-electronics, etc.

Two examples illustrating Xi’s point: Pumped Storage Hydropower in France and the US CHIPS Act

Pumped storage hydropower (PSH)

While sources of energy are still debated in the western world, with solar, wind and nuclear competing for investments, there is a consensus for the need for large-scale electricity storage as mandatory support of intermittent energy sources. Of all the methods available, the least debatable one is called pumped storage hydropower, where two water reservoirs at different altitudes are connected through a conduit with a turbine: water can either be used to generate electricity when flowing down or used for energy storage when pumped up. The round-trip energy efficiency of modern PSHs achieves an excellent 80%, and compares quite favorably for energy storage with hydrogen, while being slightly outperformed by costly lithium—ion batteries.

The drawback of such systems is the need to find candidate sites and to achieve a democratic consensus on their new purpose (appropriation of land, regulation of water flows, …). In France, for example, there is a demonstrated potential of 3 GW of such reservoirs on two sites which have been known for over 20 years but whose development has not started due to the complexity of the democratic and administrative process involved. The last French PSH project was commissioned in 1988.

By comparison, a nuclear power plant is generating about 1 GW of power, and in the past 10 years, China has installed every year about 2 GW of PSH and plans to install 35 GW more before 2030!

The US CHIPS act

The consequences of the current semiconductor chip shortage on the car manufacturing industry have been making the news every day since 2021. Most car manufacturers had to reduce their production or idle plants due to the lack of chips. This shortage and its consequences have attracted decision makers’ attention on the utter dependance of the western industries on two companies, the Taiwanese TSMC and the Korean Samsung.

The strategic importance of this bottleneck had been clear for some time and in June 2020, more than two years ago, an ambitious $52B plan supporting the re-localization in the US of chip manufacturing called the CHIPS Act was introduced in the US House.

Despite the strong support of the industry with companies like Intel and Global Foundries and the clear and present danger to our tech and automotive industry, the funding of this Act has been stuck in the US Congress for the past 24 months and has just been approved.

By contrast, the Chinese government has been strongly supportive of its semiconductor industry for almost a decade. In 2014, it set up a $20B fund dubbed “The Big Fund” to support its chip manufacturing industry, and more than doubled the funding in 2019 with an additional $29B. As a result, SMIC began the mass-production of 7nm chips in July 2022, ahead of the best US Global Foundries 12nm process. This happened despite a US ban to export technology enabling better than 14nm chip manufacturing.

Implementing large infrastructure projects

These examples illustrate the complexity of decision-making in democracies, even for obviously useful projects. We could have detailed many other areas where the comparison between China and western democracies is not at the advantage of the latter: nuclear power plants, networks of high-speed trains, extension of harbors.

This is in large part because the design of large projects requires a secular vision at country level, based on science, technology, economy and society, and that pure market forces are not sufficient to drive such projects because of their time scale, scope, and impact. As these projects irrigate the dynamics of a country and involve adequate regulation, appropriation of land, coordination of many public and private actors, education, tax issues, and much more, the obtention of a decision and its acceptance by stakeholders is extremely slow.

In order to master this complexity, and in search of efficiency required for the necessary rebuilding efforts following WWII, some democratic countries had created recognized government agencies which developed a long-term systemic vision of the needs of a country, and contributed significantly to the development of the infrastructure of their respective countries:  DARPA in the USA, MITI in Japan, “Commissariat au Plan” in France, Office for Government Policy Coordination including  KOSTI and KDI in Korea,  etc. 

However, their influence has decreased over time due to different factors such as the blurring of the image of science and facts brought by social media and the increasing difficulty to achieve a long-term collective vision in our individualistic societies focused on the short term.

In France, one of our authors, Laurent Gouzenes has contributed for 8 years to the French scientific office in support of the French Parliament and observed the reasons why current efforts are not reaching critical mass. Moreover, Yves Bamberger as Vice-President of the French Academy of Technologies is in a prime spot to witness the increasing demand by French Authorities of competent system analysis on different technical and industrial priorities.

Conclusion

Xi’s warning should be taken quite seriously as the current democratic cacophony of lobbyists, bots, social media experts and short-term election cycles is no longer conducive of the sound and timely decisions on the large infrastructure projects.

Democracies need to (re)build government-sponsored competent and recognized organizations who would use the best available knowledge to examine long term infrastructure decisions, introduce them into an organized democratic debate and track their implementation.

Authors:

Pierre Haren, PhD, is the founder and CEO of Causality Link, an AI start-up in finance that reads millions of documents to build a graph of the forces acting on the world.

Laurent Gouzènes, PhD, is the founder of KM2 Conseil, an AI start-up specialized in knowledge management. He was for 17 years in the strategic planning group for STMicroelectronics, the European leader in semiconductors.

Yves Bamberger was for 4 years Chief Information Officer and then 8 years Head of Electricity de France R&D. Yves co-published in 2021 “Electricity, our low-carbon future”.

Christian Deutsch, PhD, was the co-founder of Opeform, a consulting services for safety at sea and for the collaborative EU transport research program.