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7. Atomic Energy

We have so far omitted discussion of atomic energy. Our nuclear age has been held up as the chief argument of those who believe that government control and direction of science is necessary in the modern world—at the very least, in the atomic field. The government-directed team effort involved in making the atomic bomb has been glorified as the model to be imitated by science in the years ahead. But, in analyzing this common view, Jewkes, Sawers, and Stillerman point out, first, that the fundamental atomic discoveries had been made by academic scientists working with simple equipment. One of the greatest of these scientists has commented: “we could not afford elaborate equipment, so we had to think.”41

Furthermore, virtually the entire early work on atomic energy, up to the end of 1940, was financed by private foundations and universities.42 And the development of the bomb was, for peacetime purposes, an extremely wasteful process. The friction on the project between scientists and administrators, the great difficulties of administration, has been pointed out often.43 Moreover, Jewkes, Sawers, and Stillerman suggest that government control of research slowed down, rather than speeded up, peacetime atomic development—especially with its excessive secrecy and restrictions. They warn also that latest estimates hold that, even by the year 2000, less than one-half of the total output of electricity will come from atomic energy (the main peacetime use), and that over-optimism about atomic energy has already drained scientists and technologists away from other fields, diminishing the supply of research needed elsewhere. And Professor Bornemann warns that “pressure of exploitation for military purposes has depleted the stock of basic scientific knowledge and in an atmosphere, moreover, which has not been conducive to further discovery in this realm.”44

The eminent economic historian John Nef points out that such inventions useful to war as nitroglycerin and dynamite, did not emerge from war, but from developments in the mining industry. Nef finds that recent world wars have not so much stimulated scientific development, as diverted it into purely military tasks—in fact, have slowed down genuine scientific progress. And while the vast sums of the government speeded up the development of the bomb, “it cannot be claimed that war made the general use of this force for the material benefit of humanity more imminent.” And a prominent American engineer has noted that the armed forces, between the wars, were technologically stagnant, and that “little technological progress is possible during a war, except of the ‘hothouse’ variety, which is forced and superficial, and that whatever gains have been made in military technology have come as a consequence of more general scientific and industrial advances.”45

Bornemann charged further that government monopoly of the atom, and its lack of profit and loss incentives, made atomic power inefficient and over-costly. Government secrecy greatly delayed engineers of the power industry from learning about the modern technology, therefore slowing scientific development.

As we saw earlier, neither is Dr. John R. Baker impressed with such Soviet achievements as the sputnik as a model for science. Engineering development toward a specific given end—in addition to the other evils of government control—also deprives basic research of needed scientific resources.46

That modern nuclear science has not rendered obsolete an individual inventor, the free and undirected spirit (see the views of Jewkes et al. discussed above) has recently been shown in dramatic form in the case of the “crazy Greek,” Nicholas Christofilos, who, as an elevator engineer and supervisor for a truck repair depot, taught himself nuclear physics from the ground up, and originated theories so challenging that atomic experts scoffed and ignored him—until they proved successful. Christofilos, Dr. Edward Teller, and others have all indicated that, in his case, lack of training was a positive advantage in preserving his original bent of mind.47

If, then, the advent of atomic energy does not change our basic conclusions: that all civilian research and development be done by the free market, and that as much military scientific work as possible be channeled into private rather than government operations, what of the space age? How shall we finance our future explorations in space? The answer is simple: insofar as space explorations are a byproduct of needed military work (such as guided missiles) and only insofar, let the space exploration proceed on the same basis as any other military research. But, to the extent that it is not needed by the military, and is simply a romantic penchant for space exploration, then this penchant must take its chances, like everything, in the free market. It may seem exciting to engage in space exploration, but it is also enormously expensive, and wasteful of resources that could go into needed products to advance life on this earth. To the extent that voluntary funds are used in such endeavors, all well and good; but to tax private funds to engage in such ventures would be just another giant government boondoggle.48

Turning from the general to the particular, we find that in recent years the Federal government has begun to realize the superior efficiency of private enterprise, even in atomic development. The Hoover Task Force found that the Atomic Energy Commission’s nuclear plants were all operated as contract installations, by private industry or by universities. In 1954, the Atomic Energy Commission awarded nearly 18,000 prime contracts to over 5,000 firms, who in turn let more than 375,000 subcontracts. As a result, all the major productive facilities of the atomic energy program have been designed, built, equipped, and operated by private firms.49 Furthermore, the Atomic Energy Act of 1954 significantly relaxed the Federal atomic monopoly, permitting much more private participation in atomic development. As soon as the Act was passed, private industry began moving successfully into the atomic field. Consolidated Edison announced plans for building a 200,000 kilowatt atomic power generating plant at Indian Point, New York—with no help whatever from government except permitting the company to buy atomic fuel. Other companies interested in getting into various phases of an atomic power industry are: electric equipment manufacturers, and companies in other industries (e.g., aircraft, locomotives, machine tools, petroleum, etc.) looking for channels of diversification, and universities, medical and other research organizations, hoping to buy small atomic reactors.

Much, however, remains to be done, and existing restrictions and regulations still keep a large segment of industry from furthering atomic progress. The Atomic Energy Committee of Manufacturing Chemists’ Association urge further liberalizing of security and patent regulations.50 The AEC’s powers of licensing and further regulating should be eliminated. The Atomic Energy Commission should confine its activities to military atomic energy; by subsidizing and regulating peaceful atomic energy; by subsidizing and regulating peaceful atomic power, it distorts market allocation of resources and prevents efficient operations. Federal subsidies to atomic power plants burden competing power plants from competing energy sources, and foster uneconomic use of resources.

Another important way in which the government could encourage peaceful atomic development in a manner consistent with the free market: by freeing it from governmental burdens, to eliminate rate regulation of public utilities (a job for the state governments). Public utilities are main potential users of atomic energy, but they could hardly do the job of which they are capable with their rates, and methods of operation, fixed by government authority. And the Federal government could properly stimulate space exploration, in a manner consistent with the free market, by permitting any private firms or organizations that might land on other planets, to own the land and other resources which they begin to exploit: in the manner of the Homestead law, although without the law’s restrictions on acreage or use of land. Automatic government ownership of any new lands in space acts as an enormous damper on private exploration and development.

There has been much pressure, in recent years, by the firms about to enter the atomic energy industry (specifically the builders of atomic reactors), for Federal subsidies to supplement the third-party liability insurance available from private insurance companies: in cases where accidents at atomic plants injure third parties.51 This pressure should be firmly resisted. If private enterprise, using its own funds, is unable to pay the full costs of its own insurance, then it should not enter the business. The promotion of atomic energy for peaceful uses is not an absolute goal, as we have seen; it must compete in use of resources with other power plants and with other industries. Any government subsidization of an enterprise, whether through insurance grants or any other method, weakens the private enterprise system and its basic principle that every firm must stand on its own voluntarily-raised resources, and distorts the efficient allocation of resources to serve consumer wants. The other enterprises in this country must pay for their own full insurance costs, and so should the atomic industry. The wise words of the Hoover Task Force on Lending Agencies should be heeded here:

The risks of ownership are inseparably woven into the concept of private property. When an owner is relieved of his normal risks other than by his own effort and industry, he is beholden to those who assume the risks in his place. This increases the likelihood that he also will be relieved of the other attributes of property ownership—the right, for example, to decide how, when, where, and by whom the property shall be used. In the end he is likely to be relived of the property as well.52

  • 41. Jewkes, et al., Sources of Invention, p. 76.
  • 42. See Compton, Atomic Quest, p. 28.
  • 43. Ibid., p. 113.
  • 44. Bornemann, "Atomic Energy and Enterprise Economics," p. 196. Also see Department of State, Pub. #2702, The International Control of Atomic Energy (Washington, D.C.: Chemists’ Association), Impact of Peaceful Uses of Atomic Energy on the Chemical Industry (Washington, D.C.: Feb. 1956).
  • 45. John U. Nef, War and Human Progress (Cambridge: Harvard University Press, 1950), pp. 375–77, 448.
  • 46. See Baker, Science and the Sputniks.
  • 47. William Trombley, “Triumph is Space for a ‘Crazy Greek’,” Life (March 30, 1959): 31–34.
  • 48. See Frank S. Meyer, “Principles and Heresies,” National Review (November 8, 1958): 307.
  • 49. See Council for Technological Advancement, Industrial Participation in Atomic Energy Development (October 18, 1954).
  • 50. Impact of Peaceful Uses ..., p. 10.
  • 51. Thus see Paul F. Genachte, Moving Ahead With the Atom (New York: Chase Manhattan Bank, January 1957), p. 12.
  • 52. Task Force Report, Commission on Organization of the Executive Branch of the Government, Lending Agencies (Washington, D.C.: February, 1955), p. 9.
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