What Is President Obama’s Sputnik Moment and What Is His Apollo Response?

Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He is a white-collar criminologist who has spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.


The Soviet Union launched Sputnik on October 4, 1957 during President Eisenhower’s administration. President Kennedy launched the American response that led to the Apollo program and the “Space Race.” President Obama used these three space-related terms as metaphors forming the centerpiece of his State of the Union address:

This is our generation’s Sputnik moment.We’re issuing a challenge. We’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we’ll fund the Apollo Projects of our time. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race.

What “this” is Obama referring to when he says “This is our generation’s Sputnik moment”? (And whose generation is “our” generation?) Sputnik was a “moment” — its launch was a sensation. It caused Americans to engage in a massive reappraisal of U.S. policy and leadership. Sputnik made clear a potential Soviet threat to American’s lives. The Soviet Union first tested a hydrogen bomb in 1953. By 1957, the Soviets had the rocket technology to put Sputnik in orbit. It was clear that they would soon have the capability of attacking any American city with a hydrogen bomb — and that the U.S. had no means of stopping such an attack. Sputnik was an enormously big deal because every American understood the unprecedented threat to our survival.

President Kennedy made Sputnik one of the keys to his campaign. It happened on Eisenhower’s watch. Kennedy claimed that it showed the need for a new, more innovative generation to take the reins of power and revitalize the nation. Whatever “this” Obama was referring to, it isn’t a “moment” and it hasn’t caused such a reappraisal. Because Obama cannot tell us what “this” is, it’s tough to use the metaphor to convince the nation that we should pay for the modern equivalent of a space race to address it.

Asking what “this” Obama was referring to when he raised the Sputnik moment metaphor leads us to the missing “why” in the centerpiece of Obama’s address. Why are we going to “fund the Apollo Projects of our time?” Here’s the full context Obama provided:

Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. In a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology — an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.

Senator Obama had a position on climate change:

Global warming is real, is happening now and is the result of human activities. Barack Obama and Joe Biden believe we have a moral, environmental, economic and security imperative to tackle climate change in a serious, sustainable manner.
Reduce Carbon Emissions 80 Percent by 2050: Barack Obama and Joe Biden support implementation of a market-based cap-and-trade system to reduce carbon emissions by the amount scientists say is necessary: 80 percent below 1990 levels by 2050. They will start reducing emissions immediately in his administration by establishing strong annual reduction targets, and they will also implement a mandate of reducing emissions to 1990 levels by 2020.

Senator Obama, in a speech commenting on President Bush’s 2006 State of the Union address, had a position on energy independence:

“Focus your operations on oil, especially in Iraq and the Gulf area, since this will cause them to die off [on their own].” These are the words Osama bin Laden. More than anything else, these comments represent a realization of American weakness shared by the rest of the world. It’s a realization that for all of our military might and economic dominance, the Achilles heel of the most powerful country on Earth is the oil we cannot live without.

President Obama never even attempted to explain why his space metaphors were apt. If energy dependence on the Mideast and climate change pose an existential threat to the U.S. — as Senator Obama believed and argued — then President Obama needs to make the most powerful case possible to convince the American people of the need to spend over $100 billion in additional federal funds to support development in renewable fuels. Instead, President Obama’s mention of these matters in his address was so cursory and opaque (“an investment that will strengthen our security [and] protect our planet”) that he seemed almost embarrassed to even raise the dangers that Senator Obama warned endangered our nation and world.

But assume that Obama is right that climate change and our energy dependence pose existential threats to Americans analogous to the Soviet missile technology revealed by Sputnik and that the correct metaphor for how we should respond is with a program equivalent to Apollo to develop domestic, renewable energy sources to counter these threats to our nation. (I think that Obama could make a compelling case for each of these assumptions.) Why does Obama not propose an Apollo program? Obama’s description of President Kennedy’s response to Sputnik is positive, but incomplete and misleading.

Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik¸ we had no idea how we’d beat them to the moon. The science wasn’t there yet. NASA didn’t even exist. But after investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.

One of my summer jobs was at NASA’s Goddard Space Flight Center in their technology applications lab. I love physics and space exploration. One caution I would make is that “the science [was] there” — the problems of taking astronauts to the moon and returning them were daunting, but they were overwhelmingly engineering challenges. We need engineers every bit as much as we need scientists. The more fundamental point is that Obama doesn’t seem to get the fact that NASA was and is a government agency and that it led our successful space program to the moon (and many other programs that produced greater scientific and military advances than did Apollo). Instead of creating a similar governmental effort, Obama describes his plan as:

We’re issuing a challenge. We’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we’ll fund the Apollo Projects of our time.

So, there’s to be no national plan. No one is in charge. If “they” “assemble teams” which “focus on the hardest problems in clean energy” “we’ll fund the Apollo Projects of our time.” I was first formally taught management principles by NASA. NASA took management very seriously. When you are engaged in complex engineering projects the order in which you do things is critically important. Yes, you can approach some things in parallel, but Brownian motion does not a project make, much less the equivalent of Mercury, Gemini, and Apollo combined. A significant increase in scientific and engineering research about renewable energy may be a good thing, but every research project could be successful and we could still end up without competitive renewable energy sources if we do not have a coherent overall plan.

Obama seems to think that government cannot succeed and cannot lead, even as he uses metaphors about government success.

Our free enterprise system is what drives innovation. But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need. That’s what planted the seeds for the Internet. That’s what helped make possible things like computer chips and GPS. Just think of all the good jobs – from manufacturing to retail — that have come from those breakthroughs.

Actually, government, non-profits, and private firms have long worked together to drive innovation. Our universities, originally nonprofit religious institutions, led research and efforts even when we were colonies. President Lincoln’s creation of the land grant college system, public universities, proved brilliant. The GI Bill transformed college attendance from a privilege of the elites into the broad avenue of entry into the middle class and beyond. In many states, community colleges provide an entry to higher education to even more Americans. It is our universities that drove the incredible growth of patents. It is why we dominate the Nobel Prizes in science and medicine. It is why people all over the world hope their children will be admitted to our universities. And it is our universities that are being trashed. Public support for universities, as a proportion of total funding, has fallen for decades. We are destroying that which makes the private sector most innovative.

But that understates the problems with the crude lie that “our free enterprise system is what drives innovation.” It is all three sectors, working together, that drive innovation, with pride of place going to the nonprofit and public sector. The rule of law and democracy, government functions, were also critical to innovation. Public education began early in the North. The South resisted public education and blocked passage of the bills to create the Land Grant college system. The North quickly became economically dominant.

Worse, the “free enterprise system” is a primary cause of the problems that Senator Obama correctly said posed terrible dangers to Americans. Free enterprise drives climate change. Free enterprise brought us the Hummer and appalling overall energy inefficiency in U.S. cars and trucks. Big oil has always been a bastardized version of “free enterprise.” Big oil in its dealings with OPEC nations (corrupt members of a cartel) bears no resemblance to “free enterprise.” If Senator Obama is correct, then “free enterprise”, or what passes for it in the oil and coal industries, created climate change, pollution, and energy dependence on the Mideast that poses an unbearable risk to all Americans. President Obama told us this about big oil and innovation:

We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.

So Obama understands that in circumstances in which developing “tomorrow’s” energy is essential to prevent twin national disasters and big oil is astonishingly wealthy and highly subsidized by the government, big oil continues to invest overwhelmingly in “yesterday’s energy” instead of driving innovation. Obama repeats the mantra that free enterprise drives innovation but his own examples prove the opposite. Even when the private sector has ample funds to innovate on its own, there is a vital national need to do so, and its shareholders would benefit from the innovation, big oil will not lead the essential innovation. And this is a sector that Obama chooses for his ode to the private sector. Obama’s answer to the catastrophic “free market” failure he describes (but refuses to call) is to stop big oil’s tax benefits but have the government pay for scores of billions of dollars in research costs by big oil’s scientists. Either way, big oil gets ever richer at the public’s expense.

The banking crisis should have taught Obama that the “free market” is not necessarily free, does not necessarily function like the “markets” described in economics texts, and can produce “innovations” that make its leaders rich by impoverishing the nation. Markets that have effective regulatory “cops on the beat” can be efficient and fair. Markets overseen by anti-regulators can become endemically fraudulent and cause Great Recessions. Obama’s financial team continues to be led by the anti-regulators that helped make our financial system so criminogenic that it produced the Great Recession. (Bush’s financial team was even worse.) This is why the elite frauds now loot “their” banks with impunity.

The closest analog to the Sputnik moment is the collapse of the financial system in 2008 under President Bush shortly after Lehman failed. That collapse demonstrated the intellectual bankruptcy of theoclassical economics and its anti-regulatory and anti-governmental reflexes.

Bill Black is an associate professor of economics and law at the University of Missouri-Kansas City, a white-collar criminologist, a former senior financial regulator, and the author of The Best Way to Rob a Bank is to Own One.

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