Wrong way on the Segway

Every once in a while there will be a news story–usually an innocuous one that nobody pays attention to–that makes me think, “That’s it, that’s the paradigm for trouble.” Today’s paradigm comes as a two-wheeled gyroscope-balanced invention for humans of the future: The Segway Human Transporter.

The Segway was making headlines long before the public even got a glimpse of it. “[The Segway] surpasses my wildest dreams,” gushed one Fortune writer, and a venture capitalist asserted that the Segway would be “bigger than the Internet.” The Segway’s inventor himself, Dean Kamen, boasted that his invention would “be to the car what the car was to the horse and buggy.” Electric powered, top speed of around twelve miles per hour, the Segway was purported to be the next revolution in transportation technology.

Problem is, the Segway just doesn’t sell, being priced at a whisker under $5,000 (the cost of a decent used car). It probably also doesn’t help that the thing is generally seen as a danger on sidewalks populated by the rest of us walking stiffs (San Francisco has explicitly banned them from its sidewalks), and it isn’t handy for transporting multiple people or significant loads.

So what did Kamen do about this? Did he start a massive ad campaign to spark consumer interest in the Segway? Did he cut prices to boost sales? Did he tinker with his invention to better meet the needs of consumers? No.

Instead, Kamen went to Congress for federal help. He wants tax credits so the price can be lowered, and he’d also like some federal projects to build Segway-friendly paths throughout major cities.

This is the paradigm of corporate welfare. In effect, you have an enterprise that is losing in the market, but instead of striving to make the business more competitive or bowing out like they should, the business runs to Congress and asks that the government give them breaks so that they can make their profit without having to change their practices or their product.

What’s worse is that once Congress decides to save a particular business from going under, it sends a message to all the other businesses out there: Why bother working to be profitable when you can just get the government to make you profitable? The federal government is already doling out almost $87 billion to American businesses this year–and that’s not counting tax breaks, rebates, barriers to market entry, increased taxes on imports from foreign competitors, and other gimmicks the government uses to favor businesses that would otherwise have to cut costs or improve their products to survive.

What happens once Segway gets government backing? Don’t you think potential competitors, like bicycle and motorcycle manufacturers, might get a little distressed that the government is giving Segway an unfair advantage? After all, those inventions had the good sense to be cheaper and more adapted to the society that was purchasing them: Motorcycles do just fine sharing the roads with cars, and bike trails weren’t built to sell more bikes–it was because bikes were already in widespread use by society that local governments built trails for them. And aren’t bikes even more eco-friendly than the Segway?

But it doesn’t stop there. Maybe SUV manufacturers should propose that if the government were willing to pay off the initial investment plus the expected profits from making SUVs, the manufacturers would willingly stop making SUVs altogether and focus on smaller cars, thereby promoting cleaner air in a roundabout way. Sound farfetched? It’s not. The government already pays farmers, particularly tobacco farmers, to not grow anything. One third of the $1.5 billion Conservation Reserve Program goes to retired farmers to make sure they don’t plant new crops, keeping food prices high by cutting potential supply. So why not pay SUV manufacturers to not produce SUVs? Indeed, where does it end?

With Congress having so much power to make or break companies or even whole industries, need we even ask why corporations bother donating to politicians? Free money beats working. If Congress didn’t bother giving out corporate welfare, corporations wouldn’t bother lobbying for more.

Of course, Kamen sees his invention as a “huge, huge solution to the congestion and pollution and energy demand problems the world is facing today.” Every inventor sees their new gadget as The Answer to some problem. But there are inventors churning out ideas that people want and that improve our world without needing help from the government. Why should the government be taxing the rest of us to make Kamen, already a multi-millionaire, more successful? And what if the Segway, after all the help, is still a bust?

“Innovation is much more about changing people and their perceptions and their attitudes and their willingness to accept change than it is about physics and engineering,” Kamen told Harvard Business School last year. He’s right. But he forgot that any old invention will change society if the government forces it on us–real innovation doesn’t need the help.