Eric Schmidt of Google recently gave a speech at the New America Foundation (a post-partisan think tank) in which he outlined the need for an innovation bailout for the US. Instead of simply bailing out failing institutions, we need to take this opportunity to revolutionize our economy, particularly our energy and transportation infrastructures.

Detroit needs an innovation bailout in the worst kind of way. But innovation doesn't happen when entrenched interests (such as the UAW and GM executives) are fighting to keep the status quo. As a resident of Michigan I have witnessed the gradual decline of our automotive leadership and we are now at a crossroads. Should we continue to prop up a dying business model, or start fresh with a new one?

With $25 billion in automotive bailout money at stake, we need to think about the future. A quick and well planned bankruptcy would be the best way to initiate the complete overhaul our auto industry requires. We need all aspects of government (federal, local and state), along with private and other public entities, to help with this transition.

The scope of this endeavor is mind boggling. But the importance of hope, that a new direction could bring, cannot be under estimated. It is time for us to regain the upper hand by making a coordinated, well planned, drastic change.

What might this drastic change look like? The Chevy Volt is a good start. It's all about efficiency -- getting from point A to point B safely with the least amount of energy and emissions, saving the most money and reducing impacts on our surroundings. We need to cut total cost of ownership in half and in the process reduce carbon emissions. Build plug ins with smart technology so that drivers can easily discern the most efficient route to travel by providing real time feedback on traffic conditions. Enhance our electrical infrastructure to handle the requirements of charging vehicles away from home. Feed our energy grid with clean sources of efficient, low cost power such as safe nuclear, wind farm, geothermal and solar technology. Make energy efficiency and sustainable manufacturing technology the cornerstone of our automotive infrastructure.

Update (12/10/2008): Tom Friedman seems to agree. He mentions "Better Place", a new car company startup based in Silicon Valley. Apparently they've already inked deals with Japan, Australia, Isreal and Denmark. With the bailout now in place, Detroit has chosen a slow, painful death. Time to go to a better place: http://www.betterplace.com

Can we all agree that the culture of waste, excess, and inefficiency in America needs to die quickly? Becoming more efficient with our use of energy is critical to breaking the cycle of debt. Energy is at the root of our wealth creation system.

I like where Google is going with this:

In particular, I believe we need to centralize our energy infrastructure on the electrical grid as soon as possible, including automotive transportation. Efficiency is gained when systems share a common infrastructure.

An automotive electrical grid will allow us to enable wind, solar, geothermal, natural gas and (responsible) nuclear to be used for transportation energy. Our existing electrical grid will need to be revamped to handle new inputs, and vehicular connectivity. The technology implications are huge and there may be some pleasant surprises in this area. We need them.

Our gasoline infrastructure will enjoy a slow and painless death, as gas stations are gradually replaced by charging stations connected to the same grid that is already accessible to most vehicles where they park while not in use. Simple, clean and less expensive.

Google's Proposal for reducing U.S. dependence on fossil fuels: Clean Energy 2030