They Didn’t Build It Alone: Donor to Anti-Government Koch Political Network Profited From Public Assistance
by Nick Schwellenbach, 2/19/2014
A list of well-heeled VIP donors to the Koch brothers' shadowy political machine was recently revealed by Mother Jones after being carelessly left behind after a semi-annual donor conclave. One of the names on the list is Jim Von Ehr, CEO and founder of the Zyvex family of companies.
Von Ehr is a supporter of the Libertarian Action Super PAC (Political Action Committee), on the board of the anti-regulation Competitive Enterprise Institute (which has also opposed government assistance to companies involved in green energy research), and has funded a study on where to locate “Seasteading” communities so they are out of the reach of government taxes and regulations.
Thus, not surprisingly, Von Ehr, along with many of his Koch brother compatriots, is fond of bashing the federal government. For instance, Von Ehr said at a 2012 conference held by the Reason Foundation, a libertarian organization: “I don’t need the government telling me to do stuff. I’m doing it because I fear lawyers on the other side and I want to be sure that our employees have a safe environment.” (Starts around 17:00 in this video.)
While his stated desire to do the right thing to protect his workers, regardless of whether regulators require him to do so, is laudable, his antipathy towards government could be seen at odds with the significant support his for-profit enterprises have received from federal grants and contracts.
Case in point: NASA’s role in working with Zyvex.
At the turn of the millennium, Zyvex was conducting cutting edge work involving carbon nanotubes, a technology that promises to deliver materials that are extraordinarily strong yet lightweight by current standards. But the technology was still nascent and not quite ready for commercial prime time, although it was garnering some industry interest.
As NASA put it in a 2005 article, “In February 2003, Johnson Space Center recognized the promise of this technology and began working with Zyvex through a Phase I Small Business Innovation Research (SBIR) contract” to advance their work.
“Based on the successful results of the Phase I Johnson SBIR contract, Zyvex started offering solubilized carbon nanotubes on its Web site in September 2003,” according to the NASA article.
SBIRs are not normal contracts. They are “focused on advancing the state of the art or increasing knowledge and understanding, rather than on a specific system or solution” and “are defined by a statement of the problem rather than a statement of work,” according to the Institute for Defense Analyses, a Pentagon think tank. That means these contracts are more geared toward helping the companies that get them to advance their technology, rather than procuring products or services for the government.
Soon afterward, NASA followed up with more support. Zyvez’s “successes led to a Phase II SBIR contract with Johnson in January 2004, to build extremely strong and light hierarchical carbon nanotube-composite materials for NASA applications.”
Later on in 2004, “Easton Sports, Inc., announced the use of Zyvex carbon nanotube technology in its new line of bicycle parts.” Later on, Easton began working with Zyvez for baseball bats and hockey sticks. Zyvex touts this on its website.
According to NASA, “The introduction of a new material into commercial applications is usually a 5- to 10-year process. With the active support of NASA, a rigorous New Product Development Process, and a commitment to speed of execution, Zyvex took less than 3 years to go from invention to commercialization.”
Zyvex told NASA that it estimates the market for its nanotube composites could eventually grow to $400 million to $800 million a year.
Zyvez Vice President Thomas A. Cellucci told NASA, “We are extremely pleased to be working with NASA. A large portion of our success in nanomaterials is due to their involvement.” Celluci would go on to become the first-ever chief commercialization officer at the Department of Homeland Security and worked under both the Bush and Obama administrations.
Photo Source: Zyvex; Annotations by Center for Effective Government.
NASA isn’t the only government entity that’s worked with Zyvex. Federal contracts and grants over the years from the Pentagon’s "mad scientist" division – the Defense Advanced Research Projects Agency – as as well as the Commerce and Energy Departments have supplied Zyvex with over $13 million in awards. In addition, the University of Texas-Dallas – another publicly funded institution – has worked with Zyvex.
At his 2012 Reason Foundation talk, Von Ehr seemed to implicitly acknowledge some of the challenges for-profit businesses have in funding research on their own that might not be immediately commercializable. He spoke of a potential cancer therapy that would utilize some of the nanotechnology his firm was working on: “I got to thinking about how long it would take to actually get a real therapeutic to market, I decided I can’t afford to go after ten years and a billion dollars. I’m sorry to people with cancer that we can’t do anything about it, but that’s just the case.” (Starts around 18:45 in the 2012 Reason Foundation conference video.)
This is one of the main reasons why robust government involvement in scientific research has been a boon to the economy for decades. Oftentimes, it doesn’t make immediate sense for a company to pour significant resources into research that may not generate a profit for many years. The government does not have the same restraints – thankfully, since many initially unprofitable scientific pursuits have become enormously profitable in the long run. For instance, the Internet was initially the creation of the Defense Department, although many of its advances came out of the private sector.
The federal government often plays a positive role in creating a dynamic, healthy, innovative economy. Unfortunately, some of the people who’ve benefited, like Von Ehr, are pouring resources into efforts that would stop it.