Let’s hope it works

obama by art_es_anna
Remarks by the President on Innovation and Sustainable Growth:
[Via OSTP Blog]

President Obama gave a speech in upstate New York yesterday on the importance of American innovation. You can follow this link to the White House for a transcript of his remarks: http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-Innovation-and-Sustainable-Growth-at-Hudson-Valley-Community-College/

Furthermore, President Obama, OSTP and the National Economic Council released a Strategy for American Innovation: http://www.ostp.gov/galleries/press_release_files/SEPT%2020%20%20Innovation%20Whitepaper_FINAL.PDF


There is some good stuff in the Strategy for American Innovation report. There is this:

While it is clear that a new foundation for innovation and growth is needed, the appropriate framework for government involvement is still debated. Some claim that the laissez-faire policies of the last decade approach the right strategy, and that the recent crisis was the result of too much rather than too little government support. This view calls for cutting government regulation and gutting public programs, hoping the market will take care of the rest.

However, the recent crisis illustrates that the free market itself does not promote the long-term benefit of society, and that certain fundamental investments and regulations are necessary to promote the social good. This is particularly true in the case of investments for research and development, where knowledge spillovers and other externalities ensure that the private sector will under-invest –especially in the most basic of research.

Another view is that the government must dominate certain sectors, protecting and insulating those areas thought to be drivers of future growth. This view calls for massive, sustained government investment supported by stringent oversight, dictating the type and direction of both public and private investments through mandates and bans.

But historical experience in this country and others clearly indicates that governments who try to pick winners and drive growth too often end up wasting resources and stifling rather than promoting innovation. This is in part due to the limited ability of the government to predict the future, but also because such exercises are distorted by lobbyists and rent seekers, which are more likely to favor backward looking industries than forward looking ones. In the United States such failures at picking winners and losers includes most prominently the Synthetic Fuel Corporation, a $20 billion Federal project in the 1980s that failed to provide the promised alternative to oil.

Therefore, we reject both sides of this unproductive and anachronistic debate. The true choice in innovation is not between government and no government, but about the right type of government involvement in support of innovation. A modern, practical approach recognizes both the need for fundamental support and the hazards of overzealous government intervention. The government should make sure individuals and businesses have the tools and support to take risks and innovate, but should not dictate what risks they take.

We propose to strike a balance by investing in the building blocks that only the government can provide, setting an open and competitive environment for businesses and individuals to experiment and grow, and by providing extra catalysts to jumpstart innovation in sectors of national importance. In this way, we will harness the inherent ingenuity of the American people and a dynamic private sector to generate innovations that help ensure the next expansion is more solid, broad-based, and beneficial than previous ones.

They then provide some examples of when government did it right, such as DARPA or emerging fields like nanotechnology or personalized medicine.

The overall report is quite ambitious but set some goals that should be achievable. They may have to be if the US is to be an important part of solving the complex problems we have ahead of us.

Technorati Tags: ,