– Jonathan R. Hoganson is the deputy executive director of the Technology CEO Council, a public policy advocacy group that includes the CEOs of Intel, HP, Dell, Applied Materials, EMC, Motorola, Micron Technology and IBM. He previously was the legislative director for Rep. Rahm Emanuel and policy director for the House Democratic Caucus. The views expressed are his own. –
A few years from now, when our economy has regained its stride, we may look back to a little-noticed announcement last Monday that spurred the resurgence. Amid swine-flu hysteria and First 100 Days hoopla, President Obama quietly announced a commitment to spending three percent of the U.S. GDP on science research and development.
This is a profoundly important step, but if we are to continue to lead the world, the United States must also develop a comprehensive policy to foster innovation. For too long, the United States has lived in a “next month” mindset when it came to our economy. This short-termitis has led to sub-prime lending, credit card debt and a general lack of long-term planning. And in no place has this been more evident than in the sciences.
For the past decade our spending on research and development has been anemic at best, and beginning in 2005, federal funding of academic research actually began to decline. This was happening at the same time our overseas competitors were increasing their commitment. For example, China has increased its R&D spending by an average of 17 percent each year in an effort to catch and surpass developed nations’ spending.
Currently, the United States ranks seventh among developed countries in R&D spending as a ratio of its GDP. Is that a recipe for continued economic and technology leadership?
There is, in fact, a direct correlation between R&D and scientific leadership. As the commitment to science ebbed, so did the U.S. share of worldwide patents and research articles in peer-reviewed journals. And R&D has been proven to catalyze economic growth and enable comparative advantage for developed companies and economies.
Now is the time to make technology and innovation a cornerstone. In the last three months we have made a good start, making broadband, health-care information technology and green tech key components of the stimulus package. The president has proposed a 10-year extension of the R&D tax credit to give businesses the incentive to continue to invest in cutting-edge technologies and products. By advancing these initiatives, we are developing the foundation of a national innovation strategy, but Congress must work with the president to advance a comprehensive strategy.
In recent years, countries such as Germany, France, Japan, New Zealand, Finland, Australia, Denmark, and Australia have established or expanded agencies to promote technology and innovation. While the United States is unlikely to create a new agency, the White House can develop an inter-agency strategy that will restore America’s preeminence as the world’s leader in innovation.
This strategy could synergize the Obama administration’s efforts in clean energy, broadband, and health reform, with new initiatives in education and R&D. It could also develop a system for partnering with venture capital to foster entirely new companies and industries. At the same time, we could remove non-tariff trade barriers, enforce international agreements, open new markets and provide a globally competitive corporate tax structure. All of these are crucial components of any inter-agency innovation strategy.
The last time our government put this type of concerted effort into scientific research was President Kennedy’s challenge to land a man on the moon by the end of the 1960s. Not only did we achieve that goal, it also spawned a generation of scientists and technologies that shaped the 1980’s and 1990’s. What followed was an era of Internet, communications and medical advances that spurred an unprecedented period of economic prosperity.
President Obama’s bold commitment to R&D carries an important reminder that the 1960’s space race was more than a demonstration of increased federal funding; it was a comprehensive strategy to ensure that America led the world. The president seems willing and able to replicate that success today; Congress and industry need to work with his team to make this happen. It’s time for America to take another giant leap for mankind.
We do need research and development, but not at the government or college lab level. We need it where it is pointed toward a useful product or service. Just funding positions so someone can publish something moves at a snails pace. We need incentives for innovation and patents in order to recover from the serious production and brain drain on the country. We have serious environmental and energy problems and these cannot be solved by government research.
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I agree with Ann — those in power use goverment spending to advance their own agendas, which are frequently different than what is good for the country. If investors could be assured af a predictable economic policy and the right to receive the benefit of what they produce, then the private sector would invest in profitable R&D.
The economic strength of the industrial world and America came from the rise of the middle class. That middle class grew through manufacturing, in 1950 for example $294B of GDP contribution vs. $42B for government. Manufacturing produced goods which paid wages, and wages were used to consume other goods. The production of those goods was based on R&D, innovation and creativity. Unfortunately, manufacturing share of the U.S. economy continues its relentless 50-year decline. Last year, manufacturing GDP fell to an all-time low of just 12 percent of the economy, according to a Manufacturers Alliance/MAPI analysis, matching government spending. Government does not create wealth, it only reallocates it. Similarly, derivatives, hedge funds and other convoluted financial transactions don’t create wealth either. Its also fine to promote innovation but concurrent with government employee unionisation came a dramatic fall in American educational standards. So now we don’t even have the brain trust for innovation. This is a 50 year trend cutting across all political parties, and numerous generations. It requires more than a 3% solution, but rather a societal will to change before its too late.
Lefty doesn’t get it… Ann has some good points, but the private sector may be a little more efficient, but they are not 100% efficient… Has Detroit-Auto been efficient? Are the Financial institutions efficient? They reward millions in bonuses for good behavior (i.e. profits), but there are no penalties for bad behavior (i.e. running the economy into the ground)… they fly their private jets all over, host lavish retreats… spend their personal millions on ridiculous mansions and 85 cars… not very efficient.
Obama inherited a recession and the largest deficits ever… that’s an almost impossible situation…
Government basically exists to pool resources for the greater good… scientific/technological research is vital. New discoveries create new industries… would we have nuclear power without the Manhattan Project? How many current day products can be directly linked to the Cold War or the Space Race? Improvements in plastics, metals, etc.
Australia’s on there twice. Austria? I want to know what it should say.
In response to Kevin2oh:
It is not the rise of finance that has brought calamity on this nation. It is the perversion of financial principles that has become our ruin. Lending to friends and family who cannot repay is an admirable way to live.
It is a very poor way to run a bank. Slavery was abolished in the U.S. at great human cost. It has been brought back in the form of usery.
Perhaps it would be more cost effective to purchase intellectual properties from profit minded research assistants in China, India, and other emerging economies.
Since our children are already working for substandard wages we could manufacture their technology and sell it back to them without the burden of bankrolling all of the R & D. I think our turn at imperialism maybe about finished.
The step to work on more Science and Technology is indeed a step which needs to take place. However the fact remains that America “WE THE PEOPLE” are going to have to pay for this. Either up front or on the back end with tax increases. It is my belief that what is needed is an “Out of the box” approach to the situation.
What would be said if we could accomplish the same thing, thus increase jobs and spur economic growth? This can be accomplished with some out of the box thinking, but is that what our administration wants?
Great, now we can send even more money over to Indian and Chinese research and development firms. Do a little research and you will find that a large amount of U.S. companies research and development is now shipped overseas. That’s one reason we don’t have many engineers in graduate schools and over half of the students in engineering are foreigners. I’m an unemployed engineer and I really don’t think throwing money at this will solve the problem. We somehow need to change the mindset that it’s OK to decimate our nations engineeering capability because it’s cheaper to do engineering elsewhere.
I really like the fact that president Obama will spend more on Science and R&D. Lefty believes that spending more is a bad thing, but spending more in the correct places is a very good thing.
Of course, even Lefty’s arguments ring false. Eating more of the correct foods WILL get you thinner. And, if one reads the article, one quickly realizes that Lefty did not, as Jonathan Hoganson did a very good job of explaining the correlation between science, R&D, and economic growth.
@lefty
At least this “puppet’s leadership” is spending our money at home, where it is needed the most. Scientific and technological advances do not happen in isolation. They are fueled by investments. Investments in Science and Technology made the US what it is today.
If the Great Decider had spent all the money wasted in Iraq here at home, we wont be in the mess we are in now. Think about that!
You’re on the mark, Mr. Hoganson. We cannot continue to gut the middle and lower classes to funnel hundreds of billions to the financial industries which have produced nothing of real value except for the richest of Americans. For the rest, it’s been borrow and spend into poverty.
It’s time to reverse many of the policies that have just about turned this country into a full fledged Banana Republic over the last 30 years.
As we sow, so shall we reap and technological research, development and innovation is the best fertilizer there is.
@ Ann
That is the system we have built and are now subject to, what should we do now?
Continue, or try to make some changes?
I see this comment being made repeatedly and I always have the same question . . .
What would you rather see our money spent on?
This is a move in the right direction and a great first step. The next step most be to get our young folks interested in science and technology, the media and Hollywood needs to put people of science and technology in a better light. Stop calling them geeks and nerds and show them for the heroes they are. These are the people who shape our futures, they are my hero’s and I wish more would start looking at them that way. I develop instruments for the science community and over the last 25 years America has gone from being the dominate country of researchers to making up less then half the community now. Europe and Asia are producing many more new scientists then the USA. So again I believe President Obama has the right insight by starting with funding, students next! I love the world of science and love getting young people interested in this great field.
At least he’s spending it wisely.
When government spends money they reward their political supporters. They waste the vast majority of the funds on hair brained ideas that are thought up at the eleventh hour so the proponents can get some of that “free” money. Monitoring programs, if they exist at all, are a farce and do nothing to keep the money from being spent in an incredibly wasteful fashion.
The only way to do this type of massive spending its through tax credits, tax deductions and tax incentives. That way the money goes to private industry that has a profit motive and understands and utilizes effective cost control methods that never seem to occur in government funding scenarios.
Government has never been able to spend money in an efficient manner. The idea that money needs to be collected from people and businesses and they run through the government for a haircut (waste) and then returned to the people and businesses to “stimulate” the economy is a farce. Approximately half of the money will be lost in such a plan. 100% of the some sort of stimulus can be given to people and businesses through tax credits and tax deductions, waste is eliminated. But, it never seems to be a “good idea” because the political power brokers do not get to reward their supporters this way.
Do not ever forget that being a political person is not about what right for the people or right for the country, it is about power and money grabs for themselves and their supporters.
while i may not agree with the amount of spending and/or everywhere it has been used. i do belive this is one area that has been long neglected.
whether by accident or diligence, research has spawned industry/buisness and jobs. hopefully the future creation of related work will be here and stay.
Having grown up during the technology era of the 1980s the steps President Obama and his administration have taken to promote science research and development seem like a great idea. We live in a time of globalization and there are many more competitors on the the science and technology field. Many other countries have been funding R&D since the technology boom and I feel the US should do so as well.
Perhaps there is a correlation between the rise of finance and demise of manufacturing and patent activity? It’s hard to patent derivatives.
That seems to be his answer to everything…spend more money…one of these days he’s going to run out of our money to spend! How he thinks he can spend his way out of debt sounds like eating your way to being thinner! HOPE & CHANGE??? Not under this puppet’s leadership!