The United States is the global leader in technology and innovation. After all, we are home to U.S.-based tech giants like Amazon, Facebook, Apple, Microsoft, Google, and Twitter. In Silicon Valley alone, more than $31 billion in venture capital have been deployed to support local tech startups.
But with a spending problem in Washington that goes back to the George W. Bush administration, the federal government is investing substantially less on research and innovation. This not only hurts entrepreneurs, it also weakens our ability to be a global leader in innovation.
The public sector has always sparked innovation for one simple reason – the government can afford to take risks that the private sector cannot. And no one has demonstrated this better than economist Mariana Mazzucato in The Entrepreneurial State: Debunking Public vs. Private Sector Myths. Government plays a critical role in facilitating innovation as well as funding innovation. Apple, for example, has benefited greatly from government support according to Mazzucato. “In fact, there is not a single key technology behind the iPhone that has not been State-funded.”
In an Oval Office meeting during “tech week” at the White House, President Trump proclaimed, “My administration is embracing a new spirit of innovation that will make life better for all Americans.” And in March, the President announced the creation of the Office of American Innovation (OAI), which will “ensure that America remains the global innovation leader.” Entrepreneur and senior adviser to the president Jared Kushner has been tasked with overseeing this new office. A go-getter and effective private sector leader, Jared is a strong choice to lead this new and innovative office.
But the challenges are far greater than merely ensuring that America remains the most innovative country in the world. In the 2018 budget, we see some of the deepest cuts in innovation that we’ve ever seen. Research and development spending has been cut by about 5 percent, and some science and medical research programs have also been slashed. Granted, some spending has been ineffective in the past, and some R&D efforts have been duplicative. But I am hopeful that OAI can make the case that while ensuring financial transparency and accountability, that we maintain a spending level that encourages American innovation, rather than discourages it. American jobs are depending on it.
Canada is also capitalizing on our proposed spending cuts, and the Canadian government has begun to aggressively increase its efforts to support innovation – particularly in regulatory technology (RegTech), by substantially increasing government investments. Government agencies are even hosting hackathons where they can see firsthand the innovation of local startups and entrepreneurs. The efforts by the Canadian government are already yielding positive results, and in technology circles, Canada is even considered as the new world leader in RegTech.
It’s true, for decades, our government has wastefully spent money on programs and initiatives that yielded very little in return. We can’t spend any more money because we can’t afford too. But when it comes to being the global leader in innovation and technology, we can’t afford not to. As a country that enjoys winning, we can’t allow Canada to take the lead. American jobs and American pride are depending on it.
Mark Vargas (@MarkAVargas) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is co-founder and president of tech startup Licentiam. From 2007-2010, he served as a civilian within the Office of the Secretary of Defense.
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