The U.S. is generally recognized as the world leader in technology, having founded the silicon industry and hosting many top universities in science and engineering. Each year, however, prognostications about the nation’s demise into second-tier status crop up, usually in the context of demanding more government funding of various programs, reducing corporate tax rates or beefing up education. But truly maintaining technology leadership involves more than just throwing more (of other people’s) money at the problem: it requires recognition of the source, purpose and goals of technological development.
Healthy Technology Competition
Competition between the U.S. and, say, China (a likely candidate to replace the U.S. as technology leader, should the U.S. falter) is not necessarily bad; like any form of competition, in the right measure it can encourage each side to improve. Unfortunately, much of the competitive spirit in the U.S. is more a reflection of jingoism and a sense of entitlement, as though the nation has some claim to a leadership position simply because of who it is (a nation that is much, much younger than many others around the world).
An outworking of this nationalistic fervor is the notion that technological development is intimately linked with what is euphemistically termed defense (but all too often means offense). For instance, cutely quoting itself in a report, the National Commission for the Review of the Research and Development Programs of the United States Intelligence Community said, “Failure to properly resource and use our own R&D to appraise, exploit, and counter the scientific and technical developments of our adversaries—including both state and non-state actors—may have more immediate and catastrophic consequences than failure in any other field of intelligence.”
A disinterested party, however, might consider the United States’ nuclear arsenal (which is sufficient to turn pretty much the entire world to a nice charred color) or its invasive, pervasive spying program to all but guarantee that the country lacks any credible large-scale threats. Unfortunately, the public often buys into statements like “some of our adversaries might already have the edge over the US in cyberwarfare as well as other concerning areas.” If that is indeed the case, perhaps the U.S. could learn something about how to spend its outlandish defense budget more efficiently.
Enabling Technology by Reducing Finance
It’s a favorite of economists: growth. But is it really what technology should always aim for? Ultimately, growth is unsustainable: the available resources—particularly energy—are limited, meaning that at some point, growth must stop. As a result, although growth in the near term may be the result of technological development, it is not (or at least should not be) the goal of technology.
Unfortunately, the pursuit of growth at all costs has led to such travesties as the Federal Reserve’s so-called quantitative easing program, which is essentially a money-printing (read counterfeiting in any other circumstance) operation that diverts resources into the financial sector. The result of the program is extremely low interest rates, which effectively punishes savings, since saved money cannot keep pace with inflation. Because the incentive to save is lost, real capital (i.e., something other than debt through fiat currency) to invest in technology development is absent. The result is then a series of bubbles and busts as the economy tries to figure out what to do with the flood of money (leading to bubbles), only to later discover that the current “hot” investment is extremely overvalued (leading to busts). Scarcer capital would indeed limit the dartboard approach to innovation (fund everything in hopes that something useful falls out), but it would drive greater focus on technologies that are likely to produce results of value to society. (For insight into what government funding has done to physics, read Lee Smolin’s The Trouble With Physics.)
In the U.S., the tremendous growth of the financial sector has come at the expense of other industries. Robert Creamer notes at The Huffington Post that “fundamentally the financial sector is made up of middlemen, who spend their time creating schemes that allow them to funnel society’s money through their bank accounts so they can take a sliver of every dollar off of the top.” Furthermore, “It is the farmers, manufacturing firms, the health care providers, the transportation companies, the guys who sweep up buildings,” and so on “who produce the goods and services that we consume in our economy.” Unfortunately, monetary and public policies of the U.S. largely favor those who are not in these categories, instead favoring the financial sector, retirees, the unemployed and so on. Savers (who would normally become the investors of real capital) are penalized by artificially low interest rates, workers are penalized by ever higher tax rates and companies are saddled with a growing regulatory burden (Obamacare being the most recent).
Thus, the financial system of the U.S., combined with public policy, is detrimental to technological development—ironically, often in the name of growth. But instead of demanding that the system be dismantled to benefit everyone, many of those desiring U.S. leadership make narrow calls for more government spending on technology, “reform” of various policies (like H-1B visas) and so forth.
The education system, not coincidentally in light of the finance problems, is inflating drastically in both rising costs and falling value of degrees. Because so many (even non-professional) jobs increasingly require degrees to thin the applicant pool, more individuals are getting degrees so they can get jobs. But the growing demand raises prices, increasing debt and feeding the financial sector. Zero Hedge notes that rising student loan debts are stifling innovation because so many students need secure jobs to pay off their loans, preventing them from pursuing startups and other risky ventures that lead to new technologies.
Again, however, the perennial “solution” is more government money poured into an increasingly dismal education system. The result? More money printing to fund government debts, higher taxes, costlier education, more finance and so on. And the cycle continues. Kevin G. Coleman asks at InformationWeek, “Where is nation’s investment in STEM teachers, curriculum, and facilities?” First, despite continual whining by companies about a STEM shortage, a STEM surplus may actually be closer to the mark. Second, pouring more money into a one-size-fits-all government education system is hardly the ideal way to instill an innovative spirit. Yet the same hackneyed demands for more spending by governments (rather than, say, by companies who want STEM talent) are made year after year, shifting the burden of the supposed STEM shortage from companies who want talent onto taxpayers, who may have much less of an interest in the matter.
The sibling to finance and education in ensuring future American mediocrity in technology is intellectual property (IP). Although the notion that IP laws enable innovation by allowing inventors to receive payment for their inventions sounds reasonable, it lacks evidence. IP protections certainly hamper innovation by others who aim to build on certain ideas, however, since they must pay a patent owner, for instance, to use the idea. Furthermore, the leach industry of patent trolls extracts nearly $30 billion from the economy each year, according to one report, compounding the problem.
All in all, the greatest threat to U.S. leadership in technology is—the U.S. The nation’s overfinancialization, educational inflation and IP laws hamper innovation, but calls for greater government spending on research and development or education simply feed the problems rather than solving them. Partly to blame is the overemphasis on growth, which is ultimately an unsustainable policy. A turnaround in any of these destructive policies, however, is unforeseeable apart from a drastic change in conditions (i.e., another crash a la the Great Recession).
Image courtesy of oskay