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April 17, 2014

HAMILTON: Government as innovator? You bet!

By LEE H. HAMILTON

Five years ago, the federal government spent $169 billion to fund basic research and development. This fiscal year, it’s down to $134 billion.

People who believe in public belt-tightening applaud drops like that, but in this case they’re wrong. We need to boost the government’s investment in R&D, not slash it.

Let’s begin with the federal government’s record, which is nothing short of impressive. The bar codes that revolutionized inventory control and tracking were developed with a grant from the National Science Foundation. Google’s founders depended on government grants for their early research into search algorithms. Computer touch-screens, computer-aided design, GPS navigation, voice-activated “virtual assistants,” the internet — all were based on government research or funds.

The plain truth is that much of the research that catalyzes and accelerates technological advance is too risky, too slow to pay off, or too expensive for the private sector to undertake. Clearly there is a government role to play in underpinning economic dynamism. “Not only has government funded the riskiest research, whether applied or basic, but it has indeed often been the source of the most radical, path-breaking types of innovation,” wrote Mariana Mazzucato, a British economist, in her book “The Entrepreneurial State” last year. “To this extent it has actively created markets, not just fixed them.”

There is no question that there will be waste in research and development, just as private corporations sometimes veer onto the wrong track. All you need do is think back to 2012 and the scandal surrounding Solyndra, the Silicon Valley-based solar panel manufacturer that collapsed, leaving taxpayers on the hook for $535 million in federal loan guarantees.

The point is not that government investment in research and development is better than private-sector investment, but that collaboration between government and industry puts us in a stronger position competitively than either sector acting alone. Both are needed to solve big problems.

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