Published by the Breakthrough Generation.

In his book, China Inc.: How the Rise of the Next Superpower Challenges America and the World, Tim Fishman explores the rise of China and highlights areas where the Chinese have out-competed, are gaining ground, or seek to out-compete US industries. When we consider the recent developments, including China’s investment in clean energy from ‘green’ stimulus measures exceeding that of the US, and enacting fuel efficiency standards beyond those recently approved by Congress, it seems this could represent an emerging trend.

While Fishman acknowledges that ‘[t]he ability of American industry to stay ahead of its competition rests on the national gifts and resources that the United States devotes to innovation’, he warns that the innovation gap is ‘beginning to narrow’.

Unfortunately, Fishman asserts that the US currently lacks the political will to implement reforms in key policy areas to maintain the innovation edge and increase America’s economic productivity and competitiveness. A reform agenda that must include renewed government commitment for increased public investment, higher levels of education, and support for high-tech research and development.

The analysis of economist Jeffrey Sachs further supports the need for the US to invest in innovation. In Common Wealth: Economics for a Crowded Planet, Sachs explains that public and private investment is central to all phases of economic development. This is particularly the case for economies in the ‘innovation economy’ phase—a category that best represents the United States current phase of development—because innovation is central to ongoing progress. Given that China is rapidly building its capacity for innovation, the inability of US lawmakers to implement effective reforms presents the risk of loosing innovators that seek opportunities in China. It is needless to say that such a scenario materializing would be detrimental to the US economy.

As the Breakthrough Institute’s resident Australian, I am all too aware of the impacts of governments failing to support innovation. Solar energy pioneer David Mills—who pioneered breakthroughs in solar technology at the University of Sydney for nearly thirty years—and the Australian firm Ausra relocated to Silicon Valley in 2006. The move was due to Australia’s inadequate support for the firm’s big ideas—Austalia’s then Prime Minister John Howard, of the conservative Liberal party was more interested in thwarting the development of renewable energy than advancing it. There is an important lesson here for American policy makers: High tech innovators will go where they can find the financial support for their innovations. If the US fails to support breakthrough technologies and innovation through public investment and the multiplier effect it has on private investment, then it’s possible that a key driver of prosperity will leave US shores.

To ensure that the US maintains its innovative capacity, it’s imperative that the Obama Administration, Secretary of Energy Steven Chu, and the US Congress act to secure America’s economic future. To do this, progressives must challenge the conservative consensus that stymies progress in this area. We can start by communicating the benefits of public investment and innovation.

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