Government's Role in Innovation

An event that seemed to promise a fight over government's proper role in innovation Thursday evening turned surprisingly conciliatory instead.

Vijay Vaitheeswaran, an editor at The Economist and author of the new book Need, Speed, and Greed, about the postindustrial economy, threw the hardest blow.

"The history of government involvement in spurring innovation is a tragic one that's littered with failures," Vaitheeswaran said at the panel discussion sponsored by Google and the Milken Institute. He proceeded to rattle off a list of what he considers illustrative examples of irresponsible government meddling in innovation ranging from U.S. efforts to create synthetic petroleum to French subsidies to toy factories.

Vaitheeswaran's overarching point was that the old model of top down innovation, spurred from inside government, has seen its day. Instead, he argued, the best government can do is remove or correct misaligned economic incentives so the marketplace can force the best private-sector innovations to the top and let other competitors fail without a massive public investment.

"The idea that a moon shot...will solve climate change and the clean energy crisis, I want to challenge that," he said. "The [challenge] of sending a man to the moon once, cost be damned, to beat the Soviets is a very different kind of problem than we face today, which is finding a way to provide clean energy to 7 billion people in a manner that's affordable, sustainable and convenient. The latter problem requires a bottom-up solution."

Rather than defend innovation inside government, former U.S. Chief Technology Officer Aneesh Chopra seemed to largely agree with Vaitheeswaran that large, government-built solutions to major problems are a relic of the past.

Chopra began his presentation by rattling off three roles the government can play in innovation: investing in infrastructure, including broadband, and early research and development; creating regulations and voluntary agreements that support an innovation economy; and collecting the raw components of innovation such as government data.

Vaitheeswaran quipped: "If only those were the only things government did I'd be so pleased."

Asked about the Obama administration's controversial loan guarantee to the now-bankrupt solar energy company Solyndra, Chopra largely ducked, noting only that the loan guarantee program predated the Obama Administration.

He didn't push back at the implication that loan guarantees writ large represent too much government interference in the innovation economy. Instead, he pivoted to describe the administration's Health IT program, which rather than propping up a single provider of electronic health records, offered Medicare and Medicaid incentive payments to any vendor that met basic qualifications and could corner a piece of the market.

"When you look at the Obama Administration's track record on innovation, I'd ask you to look at both models," he said.

To be clear, as CTO, Chopra's mission was largely focused on using government to spur private sector innovation. If he'd been asked directly about new technology coming out of the Defense Advanced Research Projects Agency and other technical agencies his vision of government technology might have been broader. Still, the men's seeming consensus that government's future role in innovation is unlikely to include major innovations itself is interesting.