From Industrial Policy to Innovation Strategy
Alan Pentz, CEO
Washington DC
January 30, 2020 - The phrase “industrial policy” is making something of a comeback in tech and government circles these days. Policy makers and politicians like Senator Marco Rubio and thinkers/public intellectuals like Julius Krein have begun mentioning the policy phrase that dare not speak its name again. It has connotations of old school, bureaucratic, and socialist thinking like something Walter Mondale would run on: national champions, protectionist policies, reopening coal mines, wasteful spending, investing in factories to make widgets, taking Pittsburg back to 1958, making steel, etc.
The reality is that this country has always had some measure of industrial policy from the days of Hamilton’s Third Report to Congress on Manufactures to the last Omnibus Appropriations bill. We just kept rebranding what we were talking about. A major component of industrial policy has been investment in what we now call “infrastructure”. Back in the 1800s they called it “internal improvements” and then the progressive era renamed it “public works”. Now we call it infrastructure. Each name is evocative of an era.
In keeping with that rebranding tradition, I propose we go from the very Cold War phrase “industrial policy” to something more 21st Century like “Innovation Strategy”. Doesn’t that sound better? Much more Silicon Valley and SaaS-business-modely. Kidding aside, I believe some sort of more organized innovation strategy is inevitable no matter which political party is in power.
The competition with China will become too intense to ignore. At one extreme we might see a Sputnik-like moment where China clearly and publicly outpaces the US on some key technology area. That will inspire a deluge of spending and policy priorities to invest in R&D, education, instructure, etc. Just look at what happened in the wake of the Sputnik launch. We got NASA, DARPA, quadrupled funding for the National Science Foundation, and pumped money into STEM education with the National Defense Education Act. That got us the Internet, better computers, GPS, etc. and etc. At the the other end of the spectrum, the slow drum beat of news stories about the competition with China will produce a more piecemeal approach like Senator Schumer’s advanced technologies agency. Regardless, smart politicians like Schumer and Rubio are positioning for the time when the floodgates open and we remake US R&D policy.
While I might disagree with Julius Krein on many issues, I do believe he is right that the current question before the country and our politicians is not whether to have an industrial policy (sorry, innovation strategy) but rather what type. How will we balance private sector initiative and avoid a Statist take over of the technology sector? How do we know which technologies are appropriate to invest in? How do we ensure disruption and avoid ensconcing national tech champions who rent seek from the government? All of these issues need a healthy debate, but to not engage is to ensure the US slips behind as a technological leader.
Author
Alan Pentz, CEO and Founder of Corner Alliance, has worked with government leaders in the R&D and innovation communities across DHS, Commerce, NIH, state and local government, and the non-profit sector among others. He has worked in the consulting industry for over ten years with Corner Alliance, SRA, Touchstone Consulting, and Witt O'Brien's. Before consulting, Alan served as a speechwriter and press secretary for former U.S. Senator Max Baucus and as a legislative assistant for former U.S. Representative Paul Kanjorski. He holds an MBA from the University of Texas at Austin.
