October 26, 2011
Post-Partisan Power: The Bipartisan History of American Innovation
This is an excerpt from the white paper, Post-Partisan Power, authored by scholars at the American Enterprise Institute, Brookings Institution, and Breakthrough Institute. A report overview and introduction can be found here.
The Bipartisan History of American Prosperity
Throughout American history, strategic government investments in areas like education, technology, infrastructure, and energy catalyzed the entrepreneurship and innovation that has paved the way for so many of the great American technological and economic successes of the 20th century. In the words of conservative New York Times columnist David Brooks, the American story is one of "limited but energetic governments that used aggressive federal power to promote growth."
Federal investment led to the development of the railroads under Abraham Lincoln and the federal highway system under Dwight D. Eisenhower. Technologies leading to the wide-scale use of nuclear power were developed in government labs and initially deployed under the auspices of the U.S. Navy and Atomic Energy Commission, after active support from Presidents Roosevelt, Truman, and Eisenhower. Early, sustained investments in R&D, education, computer science, and infrastructure through programs like the GI Bill, National Defense Education Act, and Apollo space program laid the foundation for the emergence of the aerospace, computing, and information technology industries. The United States Department of Defense (DOD) has long acted as an initial funder and early adopter of key technologies like radios, semiconductors, computers, software, and the Internet. And federal investments in health research through the National Institutes of Health have enabled scientists to map the entire human genome, making way for path-breaking advances in biotechnology.
In education and technology, federal investments have repaid themselves many times over in the form of greater economic growth, increased tax revenues, and high-paying domestic jobs. Every dollar invested in education by the GI Bill following World War II returned just over $5 in greater economic growth and $1.83 in greater tax revenues over the following 35 years, according to a Congressional report. Likewise, federal investment in R&D is a key driver of productivity gains and economic growth, and studies routinely conclude that there is a significant rate of return on such investments to the national economy and the tax base.
Economist Robert Solow received a Nobel Prize in economics in part for demonstrating that over 80 percent of economic growth in the first half of the 20th century was driven by advances in technology, and later economists confirmed that technology innovation played a similarly outsized role in economic progress in the later half of the century. Just as federal investment has driven innovation in countless industries over the last century, so too will federal investment in energy technology be central to catalyzing private sector innovation and entrepreneurship in the 21st century energy sector, creating new industries and jobs.
In an era of fiscal constraint, it is important to distinguish between government spending, some of which is clearly unproductive and wasteful, and dynamic public investments that yield long-term economic returns. Fiscal deficits are an increasing concern, particularly as the federal bureaucracy has grown to record levels in recent years. Certainly, at least some government expansions are unnecessary or duplicative, and discontinuing ineffective and wasteful programs can help restore some fiscal balance. But not all federal programs should be painted with a broad, deficit-cutting brush. Indeed, federal investments in areas like science and technology have been a long-term driver of national prosperity under presidents both Democrat and Republican.
Far from being an unnecessary strain on the federal budget, federal investments in energy technology innovation are thus a critical component of an effective and responsible strategy to reduce the national debt and generate a new era of sustained economic prosperity.
See also: "Case Studies in American Innovation," Breakthrough Institute (April, 2009)