INNOVATION TALK:WHEN APPLE first launched the Mac, Steve Jobs noted that "innovation is not about money. It's about the people you have, how you're led, and how much you get it".
At the time, he noted that IBM was spending at least a hundred times more on R&D. When Apple came up with the iPhone, the rest of the mobile handset industry – LG, Microsoft, Motorola, Nokia, RIM, Samsung, Sony and Symbian – were investing heavily in keypad and pen-stylus phones. When Apple came up with the iPad, Microsoft had already invested heavily in PC-based tablet computers.
Innovation is fundamental to sustainable economic growth. Not only does innovation create new ventures, jobs and wealth, but also it defends established ventures from withering under international competition.
Which creates more advantage for an economy: building and hosting a world leader in a particular market, or merely renting to a tenuous operation of a foreign multinational?
It seems that both US presidential candidates, Barak Obama and Mitt Romney, agree that innovation is not so much about money. In 2008, Obama pledgedto double federal funding on the basic research agencies (the NSF, NIST and DOE SC) over 2006-2016. But so far his increases have been modest: a 3.3 per cent in total federal RD funding for 2013 over 2012 figures to $141bn, which is 12 per cent up on the 2006 figure of $124bn.
Romney has pledged an immediate 5 per cent reduction in discretionary spending, other than investment in national security. As president, RD programmes unrelated to national defence will be diminished.
It seems that both candidates are unlikely to materially increase total federal spending in basic research, and in consequence there has been some disillusionment about "boom-bust" federal RD funding, which affects careers of scientific researchers.
Do the presidential candidates then believe that innovation is about people? Six of the top 10 universities worldwide (according to the 2012 QS rankings) are in the US, and 14 of the top 25. One would expect a steady stream of new ventures generated by recent graduates of the US academic system, driving employment and growth in the US economy.
Perhaps this is indeed happening, but not necessarily on US soil. American graduate entrepreneurs are increasingly under the burden of university fee debt, delaying their desire to risk joining a start-up or launch one themselves. In the period 2005-2010, the number of start-ups in the US with more than one employee decreased by more than 25 per cent, and consequently fewer jobs are being added to the economy than previously.
Meanwhile, entrepreneurship has globalised, and governments such as those of Singapore, Germany, Chile, China, India and Canada all offer incentives to attract the best and the brightest to found start-ups in their jurisdictions rather than anywhere else.
In the decade from 1995, half of Silicon Valley start-ups had an immigrant as a founder. Andy Bechtolsheim, Sun Microsystems co-founder, is from Bavaria. Former Intel chief executive Andy Grove was born in Budapest. Yahoo co-founder Jerry Yang was born in Taipei. Google co-founder Sergey Brin was born in Moscow. The founder of eBay was Parisian Pierre Omidyar. Elon Musk, founder of PayPal, Tesla (electric cars) and SpaceX (private space vehicles), was born in Pretoria. Facebook co-founder Eduardo Saverin was born in Sao Paulo.
The founders of ATT, Kraft Foods, Honeywell, US Steel and Dupont were all “immigrants”. But over 20,000 US-educated graduates leave the US under the national immigration caps, and so work elsewhere. If it is easier for savvy immigrants with a great US education to work outside the US, then is the benefit for the US economy only the academic fees paid for their university courses?
Obama wants to fix "the immigration system for America's 21st century economy" and has launched initiatives to clarify visa requirements for those of " exceptional ability". Romney wants to raise the limit on visasfor immigrant holders of advanced degrees in technological fields. He would give green cards to foreigners who graduate from US universities in these fields.
What of the corporate tax system? Obama and Romney both assert they wish to simplify the US system, favouring research and development tax credits whilst eliminating business tax breaks and in both cases lowering the corporate tax rate. Romney wants to transform the US tax system to impose tax on income in the jurisdiction in which that income is earned.
He would not penalise companies repatriating profits back to the US.
Obama wants to collect more taxes from US multinationals by imposing a minimum tax rate on US corporations operating in low tax jurisdictions.
How about the web, which has become a global channel for commerce?
Obama wishes to preserve "net neutrality", so that internet service providers and telecommunications networks would never favour and give precedence to the traffic for one website over another.Romney takes an opposing view: if a corporation wishes to pay a premium to ensure its web presence has better performance and responsiveness than its competitors, then so be it – market forces should dictate the future of the internet.
Obama wishes to expand broadbandaccess to all US citizens, regardless of their location within the US, and has been criticised for slow progress on this issue. Romney would leave broadband access to state, city and local administrations, and the responsivenessof the private sector.
“You cannot escape the responsibility of tomorrow by evading it today,” asserted former president Abraham Lincoln.
Political candidates, most of all those for the presidency of the United States, owe it to their electorate to be assertive, transparent and unreservedly committed to executing their policies if elected. The future of the US economy, and in turn of many others across the planet, depends on how much – indeed, even whether – the president gets it.
The future of the US economy, and in turn of many others across the planet, depends on how much – indeed, even whether – the president gets it
