All posts by Rob Atkinson
For a long time, I and many other Washington tech policy types believed that our nation faced a shortfall in the number of highly skilled scientists and engineers (e.g., the STEM workforce) and that this shortfall hurt U.S. innovation and competitiveness. But as Keynes once said when asked why he changed his mind, “when the facts change, I change my mind, what do you do sir.” So I am grateful to Rutgers professor Hal Salzman for pointing out the error of my thinking.
Salzman tells us that only one out of four STEM graduates works in their field (it’s actually 1 out of 2 and he knows this). He tells us wages for STEM workers have been flat for the last 16 years (STEM wages actually increased about twice as fast as non-STEM wages). He tells us that engineering colleges produce 50 percent more graduates that are hired into engineering jobs each year (actually its one to one, not 1.5 to one). He tells us that IT employment is below its 2002-2003 peak (actually between 2003 and 2010 IT workers grew by 19 percent while total employment fell by 0.8%). … Read the rest
Digital piracy is a serious problem affecting content and software creators in a range of industries. In fact, at least 1 in 4 bits of traffic on the Internet is related to infringing content. One country in which piracy has been particularly rampant is China and the United States and international agencies such as the World Trade Organization have repeatedly called on the government to enhance enforcement.
Given this, there was some cause for optimism recently when the popular streaming video program, QVOD, was shut down by the Chinese government. The order cited the large amount of pirated and pornographic content that were delivered through the service as the key cause of the decision. In addition, the Chinese have also fined Kuaibo, the firm that runs QVOD, approximately $40 million for distributing pirated content. These actions symbolize the government’s larger effort to crack down on piracy and have led several large Internet sites, such as Sina, to publically apologize for distributing pirated or pornographic content.
It should be noted that pornography is illegal in China and some have argued that the actions by the government were designed principally to reduce … Read the rest
Techno-utopianism seems to be a particularly American phenomena. As I argued in The Past and Future of America’s Economy it seems like about every half century – usually as it turns out right before a big structural slowdown of technological innovation – pundits and scholars start to go overboard on how great the techno-enabled future will be. Case in point was the 1967 book Year 2000 written by Herman Kahn, noted futurist and founder of the Hudson Institute. Kahn relied on the new “science” of forecasting and ended up with a book that had the tone of “you ain’t seen nothing yet.” He wrote:
This seems to be one of those quite common situations in which early in the innovation period many exaggerated claims are made, then there is disillusionment and swing to over conservative prediction and a general pessimism and skepticism, and then when a reasonable degree of development has been obtained and a learning period navigated, many – if not all – of the early ‘ridiculous’ exaggerations are greatly exceeded. It is particularly clear that if computers improve by five, ten or more orders of magnitude over the … Read the rest
For much of the postwar era the United States led the world in technology, which brought significant economic benefits to the nation. That leadership was due in large part to generous federal government funding for R&D, much of it channeled through military spending. That this occurred during the Cold War was no coincidence: as William Janeway argues in Doing Capitalism in the Innovation Economy, nations have historically been unable to muster the political will for significant spending on innovation without it being part of a “national mission,” since such spending means giving up current consumption for uncertain future benefits. In the last half of the 1800s, nation building provided the mission for America—just as that does now for China. But after the late 1940s the animating mission that helped drive technology innovation was winning the Cold War, which we did.
The threat from the Soviet Union meant that Americans were willing to sacrifice present consumption for the good of the nation–in this case keeping the world safe for freedom and democracy. And it meant we did what it took to win—and that meant innovating. The fact that Lockheed’s Skunk … Read the rest
Earlier today, I participated in a panel discussion entitled “The Value of Medical Innovation to Patients, Economies and Societies”, which was a part of the Pharmaceutical Research and Manufacturing Association’s Annual Meeting. The discussion centered on one common theme – prioritizing medical innovation has far-reaching benefits for society.
In the U.S., public health problems take a toll not only on individual patients but also on society as a collective whole. The Milken Institute recently concluded that the most common chronic diseases cost the economy an estimated $1 trillion each year and that figure could rise to $6 trillion by 2050. More specifically, a study conducted by the Harvard School of Public Health and the World Economic Forum found that cancer costs the economy about $250 billion in 2010 and anticipated that expense to rise to at least $458 billion by 2030. Promoting and investing in medical innovation could significantly reduce these economic costs and improve public health outcomes.
In addition, the U.S. economy benefits tremendously from expanded medical innovations and the industries it promotes. The field, which accounts for $69 billion of U.S. economic activity, produces highly-skilled jobs that pay, … Read the rest
It is now become accepted wisdom in economic circles that America is enjoying a manufacturing renaissance. As the general theme goes: American companies are no longer offshoring factories; foreign companies are building new factories here; cheap energy is allowing manufacturers in the United States to expand; and groups like the Boston Consulting Group are telling everyone not to worry, manufacturing will rebound. Wish that it were so. Unfortunately, reality appears to be more troubling
If a manufacturing resurgence was truly occurring we would see it in an expanded number of factories. In fact, according the U.S. Bureau of Labor Statistics (BLS) there are fewer U.S. factories today than there were two years ago. Moreover, the BLS’ Business Employment Dynamics survey indicates that net new manufacturing establishment openings (openings minus closings) has been negative every year since 1999. In 2012 alone, 3,000 more manufacturing establishments closed then opened. This is not to mention the fact that manufactures in America face one of the highest effective corporate tax rates in the world, while the federal government doesn’t support pre-competitive manufacturing research centers like our competitor nations (e.g. Germany, Japan, etc…)
The Washington Post printed a story about how the Campaign for a Commercial-Free Childhood has submitted the opinions of six experts on child development to the Federal Trade Commission in support of CCFC’s complaint against toy maker Fisher-Price for marketing its “Laugh and Learn” app for infants and small children.
One of the six experts, Herbert Ginsburg writes, “Existing research suggests that infants and very young children are not cognitively ready to learn key abstract ideas about numbers. Although some children at the upper bounds of this age range might learn to parrot some number words they are highly unlikely to learn important concepts of numbers.”
To be sure I am not a child development expert (although I did study child development in college.) I am a parent of a wonderful daughter. When she was 19 months old I ran across a Fisher Price online game, “The ABC Game“, which taught infants and toddlers their letters. (This was pre-tablet so I used a laptop). My daughter would press keys on my laptop and up would pop a picture of the letter, a picture of an animal whose first … Read the rest
It was with great interest and mostly pleasure that I read Martin Baily and Barry Bosworth’s new article in the Journal of Economic Perspectives, “U.S. Manufacturing: Understanding Its Past and Its Potential Future.”
The article attempts to analyze recent trends in U.S, manufacturing performance, including output and employment. This is an area ITIF has been working on for a number of years. And in the past, Baily has been skeptical of our analysis, which claimed that U.S. manufacturing was in fact worse off than official statistics, in part because of the overstatement of computers and electronics manufacturing output. So it was with great delight, and some surprise, to see that Baily and Bosworth have now embraced this analysis. As they note, the fact that measured manufacturing output’s share of GDP has remained stable “is largely due to the spectacular performance of one subsector of manufacturing: computers and electronics.” In fact, as ITIF showed, they also show that by taking out computers, overall real manufacturing output fell from 2000 to 2011, something that is unprecedented in our almost 250-year history. They also rightly point out that the massive … Read the rest
R&D is fundamentally important to economies because it is a primary source for innovation and new technologies. But markets rarely provide enough incentives for innovation on their own—innovations are expensive to create but easy to copy.
For those reasons many countries provide R&D tax incentives to companies that spend money on basic or applied research. The best way to think of this policy is as actually as a fix—R&D has positive benefits for the economy as a whole, but because individual companies have trouble capturing all the benefits of R&D they are unlikely to invest the socially optimal amount.
Tax breaks for businesses are fraught with controversy because they “distort” the market and according to conventional neoclassical economics thinking distortions are by definition bad, even if they are pro-growth. To be sure certain tax incentives outlive their usefulness, as they have in the fossil fuel industry, and some tax incentives are only on the books because they serve special interests, not the public interest.
As final negotiations begin for the Trans Pacific Partnership (TPP) trade pact, it is essential that U.S. representatives understand the impact this agreement will have on our future. The TPP presents an opportunity to set the standard for future trade agreements, but implementing the wrong policies could do more harm than good.
Any TPP agreement must enable U.S. innovation and not finalizing an agreement is better than signing one that compromises America’s ability to create technologies and make advancements that benefit society. A key factor in protecting innovation through the TPP will be the assurance of strong intellectual property (IP) rights protections that promote investments in R&D and technology development and insure the free flow of information across borders.
As ITIF has noted, IP is a central component of the innovation ecosystem, which is a key factor in a healthy economy, in both developed and developing nations. For example, strengthening IP rights has been connected with increased inflows of foreign direct investment, rates of domestic innovation, and trade in high technology products.