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Archive for June, 2009

Innovation Economics Can Fight Global Warming

The U.S. House of Representatives may be on the verge of passing the most significant environmental measure since 1990. The bill, named for its sponsors, representatives Howard A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.), would for the first time impose caps on carbon dioxide emissions, which contribute to global warming. It also would allow companies to buy credits from each other, permitting them to exceed their greenhouse gas limits.

While the so-called cap-and-trade mechanism (or some kind of carbon pricing) is needed, it isn’t enough. To really avert climate change, the government needs to adopt an explicitly green innovation policy. Unfortunately, green innovation is getting short shrift in this bill and in Washington generally.

Four prevailing doctrines shape U.S. economic policy today: Keynesian economics; two versions of neoclassical economics (conservative supply-side economics and liberal “Rubinomics”); and the new kid on the block, “innovation economics,” about which BusinessWeek Chief Economist Michael Mandel wrote a cover story last September.

Both conservative and liberal neoclassicists oppose any government allocation of scarce goods and services. They prefer a market tool such as emissions trading that would set a price

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Divorce Washington at Your Peril, Silicon Valley

Washington, D.C. and Silicon Valley are separated by 3,000 miles and vastly different cultures. But if the Valley itself and, more broadly, the U.S. economy are to thrive, then Washington and Silicon Valley need to appreciate each other more than they currently do. From my perch inside the Beltway, I’d like to offer some words of advice for the Valley.

First, I salute your entrepreneurial and organic spirit. It has helped transform the world and create jobs and wealth. But while Washington doesn’t always understand what Silicon Valley does or needs, you need to abandon the myth that Washington had nothing to do with your creation.

Remember: the Internet emerged from the Defense Department’s Advanced Research Projects Agency (ARPA). Oracle got started doing work for the Central Intelligence Agency and Intel sold much of its early output to the Pentagon. Sergey Brin was working on bibliographic research with an National Science Foundation (NSF) grant when he conceived Google. The founders of Genentech and other Bay Area biotech firms relied in part on federal research money to universities. Granted, these and many other companies became forces in the market independent of

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Cybersecurity Challenge Calls for Multilevel Plan

On Friday, May 29, the Obama administration announced the results of the 60-day review on cybersecurity conducted by Melissa Hathaway and laid out new priorities for cybersecurity.

Overall, the report delivers a solid overview of the current challenges and presents next steps for grappling with them. Key portions of this strategy include creating a “Cyber Czar” to oversee national cybersecurity initiatives; public-private partnerships to better share data and resources; efforts to create and retain a skilled cybersecurity work force; and plans to increase public awareness of cybersecurity threats and challenges.

The report’s near-term action plan also includes updating the national strategy to secure cyberspace; developing a framework for additional research and development of security technology; and preparing a cybersecurity incident response plan.

The fact that the Obama administration is making this a priority speaks volumes about the growing need to secure our critical infrastructure. With two wars, a growing nuclear threat from North Korea, and a still-struggling economy, the President already has more than enough to keep him busy. But many important policy objectives of this administration rely on digital infrastructure — from modernizing the healthcare system with electronic medical

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