Government and Innovation

Government’s role is to create an environment within which men can prosper in accordance with their own efforts and the degree of those efforts.  Thus, legitimate government sets laws that prevent one from cheating another and laws that require each to honor the contracts to which they agreed.  Legitimate governments do very little more than that.  Government does not have, for instance, a legitimate role in determining what those contracts must accomplish, or how they must be structured.  Nor does government have a legitimate role in inuring any of us from the failure of our efforts: it is, in fact, from those failures that our enterprises grow stronger for the next effort.  It is in the fermentation vats of competition, unconstrained by government, that innovation occurs.

Why, then, is what used to be a uniquely American skill of innovation moving apace overseas and no longer occurring here?  Here’s an example of this failure, and it illustrates an answer.  Despite our need to become energy independent, for a range of reasons I’ll not go into here, and despite our Progressives’ push to move away from coal, oil, and gas as the primary source of our energy, nuclear power innovation is moving to the People’s Republic of China, at the behest of American innovators.  In this illustration, I’ll leave aside the question of helping the PRC obtain technological superiority over us (which is troubling in itself).

The Washington Post reports that a startup called TerraPower has developed a nuclear power breakthrough that involves traveling wave reactor technology and this technology’s ability to use depleted uranium to power a nuclear plant for decades without need of refueling or waste removal.  However, instead of looking to deploy this technology in the US, TerraPower, heavily backed by Bill Gates of Microsoft fame, is talking to the PRC government about selling its technology there.  How does this work?

For one thing—for the driving thing—innovators still are human, and humans still can go anywhere they like.  And humans, being humans, are going to go where it’s easiest to follow their dream, easiest to satisfy their own drives and imperatives.  With business, and especially high-tech business, those places are where the conditions conducive to development and growth are most available.

The US’ rules for permitting and environmental studies, especially for nuclear power, and the US’ litigation environment that encourages lawsuits over any perceived slight, whether environmental, social, or something else all serve to drive the costs of bringing innovation from the laboratory into the market to astronomical heights.  Although, in TerraPower’s case, this might be irrelevant: “Current U.S. rules don’t even cover the type of technology TerraPower hopes to use.”

Additionally, the US’ visa rules are outright stupid.  We educate highly talented and motivated engineers and scientists, and then, because they’re aliens, we send them back to their home countries, even if they want to stay—the quotas are too low and for the few allowed, it takes too long for the converted visas to be issued.  Then, getting talented, motivated, already educated—and experienced—foreign engineers and scientists (back) into the US also is a Herculean task, made worse by not having allowed those freshly trained to stay: the quotas are set too low, and the few authorized visas are slow to be issued.  In either case, why should we have quotas at all?  We should welcome these people with open arms, as we did with the German scientists after WWII, who built our space program.

On the other hand, the PRC has programs like “Thousand Foreign Talents” to attract the world’s best and brightest into China.  And they have an active, empirically visible interest in tech and in having an environment conducive to development—and deployment.  While the US is shrinking its satellite and exploration programs and withdrawing from manned space efforts, while hoping for small change from companies like SpaceX (which NASA is in the process of stiffing due to budgetary problems), China is accelerating its programs, including intending to put a man on the moon by 2020—a feat we’ve been too timid to think about trying for 40 years.

As the WaPo concludes

The lesson is clear: The U.S. government needs to be just as aggressive as the Chinese in creating incentives for entrepreneurs and technology start-ups to grow and mature. At a time when the U.S. is downplaying efforts to attract and retain foreign entrepreneurs and flirting with legislation that could slow the pace of digital innovation, it is strangely China that is proving to be more proactive in creating the conditions for innovators to thrive. Bill Gates is one of America’s great entrepreneurial legends. Something feels wrong about seeing him launch a new chapter in his tech career in China and not the U.S.


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