(…) The decline in U.S. productivity growth since the 1970s puzzles economists; potential explanations range from an aging workforce to the rise of new monopolies. But John Fernald, an economist at the Federal Reserve, says we can’t rule out a drought of breakthrough inventions. He points out that the notable exception to the post-1970 decline in productivity occurred from 1995 to 2004, when businesses throughout the economy finally figured out information technology and the internet. “It’s possible that productivity took off, and then slowed down, because we picked all the low-hanging fruit from the information-technology wave,” Fernald told me.
The U.S. economy continues to reap the benefits of IT breakthroughs, some of which are now almost 50 years old. But where will the next brilliant technology shock come from? As total federal R&D spending has declined—from nearly 12 percent of the budget in the 1960s to 4 percent today—some analysts have argued that corporate America has picked up the slack. But public companies don’t really invest in experimental research; their R&D is much more D than R. A 2015 study from Duke University found that since 1980, there has been a “shift away from scientific research by large corporations”—the triumph of short-term innovation over long-term invention.
The decline of scientific research in America has serious implications. In 2015, MIT published a devastating report on the landmark scientific achievements of the previous year, including the first spacecraft landing on a comet, the discovery of the Higgs boson particle, and the creation of the world’s fastest supercomputer. None of these was an American-led accomplishment. The first two were the products of a 10-year European-led consortium. The supercomputer was built in China.
As the MIT researchers pointed out, many of the commercial breakthroughs of the past few years have depended on inventions that occurred decades ago, and most of those were the results of government investment. From 2012 to 2016, the U.S. was the world’s leading oil producer. This was largely thanks to hydraulic fracturing experiments, or fracking, which emerged from federally funded research into drilling technology after the 1970s oil crisis. The recent surge in new cancer drugs and therapies can be traced back to the War on Cancer announced in 1971. But the report pointed to more than a dozen research areas where the United States is falling behind, including robotics, batteries, and synthetic biology. “As competitive pressures have increased, basic research has essentially disappeared from U.S. companies,” the authors wrote.
It is in danger of disappearing from the federal government as well. The White House budget this year proposed cutting funding for the National Institutes of Health, the crown jewel of U.S. biomedical research, by $5.8 billion, or 18 percent. It proposed slashing funding for disease research, wiping out federal climate-change science, and eliminating the Energy Department’s celebrated research division, arpa-e.
The Trump administration’s thesis seems to be that the private sector is better positioned to finance disruptive technology. But this view is ahistorical. Almost every ingredient of the internet age came from government-funded scientists or research labs purposefully detached from the vagaries of the free market. The transistor, the fundamental unit of electronics hardware, was invented at Bell Labs, inside a government-sanctioned monopoly. The first model of the internet was developed at the government’s Advanced Research Projects Agency, now called darpa. In the 1970s, several of the agency’s scientists took their vision of computers connected through a worldwide network to Xerox parc.
“There is still a huge misconception today that big leaps in technology come from companies racing to make money, but they do not,” says Jon Gertner, the author of The Idea Factory, a history of Bell Labs. “Companies are really good at combining existing breakthroughs in ways that consumers like. But the breakthroughs come from patient and curious scientists, not the rush to market.” In this regard, X’s methodical approach to invention, while it might invite sneering from judgmental critics and profit-hungry investors, is one of its most admirable qualities. Its pace and its patience are of another era.