Dan Traficonte: So, thanks so much for inviting us. I’m Dan Traficonte, I’m a PhD student in urban planning at MIT. I’m currently studying history of industrial policy in the United States. This is Ian Wells. He is a lawyer based in New York and he works in community development in Queens.
So today, we’re gonna give a talk that really comes out of a policy brief that we wrote several months ago for Matt Bruenig’s People’s Policy Project. We also published a companion piece in Jacobin for this policy brief.
And what the brief deals with is how we could think about innovation policy under a Green New Deal. By innovation policy what we’re really talking about is federal R&D programs. So despite the American economy’s reputation for being this quintessential free market system, much of the innovation and technological development in the American economy can be linked to direct government intervention. And so since World War II when this kind of activity really got going, the federal government has been a leading if not the leading driver of innovation throughout much of the economy. And so you may recognize some of these programs. Some of them are quite large and well-known like the National Science Foundation, NASA; others are smaller and more targeted.
So in recent years, both scholars and policymakers have begun to look at this collective set of R&D projects and characterize it as the American style of industrial policy, meaning that it’s a form of state action that selectively promotes certain industries over others, and in this case it’s high-tech industries.
And I just want a flag for you at the onset here, sort of two key institutional features of this system that are going to be coming up in this talk. One is the system is basically fragmented into a series of separate programs, none of which really have much interagency collaboration, and there’s no central coordination mechanism. So this is not a planned system. It’s been described by the Roosevelt Institute, for example, as industrial policy but not industrial planning. So that’s the first institutional feature.
The second is the system is characterized by a fairly large giveaway to the private contractors, in this case R&D‑heavy industrial firms that take part in R&D projects. And the giveaway’s in the form of intellectual property. So when R&D projects from these programs are successful, they result in products or processes that can be patented. In this system as it currently exists, those are transferred over to the private contractors. And we’re going to discuss both of those features today.
So just to sort of bring this a bit closer to home, you can track the success of this kind of state activity by looking at many of the most influential technologies in the American economy, many of which have generated huge new markets not just in the American economy but across the world. And you can sort of decompose these technologies into component parts and then trace basically all of the component parts back to these federal programs. So the iPhone famously derives entirely from federal R&D efforts from decades earlier. And you can do this for a number of technologies. So you know, these programs make a huge difference in the long run.
And so I think we’re at a really interesting time with respect to federal R&D policy, because what we’re seeing is the emergence of a new debate on industrial policy. Of course that’s been a center focus of the discussion here today. But it’s also focused in particular on innovation and innovation policy. And this debate has actually spanned across the political spectrum. So on the left, the issue is climate change. You may recognize this picture of AOC. And the driver is of course the need to create and deploy green and sustainable-oriented technologies as quickly as possible. So for example both Warren and Sanders have issued climate change plans that include recommitments of federal investment to green innovation. And these ideas are gaining at the grassroots level.
But on the right, you also have new interest in innovation. And the driver is basically China. So as China has moved up the ladder of technological development and entered into increasingly high-tech production and now has begun to threaten some of the staple high-tech industries of the United States like aerospace…so there’s a Chinese state-owned airline manufacturer that may in a few years compete with Boeing, some Republican legislators are getting cold feet about small government and free markets and are pushing a new kind of nationalist competition version of innovation policy. So Marco Rubio is an example of one of those Republican politicians.
So given the emergence of this debate, which again spans across the political spectrum, I think it’s critical for people who are thinking about the Green New Deal to pay attention to innovation policy, because this debate is now…you know, we’re gonna have to deal with this issue either way, it seems.
So I’ll talk a little bit about the history, which I think is both really fascinating in itself and also informed how we thought about the potential for innovation policy under the Green New Deal and how we think it might be productive to think about it.
So by the mid 40s—so as I mentioned this activity really got going during World War II. By the mid 40s, a group of what you could call late New Dealers, so progressive Democrats that were becoming increasingly marginalized, these late new Democrats like Senator Harley Kilgore from West Virginia on the left, and then Vice President Henry Wallace on the right, saw basically what was emerging from World War II with the government playing this new role in directly promoting innovation. And they saw R&D and the government’s role in R&D as a new form of planning. And they sought to basically create a planning apparatus which they called the Office of Technological Mobilization, built on New Deal planning principles, principles that basically got going in what’s called the First New Deal.
So these were the sort of centerpiece programs of 1933 and 1934. The Agricultural Adjustment Act, the National Recovery Act. So these late New Dealers in the mid 40s said, “You know, we have to deal with R&D somehow, and we should build the federal government’s capacity based on New Deal planning principles.” And they basically had two main commitments—or three rather.
The first was R&D would have to be centralized and planned in some way. If it was fragmented and spread out across the executive, it couldn’t be mobilized toward socially-useful technologies and it would be more easily coopted by business.
The second principle was that the federal government should not be giving away the fruits of this R&D activity. So the intellectual property, the patents that resulted from these programs, would be retained either by the government or would be stewarded by the government in what we would recognize today as a kind of open source alternative to just sort of straightforward government ownership.
And then finally the third was progressive Democrats were concerned that the geographical benefits from these programs would be hoarded and concentrated into already-thriving areas. Areas like Route 128, New York, etc.
So those were the three commitments. That was if you like the New Deal vision for innovation policy. But there was an alternative put forward by Dr. Vannevar Bush, who was a very famous and successful wartime science bureaucrat. And he put forward pretty much the opposite institutional vision. So he wanted a sort of fragmented series of government-industry partnerships, and critically he wanted private contractor ownership of IP. And not surprisingly this was the vision endorsed by the major industrial business groups at the time, groups like the National Association of Manufacturers and the federal branch of the Chamber of Commerce. And the result of this was the creation of a National Science Foundation rather than an Office of Technological Mobilization. So an NSF that was severely weakened from what it had originally been conceived of, and the creation of the kind of fragmented system that I discussed.
So in light of that history we think it’s useful to take inspiration from this original New Deal vision for innovation policy. And Ian will talk a little bit about what we came up with.
Ian Wells: Great, thanks. And thinking about designing an institution for innovation for the Green New Deal, Dan and I tried to form our thinking around a few core questions. So one is what is actually produced by this innovation state? Second, who benefits? And the third, who controls? So who controls the innovation state and who controls what’s ultimately produced?
In terms of what’s produced, one what we think is key deficit of the current innovation state is that it’s overwhelmingly geared towards military technology. There are different programs up here. One is called DARPA, which develops new military technologies. And one is called the ARPA‑E, which focuses on new clean energy technologies. And as you can see one is dramatically overfunded, and one has by federal standards a relatively tiny budget. So a big recommendation we have is to create the inverse. So to put more money towards research and development for clean energy through programs like an expanded ARPA‑E.
The military also has public venture capital. The CIA has In-Q-Tel, which gives early stage investments to some companies for defense purposes. We think that public venture capital could be geared towards clean energy. And we also believe in the creation of a green innovation fund. So that would be public investment that would help green companies grow and expand.
Looking at one part of who benefits, the current innovation system helped the tech industry thrive. And one characteristic of the tech industry is that it is overwhelmingly concentrated in a few geographic areas like San Francisco, New York, around Boston—even though I don’t like to give Dan that. So we thought we could create these “Green New Deal Institutes” that could be located in more strategic areas, so-called “lagging areas,” that haven’t benefited from the current innovation system.
This is somewhat modeled on an Obama administration policy called Manufacturing USA, which was geared towards forwarding advanced manufacturing by creating these industry consortia in different areas. So you can see there are some in places like San Francisco and New York, but also in Rochester, the Appalachian area of Tennessee, the Midwest. And each of these programs is focused on a specific technology. You can see like recycled materials, things like that. For a Green New Deal it’d be very possible to form similar consortia around things like advanced batteries or alternative fuels, and to then place those in areas that might be strategic and might help spread the economic benefits of innovation.
What we think is an important thing that underlies all of this is the question of who ultimately controls this technology. First, I think it’s important that the public actually gets a return on investment from the public spending that it puts forward. And one way of doing that is to possibly retain public control of intellectual property that’s generated through public spending.
In looking at public investment, the federal government could possibly require that anyone receiving federal funding would need to give the federal government an equity stake in the company. The federal government could vote those shares.
The government could also put conditions on public assistance for say, union support or giving workers board seats on their boards.
And I think the third thing that we thought about and I think should be a consideration is full public ownership. If the federal government creates new technology, it could just roll that technology out without any private sector engagement at all in the commercialization.
So we really see innovation policy as a major opportunity for the left. We don’t think that we can invent our way out of the climate crisis. I think that would be you know, foolhardy. However we do believe that new technology will need to be created to have a speedy transition to decarbonization, and having a comprehensive state innovation plan is going to be a necessary part of that. Great. Thanks.
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