A quote in a recent Businessweek article about the latest tech bubble really struck me.
Hands waving and voice rising, he says that venture capitalists have become consumed with finding overnight sensations. They've pulled away from funding risky projects that create more of those general-purpose technologies - inventions that lay the foundation for more invention. "Facebook is not the kind of technology that will stop us from having dropped cell phone calls, and neither is Groupon or any of these advertising things," he says. "We need them. O.K., great. But they are building on top of old technology, and at some point you exhaust the fuel of the underpinnings."
I've been thinking quite the same thing for some time now. I think you can throw in the move to a service economy (and thus, away from manufacturing), as well as our focus on finance as a major "industry" into this mix of why our economy is tanking.
All this talk about "American exceptional-ism" is truly misleading. There was an op-ed columnist in the New York Times who mentioned the same idea - that by focusing on this idea of exceptional-ism, we're actually taking away from the reality of what it took for us to get here. Hard work, ingenuity, a penchant for risks, and a belief that if you believe and devote energy to something, you can get it done. Brandying about our "exceptional-ism" doesn't automatically make us more productive as modern Americans (and politicians) want us to believe. In our generation of instant gratification and entitlement, we have misunderstood what truly makes Americans exceptional - the marriage of belief and hard-work. That is exceptional. Being American... that is not. As long as we shy away from the hard work that is needed to be the best, we will continue to falter.
But, I digress.
This post should be about the tech bubble, or more specifically, this idea of "old technology" and current innovations. We are truly living off of our past at this point. Think about all of our "innovations" and how many of them have really been from recent funding, recent research? Everything Internet related can be traced to huge amounts of defense funding in the 50s and 60s. Much of our basic medicines come from research that led to penicillin and related anti-biotics in the first half of this century; super bugs today are immune to our anti-biotics, and despite numerous drugs having been developed for guys to stay hard longer and into older age, we have had virtually no new anti-biotics. Cars today are largely the same as cars 100 years ago. Even our "new" hybrid and electric technology is just built on research done in the past. EV1 anyone?
Many of my friends in academia bemoan the funding situation there, and it speaks to what is wrong with our system today. Basic research - those things that might open up doors to amazing new technologies and discoveries later - is essentially no longer funded. Instead, everything is judged against its commercial applicability. Can it make money, or not? And if the answer is no, we don't fund it.
The current budget debate is being framed as a "tax" versus "spend" issue. The common boilerplate for the Republicans is that "we don't have a revenue problem, we have a spending problem." What both groups can agree on, is that we want greater growth. That's a topic for a whole other post, because I sort of think this chase for growth is what is getting us in trouble in the first place, but.. again, I digress. No, the truth is, we have both a tax and a spend problem. We tax too little, and we spend too much. End of story. Or is it?
Perhaps we should stop simplifying things so much and dig a little deeper. Perhaps we don't tax certain things enough (oil, pharma anyone?) and we don't provide enough tax incentives elsewhere. And perhaps we spend too much on certain things (defense??) and not enough on others. In essence, it's a matter of priorities, of investment, of planing ahead. Basic research into things that may not be commercially viable, ever, could turn out to be the building blocks for the next great human innovations. By not funding basic research, aren't we eliminating the potential for Americans to really be exceptional. At what point do the fruits of our past exceptional-ism and investment wither and run out?
It's great to talk about wanting growth and wanting to put our country on a sound footing. But without investing in the things that will put us in a position to compete - education, research, health - can we actually expect to get there?