At least since the 2008 global financial crisis, widespread frustration with stagnant economic prospects and deep regional disparities in developed countries has fueled increasingly dangerous forms of anger. But there are constructive ways forward, as the example of the 2022 US CHIPS and Science Act shows.
WASHINGTON, DC – In many countries, innovation and good jobs have become increasingly concentrated in a few places. Some big cities have done well, but many regions feel left behind. In the United States, the United Kingdom, many countries in Europe, and increasingly in other parts of the world, how to address these disparities has become a crucial question.
At least since the 2008 global financial crisis, widespread frustration with stagnant economic prospects has fueled increasingly dangerous forms of anger in developed countries. All too often, this has led to self-destructive economic policies such as Brexit or Donald Trump’s vow to round up and deport all unauthorized immigrants – a step that would immediately reduce the American workforce by about 5%, and likely cause the overall US economy to contract by a similar amount.
But there is an entirely better way forward, as demonstrated by the 2022 CHIPS and Science Act, which overcame the US Senate’s filibuster rule (the de facto requirement of a three-fifths majority for all legislation) and passed by a vote of 64-33 (including 17 Republicans). The act authorized a boost to federal support for research and science, aiming to support breakthroughs across a broad range of sectors. Crucially, it also proposed to spread this support around the country, aiming to create next-generation tech hubs.
Innovation typically involves technological breakthroughs, and over the past century the biggest – including radar, microelectronics, satellites, the internet, and biotech – have had profound effects throughout the economy. But as Jonathan Gruber and I explained in our 2019 book, Jump-Starting America, precisely because the impact is so widespread, the full benefits (including wide-ranging and often unanticipated spillovers) do not accrue to any individual firm or investor.
In addition, the exact financial return from transformational breakthroughs is always hard to quantify. Consequently, venture capital and established corporations prefer to avoid the risks inherent in basic science, initial applications, and scaling up in markets of unknown size.
Today, for example, the potentially overriding importance of quantum computing is not disputed, but the hesitancy of the US private sector to invest represents a major constraint – creating a significant risk that other geopolitical players will leapfrog America’s current advantages. Or consider biomanufacturing (using biological materials to make all manner of products), for which the basic concepts are firmly established. Here, too, the private sector is unwilling to support scaling up. And for advanced manufacturing (which generally denotes digital forms of control for machines, applied across many industrial processes), small and medium-size businesses are struggling to find and adopt domestic versions of what they need next.
Project Syndicate is returning to Climate Week NYC with an even more expansive program. Join us live on September 22 as we welcome speakers from around the world at our studio in Manhattan to address critical dimensions of the climate debate.
Register Now
The US, Britain, France, and any number of other European countries urgently need to make strategic investments in key technologies, to create more good jobs, and to stay ahead of increasingly aggressive geopolitical competitors. To be sure, if other countries are rushing to invent the future, that increases the pressure on any one country to move fast – but this is generally a good thing, particularly in terms of job creation. As long as we are inventing useful things – not socially harmful goods like tobacco, junk food, and digital advertising – more competition to invent is likely to trigger a race to the top.
During the implementation phase of the CHIPS and Science Act, the US Economic Development Administration designated 31 Tech Hubs in 32 states and Puerto Rico. In early July, the EDA announced $504 million in funding for 12 Regional Technology and Innovation Hubs, “to accelerate the growth of innovative industries.”
Will all of these hubs succeed? Perhaps not: pursuing genuine innovation involves real risks, after all. And the funding so far almost certainly is not enough to have a significant impact. But the big news is that almost all parts of the country want to get in on the action – only four states failed to at least win a Strategy Development Grant.
As Senator Maria Cantwell of Washington, chair of the Senate Committee on Commerce, Science, and Transportation, put it with regard to the CHIPS and Science Act,
“We don’t know exactly what innovations will come out of this, but we do know this: America will be more competitive because of it. And … we will be able to grow our economy for the future, because of the investments that we’ve made today.”
If you want more good jobs, invest in science, facilitate the commercialization of the technology that results from it, and make it easy for people to build companies where the product was invented. More funding and further strategic thinking is needed, in part because there will always be new technologies just over the horizon. But the CHIPS and Science Act has provided a major constructive step forward, and other countries should take note.
To have unlimited access to our content including in-depth commentaries, book reviews, exclusive interviews, PS OnPoint and PS The Big Picture, please subscribe
The implications of the deepening Sino-American rift are far-reaching, because several of the world’s most pressing economic problems can be solved only with contributions from both countries. And, to address global challenges, active cooperation between the two economic powers is indispensable.
hopes that political will on both sides catches up with the opporunities for cooperation that now exist.
If the new "industrial strategy" is offering ideas for better public governance, it is useful. But it becomes positively dangerous when it turns to the private sector, where state interventions inevitably undermine competition, disrupt price signals, and dampen the motivation to innovate.
sees little reason to support the case for renewed government interventions in the private sector.
Although multilateral efforts to address climate change are not well served by deepening geopolitical rivalries or the apparent trend toward global economic fragmentation, that doesn’t mean governments have abandoned the pursuit of net-zero emissions. Instead, the process has become more competitive – and more complex.
considers the international political dynamics of current energy, trade, and environmental policies.
Although policies based on mainstream neoclassical economics, famously enshrined in the Washington Consensus, have clearly failed, economic theory has remained in a state of paralyzed confusion. What has been missing is a full shift to modern modes of thought informed by contemporary science.
offers a new conceptual framework based on twenty-first-century science and simple observation.
WASHINGTON, DC – In many countries, innovation and good jobs have become increasingly concentrated in a few places. Some big cities have done well, but many regions feel left behind. In the United States, the United Kingdom, many countries in Europe, and increasingly in other parts of the world, how to address these disparities has become a crucial question.
At least since the 2008 global financial crisis, widespread frustration with stagnant economic prospects has fueled increasingly dangerous forms of anger in developed countries. All too often, this has led to self-destructive economic policies such as Brexit or Donald Trump’s vow to round up and deport all unauthorized immigrants – a step that would immediately reduce the American workforce by about 5%, and likely cause the overall US economy to contract by a similar amount.
But there is an entirely better way forward, as demonstrated by the 2022 CHIPS and Science Act, which overcame the US Senate’s filibuster rule (the de facto requirement of a three-fifths majority for all legislation) and passed by a vote of 64-33 (including 17 Republicans). The act authorized a boost to federal support for research and science, aiming to support breakthroughs across a broad range of sectors. Crucially, it also proposed to spread this support around the country, aiming to create next-generation tech hubs.
Innovation typically involves technological breakthroughs, and over the past century the biggest – including radar, microelectronics, satellites, the internet, and biotech – have had profound effects throughout the economy. But as Jonathan Gruber and I explained in our 2019 book, Jump-Starting America, precisely because the impact is so widespread, the full benefits (including wide-ranging and often unanticipated spillovers) do not accrue to any individual firm or investor.
In addition, the exact financial return from transformational breakthroughs is always hard to quantify. Consequently, venture capital and established corporations prefer to avoid the risks inherent in basic science, initial applications, and scaling up in markets of unknown size.
Today, for example, the potentially overriding importance of quantum computing is not disputed, but the hesitancy of the US private sector to invest represents a major constraint – creating a significant risk that other geopolitical players will leapfrog America’s current advantages. Or consider biomanufacturing (using biological materials to make all manner of products), for which the basic concepts are firmly established. Here, too, the private sector is unwilling to support scaling up. And for advanced manufacturing (which generally denotes digital forms of control for machines, applied across many industrial processes), small and medium-size businesses are struggling to find and adopt domestic versions of what they need next.
PS Events: Climate Week NYC 2024
Project Syndicate is returning to Climate Week NYC with an even more expansive program. Join us live on September 22 as we welcome speakers from around the world at our studio in Manhattan to address critical dimensions of the climate debate.
Register Now
The US, Britain, France, and any number of other European countries urgently need to make strategic investments in key technologies, to create more good jobs, and to stay ahead of increasingly aggressive geopolitical competitors. To be sure, if other countries are rushing to invent the future, that increases the pressure on any one country to move fast – but this is generally a good thing, particularly in terms of job creation. As long as we are inventing useful things – not socially harmful goods like tobacco, junk food, and digital advertising – more competition to invent is likely to trigger a race to the top.
During the implementation phase of the CHIPS and Science Act, the US Economic Development Administration designated 31 Tech Hubs in 32 states and Puerto Rico. In early July, the EDA announced $504 million in funding for 12 Regional Technology and Innovation Hubs, “to accelerate the growth of innovative industries.”
Will all of these hubs succeed? Perhaps not: pursuing genuine innovation involves real risks, after all. And the funding so far almost certainly is not enough to have a significant impact. But the big news is that almost all parts of the country want to get in on the action – only four states failed to at least win a Strategy Development Grant.
As Senator Maria Cantwell of Washington, chair of the Senate Committee on Commerce, Science, and Transportation, put it with regard to the CHIPS and Science Act,
“We don’t know exactly what innovations will come out of this, but we do know this: America will be more competitive because of it. And … we will be able to grow our economy for the future, because of the investments that we’ve made today.”
If you want more good jobs, invest in science, facilitate the commercialization of the technology that results from it, and make it easy for people to build companies where the product was invented. More funding and further strategic thinking is needed, in part because there will always be new technologies just over the horizon. But the CHIPS and Science Act has provided a major constructive step forward, and other countries should take note.