The Good That Government Can Do

More

If you're wondering whether the U.S. government can help private enterprise, consider the 20th century. This report from the Breakthrough Institute (via Economix) breaks down Uncle Sam's helping hand in America's most famous technological achievements in the last 100 years. A sampling of synergy:

-- Defense spending helped develop and popularize (and make affordable) the Internet and the personal computer.

-- The second World War and federal research contracts helped to establish our edge in aviation, a key export that has (mostly) survived the recession.

-- Government demand for microchips helped to pull down the cost of electronics for consumers.

-- Public investment dating back to the Tennessee Valley Authority spawned the country's first nuclear power plant.

Industrial policy -- that is, the government picking "winners and losers" with direct financial support -- might not be the only way, or the ideal way, to establish our edge in advanced manufacturing or clean energy technology.*  Indeed, cleaning up the corporate tax code, reducing export control barriers and establishing a national carbon tax might be the most cost-effective ways to promote a new age of "Made in America." But while Americans like to think of ourselves as independent garage-based innovators, it's clear that Washington money has played a key role in building America's Silicon Valleys.

We're at an interesting crossroads for American economic policy. One major party is convinced that the proper role for the U.S. government is to cut taxes, stop spending and let the private sector lead the recovery. Another major party is convinced that we need to raise taxes to pay for new spending to improve education, research, and infrastructure and support (or guide?) the private sector. I don't know whether Democrats or Republicans are right, but it's useful to remember that government spending has powered U.S. competitiveness in the past, and it should continue to play a role in the future.

The question is: how should the government protect and nurture our competitive edge in an age of deficit reduction? We hear answers from both parties tomorrow.

___________

* Government investments aren't exactly fool-proof. Look at ethanol. Look at Fannie and Freddie. Read this story. Investments are bets, and some bets fail, by definition.

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

Tracing Sriracha's Origin to a Seaside Town in Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Where the Wild Things Go

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Adults Need Playtime Too

When was the last time you played your favorite childhood game?

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In