Notable Lines

One of President Obama’s most notable lines, “you didn’t build that,” sent chills up my spine when I first heard it.   As an entrepreneurial-minded business owner, I found that statement shocking, to be honest.  But maybe there is some truth to it…

In a relatively new book – The Entrepreneurial State, author Mariana Mazzucato contends that the government has assumed most of the risk as well as the necessary initial funding for most of the innovations that have benefited society since the end of WWII.  Our federal government does indeed spend more on research than most of the rest of the world, particularly through the Department of Defense, but also through various agencies including: the National Institutes of Health, the National Aeronautics and Space Administration, and the Department of Energy, to name but a few.

However, in more cases than not, it is the private sector, not the government, that transforms scientific discoveries into wealth-creating businesses.  The private sector has a much greater level of monetary incentive to commercialize innovation than does the federal government.

So, perhaps President Obama should have said, “you didn’t invent that.”  On that score he might have been more accurate.  Without question, the government’s ability to fund basic research is vitally important to our future economic growth.  Research, by its very nature, requires risk taking, with failure occurring more frequently than success.  No one knew that any better than America’s greatest inventor, Thomas Edison, who uttered this notable line during his quest to invent the light bulb – “I have not failed.  I’ve just found 10,000 ways that won’t work.”

During the last seventy years, as America has dominated the world economy, there has been a reasonably efficient partnership in the area of research and development between the federal government and the private sector.  During that time period, our country has created more wealth than has been created in the history of the world.  By this measure, the capitalist system worked, and it worked better than any other system ever devised.

But has it worked too well?…  The focus, it seems, is no longer on research and discovery, as much as it is on who reaps the benefits of innovation and wealth creation.  Free market economists contend that the private sector deserves to capture a significant percentage of the wealth created, while the other side is more concerned, and rightly so, with the growing income and wealth disparity between the rich and poor.

This brings me to one final notable line…  The goal is to strengthen the weak, without weakening the strong.

Our economy will continue to struggle as long as the private sector and the federal government remain antagonists.  Government’s ever changing rules, higher taxes, onerous legislation, and executive overreach has corporate America on the defensive.  Corporations fight back by hoarding cash, cutting costs, taking as few risks as possible, and operating well below full employment.  The result of this contentious relationship is very slow economic growth and frustratingly high unemployment, which has been the case over the past five years.  Worse over, in this highly polarized environment, the gap continues to widen between the rich and poor.

We need a new paradigm… Perhaps our greatest challenge as a nation is to provide opportunities for the economically disadvantaged, instead of handouts. Too often, I fear, we all rely upon government for the solutions, but a top-down approach will never work to solve a relational problem.  Breaking the cycle of poverty and dependency requires one-on-one relationship building, and consistent, long-term mentoring.  Individuals can do this.  Government agencies are not set up in this manner.

Who, or what, can motivate us individually to make this paradigm shift in thinking?

I really have no idea.  But if it happens, look out!  Our country and our world will never be the same.