Expanding Bureaucracy Is No Way to Spur Innovation

(Bloomberg Opinion) -- As originally conceived, the Endless Frontier Act was a surefire winner. It proposed to greatly expand the budget of the National Science Foundation, establish a new directorate at the agency focused on technology, and generally enliven the federal government’s efforts to encourage innovation. Rather unusually, it was both bipartisan and popular.

As the bill has advanced, however, it has grown, and not in a good way. Now known as the U.S. Innovation and Competition Act, it exceeds 1,400 pages and includes not just science funding but also bureaucracy, bloat and bad ideas. If lawmakers want to propel American innovation, they should strip this behemoth down and start again.

The government should certainly invest more in research. Federal R&D spending as a share of gross domestic product has stagnated at about 0.7% over the past few years, down from a historical average of 1.1%. This decline occurred despite urgent new scientific challenges, from climate change to pandemic preparedness, and as America’s lead in technology has come under threat from free-spending rivals.

So the bill is right to call for higher outlays. Unfortunately, it proposes to spend them unwisely.

One concern is its emphasis on applied research — the kind that aims to solve narrow practical problems. Businesses generally excel at this (they funded 57% of total U.S. applied-research efforts in 2018) and have every incentive to do it. Investors and entrepreneurs, moreover, are usually better than politicians at deciding what’s worth pursuing. An excessive shift toward this kind of research, with goals chosen by Congress, would likely lead to boondoggles and expanded corporate welfare, while crowding out the basic research that the NSF has traditionally focused on.

A second worry is the bill’s enthusiasm for busywork. Among other things, it will create a new Office of Manufacturing and Industrial Innovation Policy, overseen by a chief manufacturing officer, who’ll establish an Intergovernmental Manufacturing and Industrial Innovation Panel, which will produce a National Strategic Plan, which will come up with identify "short-term, medium-term, and long-term needs.” There will also be a Federal Strategy and Coordinating Council on Manufacturing and Industrial Innovation (not to be confused with the existing National Science and Technology Council, National Council for Expanding American Innovation, or the 16 innovation institutes that comprise Manufacturing USA) and a National Manufacturing Advisory Council. Reassuringly, additional “committees, task forces, or interagency groups” may be constituted as needed.

Although it will no doubt produce some gripping reports, this cornucopia of new officialdom won’t do a thing to encourage innovation. To the extent it draws time, talent and tax dollars from more productive pursuits, it will impede it.

What really does boost innovation is the kind of open-ended basic research that the NSF has successfully funded for 71 years. Such study — focused on expanding useful knowledge, rather than solving specified problems — helps train scientists across a broad range of disciplines, creates an empirical foundation for others to build on, and often leads to serendipitous discoveries. Over the past century, nearly a third of patents issued have built on federally funded research of this kind, helping to produce everything from GPS to autonomous cars.

As lawmakers debate this bill, they should focus on an ambitious but gradual boost to science funding, reaffirm their commitment to basic-research efforts, and scrap the needless innovation bureaucracy altogether. Beyond that, if the U.S. wants to retain its traditional lead in cutting-edge technology, it should focus on the basics: reliable infrastructure, first-rate education, modest taxes and minimal red tape. Then let capitalism work its magic.

Editorials are written by the Bloomberg Opinion editorial board.

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