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Can Government Mandate Innovation?

An influential technology lobby wants President Obama to create an Office of Innovation Policy (OIP) to help spur innovation in the U.S. It sounds like the making of a new alphabet soup, but the idea has some merit.

The Information Technology and Innovation Foundation (ITIF) often weighs in on technology issues awaiting governmental action (a recent example being the use of stimulus funds to extend broadband to under-served or unserved rural areas), so it certainly understands the perils and pitfalls of federal programs.

My initial reaction, though, was: government stimulating innovation is like someone telling you to be spontaneous. Once you're told to be spontaneous, the game's over, right? Well, not so fast. According to the ITIF, economists have come to the conclusion that government policy can in fact stimulate innovation by various means -- innovation doesn't have to come out of thin air.

Leading growth theorists like Paul Romer have demonstrated that innovation is endogenously determined... [which] many forms of government policy, including but not limited to subsidies, can affect.

Moreover, the ITIF argues that entrenched interests can afford to spend money lobbying various federal agencies in ways that block the kind of upstart competitors that bring genuine innovation to market. The courts and Patent Office aren't much better, as they often make a hash of things like granting incumbent carriers patents to technology relating to VoIP -- which they've had nothing to do with developing and have every interest in restricting.

But how do you create an agency that has enough teeth to get things done without becoming too obtrusive? The ITIF proposes:

that President Obama create OIP by executive order and provide it with enough authority to be able to have a significant positive impact on innovation policy, but without giving it so much power that it can run roughshod over the other agencies.

Picking a middle ground between allowing its proposed OIP to have veto power over other agencies and, at the other extreme, giving it no power at all, the ITIF suggests that federal agencies would have to consider and respond to objections or suggestions from the OIP. It also suggests that the OIP be empowered to block rulings temporarily if it feels its position hasn't been thoroughly considered, giving the OIP enough power to coerce agencies to at least consider its recommendations.

It sounds pretty wishy-washy to me, but it's better than other proposals being floated in Washington these days, like the one offering incentives to American companies that provide Iranians with technology helping them circumvent state apparatus and punishing those that comply with censorship mandates of the repressive regime. The tyranny of the Iranian mullahs notwithstanding, the cynical singling out Iran and not, say, China, by Senators Leiberman and McCain is precisely the kind of grandstanding that discredits government and politicians in general.

Given the techno-political theater to which the lesser political lights have accustomed us, the ITIF's proposal, flawed as it may be, is at least an attempt to use the power of government constructively, and deserves our attention.

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