What does government do?
Some entrepreneurs may chafe at government regulation, but they wouldn’t exist without government investment.
If the US wants to stay at the forefront of innovation, it needs to do more of what it has done so well in the past: invest in research and development (R&D), invest in public infrastructure, invest in education. If the US government had not invested in these in the past, the entrepreneurs who sometimes wish government would “get out of the way” would not exist. The R&D underlying their innovations would not have been done, the roads and telecommunications infrastructure their businesses depend on would not exist, they and their employees would not have the education that lets them innovate, their potential customers wouldn’t have the cash to buy new innovative products because they would be struggling without education or roads.
Sometimes, private sector innovators get caught up in the mantra of “get government off our backs” and ignore the many ways they benefit from government activity. Yes, the government regulates private sector activity because we want to protect our health and well-being; clean air and clean water laws stop polluters from dumping poisonous waste into our air and water, and anti-trust laws prevent companies from acquiring monopoly power that they can use to exploit captive customers. Whether you think clean air and water and market competition are important or not, it is important to remember that we ask our government to do more that regulate.
We also use the collective power of our government to invest in things that are important to all of us but that no private sector actor will invest in: we invest in public schools that educate the next generation of workers and entrepreneurs, we build and maintain the roads, bridges, and rail lines that all businesses depend on to build and sell their products, and we invest in the R&D that is the basis for much innovation.
The latest example of an entrepreneur demanding that the government do less while actually wanting the government to do more, was Peter Diamandis (founder of the X-Prize and co-founder of Singularity University, and someone I greatly admire). In a recent Medium article, Diamandis extolled the benefits of some exciting innovations that are dear to my heart: ride-sharing, electric vehicles, peer-to-peer networks. He said regulators are not keeping up with the pace of innovation. I agree that regulations need to keep up with fast-developing technologies and changing social values.
But here’s where Diamandis let rhetoric triumph over logic: he cited the Bush administration’s cessation of federal funding of stem cell research as his example of government “over-regulation.” How was Bush “over-regulating”? Bush didn’t regulate stem cell research — private funders and researchers are still free to do whatever they want. The administration just stopped spending taxpayer dollars on research. So Diamandis is saying he (and other entrepreneurs) want the government to regulate less, but the only example he gives is one where he actually wants the federal government to do more (spend more money on research because the private sector won’t spend enough money).
Stem cell research is just one example of how trying to drown our government in the bathtub hurts us all. This year, federal R&D spending will hit a new low: just 1.6% of the federal budget. Grover Norquist may be cheering, but are entrepreneurs?
The ideological mantra about getting government off our backs seems to have blinded Diamandis to the fact that he is actually not asking government to back off, but bemoaning that it has backed off too much from critical roles such as investing in R&D. I hope that Diamandis and other entrepreneurs will take a second look at what they are asking for and at what government actually does. Don’t let your distaste for slow or ineffective regulation pervert your support for more aggressive government investment.
