D.C. a Wellspring? : Views Split on Ideas Flowing From Capital

As both a new year and a new Administration approach, one question completely dominates the 1993 innovation agenda: Should Washington become the nation’s next capital of innovation, and will it?

Once upon a time, Pittsburgh, Detroit and Wilmington, Del., were the nation’s innovation capitals: Their smokestacks literally symbolized American industry. In the decade past, California’s Silicon Valley, Boston’s Route 128 and Wall Street shared the post-industrial innovation honors: People began to recognize that intellectual capital mattered every bit as much as financial capital.

Of course, some folks would argue that Washington, D.C., with its $70-billion-plus annual research and development budget and an armada of alphabet agencies--NOAA, NASA, NIST, DARPA, etc.--is already a capital of innovation.

Not true. Yes, there have always been champions of innovation in the federal bureaucracy, but this is the first postwar Administration to have made it a central tenet of its economic proposals.

With a new President promising “change,” “investment” and “reinventing government,” the map of American innovation will inevitably be redrawn. Will Washington be at its center? Off to one side? Or will the new Administration attempt to become the nation’s innovation cartographer?

An Administration that champions industrial competitiveness, technological prowess and a new government-industry “partnership” can’t help but transform the culture and business of American innovation. Should we invest in new machinery now? Or should we wait and see if that investment tax credit materializes? Should we launch that new research initiative? Or should we first see if that new industry consortium materializes?

If Ron Brown’s Commerce Department helps organize and fund a materials research consortium of leading chemical companies, who sets the research priorities? The government technocrats, the Fortune 500 “corpocrats” or the entrepreneurs? What determines its ongoing success? The marketplace? Or an appropriations subcommittee worried about the reaction back home? When defense contractors in California and Massachusetts struggle to adapt to military spending cuts, who helps oversee their retraining efforts? The state? Or Robert Reich’s Labor Department and Les Aspin’s Pentagon?

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These questions should not be construed as some morbid fear of central government or concern over pseudo-socialistic “industrial policies.” The problem is actually much simpler and more dangerous. When the nation’s capital promises bold and activist leadership, people understandably start to look as much to Washington as they do to themselves. A corrupting “psychology of the center” emerges.

Even the boldest entrepreneurs start viewing opportunities through the prism of policy. The capital of innovation becomes the capital of innovation politics. That’s how leadership can devolve into pork-barrel co-dependence. Consequently, it becomes just as important to manage expectations as to manage programs.

Should Washington want to be seen as an arbiter of post-industrial innovation? Or should Washington’s role be to enable dozens of innovation capitals to emerge? Does leadership in innovation mean federal decentralization or recentralization? Should government standards be used to stimulate technical innovation? Under what circumstances is federal intervention never appropriate?

This is what policy is all about. This is why rhetoric can matter as much as implementation. You can’t “reinvent government” without first redefining it.

Clearly, there is a world of difference between innovation policies designed to stimulate regional economic development and those that recentralize power and influence. Clearly, innovation policies designed to stimulate small-business growth are fundamentally different from those intended to encourage mature industries to adopt new technologies.

But, just as clearly, any Administration that asserts that these worthy goals can be pursued simultaneously understands neither innovation nor priorities. The obvious risk is that the promises of partnership quickly turn into a New Paternalism: a belief that the federal government is primarily responsible for setting technical standards, funding new technologies, promoting technology transfer and encouraging innovation.

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Instead of necessity being the mother of invention, it becomes the excuse that justifies government intervention. The less obvious risk is that, if Washington becomes an innovation capital, we lose the benefits of creative tension and rivalry between industry and government. Open hostility is clearly counterproductive, but so is coziness and complacency. Look at the dramatic rise of fuel-efficient cars and the emergence of the semiconductor industry as examples in which the absence of public-private partnerships was essential to marketplace success.

Transforming Washington into a capital of innovation hasn’t happened since Franklin D. Roosevelt and Vannevar Bush in World War II. Their success was astonishing and undeniable. But they had a world war and the most concisely articulated set of philosophies, policies and programs since the Federalist Papers. The new Administration has little more than sharp people and great expectations. That’s probably not enough.