February 6, 2020
IT'S NOT sOCIALISM WHEN WE DO IT:
Europe Needs a DARPA (DALIA MARIN, 2/06/20, Project Syndicate)
In short, Germany needs an industrial revival of the sort it experienced in the late nineteenth century, when companies such as Daimler, Bayer, BASF, and Allianz emerged. But this will be possible only if the state offers technological backing to German firms. Here, the United States government's Defense Advanced Research Projects Agency (DARPA), with its successful decades-long track record of high-tech innovations, should serve as a model for Germany and Europe to follow.
As the economist Mariana Mazzucato has pointed out, DARPA and other US government agencies have been instrumental in developing new technologies such as the Internet, GPS navigation, touchscreen displays, and voice-activated assistants such as Apple's Siri and Amazon's Alexa. Without these state-backed research successes, today's US tech giants would not exist.
DARPA also buys innovations. For example, robotics company Boston Dynamics - which was spun off from the Massachusetts Institute of Technology, subsequently acquired by Google, and now owned by Japan's SoftBank Group - won a tender in 2013 to deliver robotic systems for the next DARPA Robotics Challenge. Under this contract, the company will deliver a range of autonomous humanoid Atlas robots that can be used in the event of natural disasters.The US government thus plays an important role in shaping innovation. China, Israel, and South Korea have similar ecosystems of state-led research support geared toward military and intelligence applications, which helps to explain why they, too, have become world leaders in digital innovation.A recent study of OECD economies by Enrico Moretti of the University of California, Berkeley, and MIT's Claudia Steinwender and John Van Reenen supports this anecdotal evidence. The authors investigate the impact of government-funded military research spending on privately funded corporate research activity, and its effect on productivity growth. In contrast to the "crowding out" of private investment that usually accompanies increased public investment, they find evidence of a "crowding in" of private research expenditure. Specifically, a 10% increase in publicly funded research spending generates an additional 4.3% increase in privately funded research. They conclude from this that the low level of private research spending observed in some OECD economies is also related to the lack of military-related research in these countries.The clear implication is that Europe needs a European research agency with a budget similar to that of DARPA in order to keep pace with intensifying global technological competition.
Ms Mazzucato is one of the few guests ever to leave Russ Roberts at a comlete loss on EconTalk.
Posted by Orrin Judd at February 6, 2020 8:54 AM