Harnessing the Free Market

HARNESSING THE FREE MARKET….Ben Wallace-Wells writes in the current issue of the Monthly that today’s free market fundamentalists are coasting on the success of a previous generation’s government interventionism:

The land grant college system, signed into law by Abraham Lincoln, provided the nation’s farmers with expert guidance on the latest agricultural techniques to improve their crop yields. No entrepreneur could figure out how to mass produce cars profitably, writes Harold Evans in his excellent new book They Made America, until Henry Ford fought an aggressive bid against restrictive patents. The pharmaceutical, financial, and airline industries blossomed thanks to the creation of the FDA, SEC, and FAA, which gave customers some assurance of safety when they popped pills, traded stocks, or boarded flights.

….These investments and regulatory changes aren’t merely tools of the past; it is impossible to imagine the ’90s boom emerging without them. Early investment from the Pentagon helped nurture the Internet. The algorithm that powered Google was developed when co-founder Larry Page, then a Stanford graduate student, won a federal grant to write a more efficient sorting and search engine for libraries. The innovative new medicines that have driven the expansion of the biotech and pharmaceutical industries arose from university research largely financed by the National Institutes of Health.

Ben argues that we have increasingly abdicated this traditional government role and are starting to pay the price:

For decades, the United States ranked first in the world in the percentage of its GDP devoted to scientific research; now, we’ve dropped behind Japan, Korea, Israel, Sweden, and Finland. The number of scientific papers published by Americans peaked in 1992 and has fallen 10 percent; a decade ago, the United States led the world in scientific publications, but now it trails Europe.

His recommendations? A stronger government role in a few specific areas such as broadband, wireless, alternative energy, and healthcare IT, combined with a bipartisan commitment to policies that broadly encourage innovation.

Instead, of course, we’ve gotten an initiative to go to Mars. So I’d add to Ben’s recommendations one more: the first step is to elect people to office who believe that government has a serious role in the economy in the first place. We liberals need to work on that.

UPDATE: By coincidence, just after I wrote this CNN posted two related pieces. This one reports that the United States has dropped from first to fifth in “making the best use of information and communications technologies,” and this one reports on high tech CEOs’ concerns about our lagging broadband capability.