While the U.S. economy has gradually – almost begrudgingly – emerged from the Great Recession, productivity and economic growth have been low relative to previous recoveries. Former Treasury Secretary Lawrence Summers labels the trend “secular stagnation,” evoking Japan’s lost generation of economic progress after its 1986-1991 commercial real-estate bubble and the 1930s Depression in most of the West.
Stock markets are booming, unemployment is low (although the labor-force participation rate remains a concern), and inflation appears virtually nonexistent. At the same time, there’s a sense that the country’s dynamism and growth that characterized the 1945-1973 period are missing.
We’re still the wealthiest economic power on the planet and yet:
(1) our K-12 schools are mediocre,
(2) we outspend the rest of the world on healthcare but have pathetic outcomes in obesity, infant mortality, longevity, and now, opioid addiction.
(3) our roads, bridges, tunnels, subways, and other vital infrastructure are crumbling,
(4) our public companies use financial engineering (stock dividends, share buybacks, exotic investment vehicles) to boost stock prices, and amass trillions of dollars of unspent cash that could fund future research, and
(5) we have access to the world’s best technology and innovation (Silicon Valley, Silicon Alley, and Boston’s Route 128), and yet our government bungles technology in launching a new Affordable Care Act enrollment process and can’t develop a simple intake system to meet our veterans’ urgent medical needs.
Some wonder: whatever happened to the Concorde? Have we abandoned supersonic air travel? Are we backsliding with respect to innovation and breakthrough technologies?
There’s a growing sense that with all of our riches, we’re not maintaining our technological edge. Driverless cars and myriad new cellphone apps aren’t trivial pursuits, but they hardly rival the mega-investments that led to rebuilding Western Europe after World War II, establishing a national highway transportation network, sending astronauts to the moon, and investing in what became today’s internet. (All of which involved presidential leadership). We’re doing “stuff,” but that “stuff” seems pedestrian given past breakthroughs.
The sobering reality that most Americans may not realize is that U.S. productivity peaked in the early 1970s. According to Columbia University professor Edmund Phelps (winner of the 2006 Nobel Prize in Economics), in his superb book, “Mass Flourishing” (Princeton University Press 2013, at page220): “a discernible slowdown of productivity began around 1964 and gained force – off and on – until the mid-1970s. Productivity growth remained very slow until 1993, and after recovering nicely during the build-out of the internet, fell back to the snail’s pace set in the 1970s.”
Princeton University Press did the country a great service earlier this year by republishing a once famous, but long-forgotten, essay by Abraham Flexner entitled “The Usefulness of Useless Knowledge.” Flexner (1866-1959) was a polymath who was also the first director of Princeton’s Institute for Advanced Study. His 40-page essay makes an eloquent plea for “basic research” – research undertaken for its own sake and not necessarily directed at achieving an intended result. Here’s Flexner’s message near the end of his essay: “we cherish the hope that the unobstructed pursuit of useless knowledge will prove to have consequences in the future as in the past.”
Federal government basic research budgets have been declining due to shrinking domestic discretionary budgets. Private-sector basic research budgets have fallen victim to the ongoing pressures associated with quarterly-earnings reports in publicly traded companies. One tech lobbyist commented recently that his job description requires that he think no more than 18 months ahead.
Flexner’s reprinted essay has a companion essay by Robbert Dijkgraaf. A mathematical physicist who specializes in string theory, Dijkgraaf is also a professor at the Institute for Advanced Study. He notes “Flexner’s lifelong conviction that human curiosity, with the help of serendipity, was the only force strong enough to break through the mental walls that block truly transformative ideas and technologies.”
If, instead, we insist that our research efforts play it safe, avoid risk, and thereby satisfy the incessant accountability focus of government Inspectors General (or dividend-focused, impatient shareholders and accountants), then results are likely to be paltry: “[t]he path from exploratory blue-sky research to practical applications is not one-directional and linear, but rather complex and cyclic, with resultant technologies enabling even more fundamental discoveries.” Dijkgraaf wisely notes that “[t]he growing culture of public accountability puts pressure on the margins of error, eliminating downside but also upside risk.”
It was Albert Einstein – another Institute member – who said that “[i]magination is more important than knowledge.” If we become a play-it-safe society in which our young people envision careers dedicated to minimizing risk and maximizing security, then we are likely to become a nation of hedge-fund managers, Wall Street financiers, corporate lawyers, and accountants.
Goal-directed research is, by definition, constrained at the outset. If imagination has already been “cabin’d, cribb’d, and confined,” then the results will be commensurate: adequate perhaps, but hardly the “stuff that dreams are made of.”
Nearly 20 years ago, the nonpartisan Committee for Economic Development published an important subcommittee report on “useless knowledge.” “America’s Basic Research: Prosperity through Discovery” was chaired by former BBN Technologies CEO George Conrades (now chairman of Akamai). Other subcommittee members included MIT president Chuck Vest, Merck CEO Ray Gilmartin, and RAND president Jim Thompson. This important report identified 14 recommendations for strengthening basic research, including: setting broad national priorities, diversifying federal support, making basic research a budget priority, realigning the Energy Department’s labs, improving graduate training, and pursuing expanded international collaboration and the globalization of research.
President Trump was wise to establish the American Technology Council. Council members should read carefully the CED report and Flexner’s essay as they formulate their findings and recommendations. Prioritizing basic research should be high on their agenda.
As Americans, we are known for our pragmatism, but we have also been known for our dynamism, our vitalism, our creativity, and our idealistic propensity to dream big and explore. For four decades, however, we have mostly been eating our seed corn and reaping the benefits of earlier basic research. A lot more “useless knowledge” pursued by today’s public and private sectors will ensure that today’s idealistic dreams become tomorrow’s engines of progress, dynamism, and vibrant economic growth.
Charles Kolb is president & CEO of DisruptDC, a new business coalition for better government and elections. From 1990-1992, he served as Deputy Assistant to the President for Domestic Policy in the George H.W. Bush White House, and from 1997-2012, he was president of the business-led Committee for Economic Development.