With economists scrambling for solutions to the U.S. capital market failures, a technology group on Friday issued an eight-point plan for the next administration to place innovation at the center of the country’s economic policies.
The government should double the federal research and development tax credit, which once led the world but is now just the 17th most generous, according to the Information Technology and Innovation Forum, which issued the plan.
Doing so not only would generate more R&D investment at home but also would make the U.S. a stronger magnet for internationally mobile R&D, according to the Washington D.C.-based think tank.
“Because the economy was not focused on robust innovation in the real economy, we ended with innovation in the pseudo economy of financial derivatives of things that did not lead to real wealth,” said Robert Atkinson, president of the ITIF.
The ITIF is a proponent of innovation economics, a school of thought that believes knowledge and innovation should be treated as financial instruments subject to international trade.
“If we had followed innovation economics we would’ve been much more aggressive in dealing with trade deficits and there would not have been $700 billion in foreign capital flowing into our markets every year propping up the housing bubble,” he said.
Current economics pretty much ignores innovation by defining it out of existence and instead attaching to either conservative or liberal political movements, he said.
“The supply-siders in the Bush Administration completely embraced the deregulatory model that says markets are essentially all-knowing and we now know that’s a total disaster,” Mr. Atkinson said.
The ITIF proposes that the new administration push for the creation of a national innovation foundation devoted to the ongoing support of firms and organizations involved in innovative activities.
The foundation would initiate, encourage, and support partnerships among commercial, university, and government research organizations, particularly with the commercialization of innovation.
The ITIF is also calling for the government to allow foreign students receiving graduate degrees to also receive green cards.
Also, the patent system should be reformed to encourage rather than stall innovation, and companies should be able to expense new investments in information technology in the first year, the ITIF said.
The ITIF is pushing for the government to establish a federal chief innovation officer to oversee the digital transformation of the U.S. economy and government. The federal CIO should examine how government procurement and regulation should be used to speed the digitization of sectors such as housing, health care, and education.
The new administration should craft and implement a national broadband strategy, according to the ITIF, through favorable tax policies, and the availability of spectrum.