Yesterday’s technological breakthroughs are — quite literally — now sitting in the palm of your hand.
The semiconductor, GPS, Internet protocol — and even that annoying know-it-all Siri — are all in your smart phone, and they were all invented by scientists financed by national security research spending.
The indisputable link between national security spending and development of new industries can be seen in railroads, highways, aviation, telecommunications, and computer software and hardware.
Next year, the federal government plans to spend more than $140 billion on research and development, with $70 billion of that coming from the Department of Defense. That federal spending is more than all funding provided to entrepreneurs from friends and family, angel and venture investors put together. This spending reality is nothing new; it has generally been the case since World War II.
Greater Washington enjoys federal spending as a driver of economic activity; the government is a customer. And when the government changes how it consumes technology, we pay attention. The State Department recently announced it’s heading to Silicon Valley (joining the Department of Homeland Security) to seek innovation, reminding us yet again that our region must retool itself into a more product-oriented technology community.
And there’s another challenge for our region.
The national security establishment is not just a customer, it is also a funder and driver of new industries. Our national economic growth can be explained as a series of cycles of creation, exploitation and commoditization of industries. When an industry is young, and its products novel, customers pay a premium. Employees and owners of these new businesses benefit with higher paying jobs and equity values. This is true locally and nationally. Being ahead of an industrial wave is the path to high-value added jobs and opportunity.
This cycle of growth and industrial commoditization is at the very core of our economy. For years, we led the development of new industries and other nations caught up to commoditize them. The talent and drive that made us leaders are part of our identity as a nation. We benefited by being at the crest of the wave, riding it to prosperity.
But right now, we find ourselves on a hiatus between a new industrial cycle we can lead, and the commoditization of what we have already done. Which brings us to our region’s challenge. National security agencies continue to spend billions to foster and create the next industrial waves; they are investing in robotics, artificial intelligence, artificial life, outer space and material sciences, to name a few. These dollars are being allocated in our midst to researchers and entrepreneurs our government officials believe are best-suited to advance these new areas.
We in greater Washington are perfectly suited for those tasks, but we are not a shoo-in for the investments. Into which regions of the United States is that money flowing? Which universities are doing this work? Which businesses and entrepreneurs are working on the challenges? We need to find out where and how our region is participating — and fast.
We are talking about what I think of as a “nextistential threat” to our region. We need to participate in the next industrial wave because failure to do so will slowly crush our ability to create opportunities for growth— and that will hit us harder than any budget sequestration ever could.
There will be new industrial waves to come in the United States. That is inevitable. The research is being done, and breakthroughs are occurring. We need to be ahead of those waves. Proximity to the federal government will only be an advantage if we do the hard work to make it so.