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The Budget and Innovation

by Adam Segal
February 15, 2011

Budget and Innovation

The U.S. 2012 fiscal year budget is unveiled in Washington on February 14, 2012. (Jason Reed/courtesy Reuters)

A little house keeping. I was on the road last week, speaking about Advantage in Berkeley and Seattle.  About ten days ago, Foreign Policy published my response to the State of the Union, “The Great Invention Race,” and CFR.org just posted some of my thoughts on the budget and innovation—increased spending is definitely good news (if it does not eventually get slashed in the battle to reduce the budget deficit), but it is not enough.

One of the most interesting exchanges I had on the West Coast involved a serial entrepreneur who was trying to commercialize a dual-use technology but kept running into government bureaucracy. Venture capital was scared away from making an early investment, and hiring foreign-born workers was near impossible because of deemed export control laws—a Chinese engineer, for example, who works with technology that is controlled for export is “deemed” an export, and the company must obtain a license for that worker to use the technology in the lab.

This is a self-inflicted wound that the United States can no longer afford.  While there is no doubt that the United States must work to keep critical technologies out of the hands of potential adversaries, the range of technologies the government can control is increasingly narrow.  We have to assume most dual-use technologies already are available on global markets.  Moreover, openness drives innovation and is the ultimate source of American security.  Only by running faster and developing new products do we assure security.  As Edward Teller, the father of the hydrogen bomb, wrote in 1999, “Our continuing security is acquired by new knowledge rather than by conserving old knowledge.”

There are some reasons to be optimistic.  Last year, both President Obama and Secretary of Defense Gates called for reform of the export control system.  And a West Coast-based lawyer heavily involved in export control cases told me he was more optimistic that change was coming than he’d been in a long time.  He saw a move to what he called the “four singles”: a single agency to oversee export controls; one set of policies; one IT system to regulate; and a single enforcement agency.  We’ll have to wait and see, but at least for now things seem to be moving in the right direction.

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