United States Innovation Problem and How We Can Solve It

The United States used to be the undisputed global leader in innovation. In the past, we put a large portion of our considerable economic power behind research and development, with the goal of becoming and remaining the most innovative country in the world. However, in the past few decades, America's lead in innovation has shrunk, and some experts believe our lead will disapeear altogether. In either case, the simple fact is that American innovation is being threatened by structural erosion and global pressures.

The U.S. lead in innovation has shrunk and that lead could disappear altogether if something doesn't change.

Phil McKinney

Patents Losing Ground

During and immediately after World War II, the United States government's funding of corporate Research and Development was at an all-time high, and it showed. We were the dominant technological and innovative force in the world. Even going into the Cold War, there was little question as to the fact that we were the supreme innovative world power.

Over the course of the 1970s and 1980s, however, that changed quite a bit. Western Europe had finally finished rebuilding after the carnage of WWII, and was starting to catch back up. Japan, having been devastated by the war, had made a concerted effort to drag itself into the forefront of innovation in the twentieth century. That effort was startlingly successful, and at the start of the 1970s, Japan became the only country to surpass the United States in annual patent applications during the 1900s. Japan would remain ahead of the United States for more than thirty years, and while the US would regain the lead in the early 2000s, China dethroned us in 2012.

In the late 1980s and throughout the 1990s, the United States endeavored to reassert its lead in innovation by increasing federal spending on Research and Development programs. This spending increase, along with other factors, contributed to the internet revolution of the 1990s, once again putting the United States clearly at the helm of global innovation.

R&D on the Back Burner for the United States

The United States was ousted from this privileged position by the bubble bursting in the early 2000s, which brought us back down to Earth. And while our economy has recovered more quickly from the recent recession than many other nations, we have not resumed the level of spending on innovation that we once had, while other developed countries have retained their commitment to stimulating innovation.

This is one of the major reasons for our falling behind: federal funding for Research and Development is at one of the lowest points it's ever been since World War II. Partially because of this, large public tech corporations have begun to focus on applied research instead of raw, unfettered innovation, with startups following suit. This shift has relegated early-state innovation to private companies' R&D departments, which are some of the last places that multi-decade research actually happens. But this isn't enough. Even federally-funded university and governmental research programs aren't very productive, compared to those in other developed nations.

Education Less Accessible

Lack of funding, although one of the largest contributors to the U.S. innovation stagnation, is not the sole factor. The other primary cause comes earlier in the developmental chain: education. From the aftermath of World War II until the 1980s, the United States led the world in its population of college and university graduates, also excelling tremendously in the quality and effectiveness of its primary and secondary schooling practices. But over the last thirty years, the majority of East Asian countries, as well as a number of European countries, have surpassed us in the quality of their educational systems and the percentage of their populations that possess post-secondary degrees and certifications.

A large part of this shift has occurred because of the affordability of college and the changes in how the federal government approaches secondary education spending. According to a report by Bloomberg, since 1978, tuition prices in the United States have increased a full four times faster than the consumer price index. So not only has tuition failed to keep pace with inflation, but it has been four times as unsuccessful at doing so compared to most other consumer goods and services. Though larger shares than ever of the nation’s population are earning college degrees, they’re under increasingly astronomical mountains of debt and face a tough job market — not necessarily the best conditions for taking risks on innovative ideas.

As for secondary education, there has been a shift in the past thirty years toward a focus on students passing standardized tests, and with federal distribution of educational funds reinforcing this the result is that students not only fail to learn as well but also fail to develop the creativity and enthusiasm for learning that is necessary for innovation to occur.

Looking Ahead

The first step toward the U.S. regaining its dominance as the most innovative country in the world is for us to first accept that we have been dethroned. In order to devote more resources — more government funding, private-sector time and energy, and educational focus — towards reclaiming our place at the forefront of global innovation, we must first realize that we need to do so. Much of the difficulty we have with solving our current innovation problem lies in the fact that we don't believe we have an innovation problem. However, with mindfulness and concerted effort, the United States can once again lead the world in innovation.

Over the next few weeks, I’ll be looking at the U.S. innovation problem from a few different angles, focusing in on promising ideas from various sectors with an interest in restoring innovation as a central element of our nation’s character.

If you have an idea on how to fix the innovation problem, please contact me. I would love to hear your thoughts.