How to Restore Economic Prosperity
If we want to restore economic prosperity, we have to equip the public funding ecosystem with modern infrastructure and actionable data, which will improve capital efficiency and allow the government to achieve parity with private sector services.
The United States had an exceptional public funding ecosystem.
Two-thirds of the most momentous and far-reaching technologies of the last 50 years were funded “by federal R&D at national laboratories and universities.” Personalized medicine, smartphones, autonomous vehicles, and other transformational innovations grew from public R&D.
This ecosystem is necessary because these innovations are often too expensive and risky for private funding to carry by itself. Public funding helps hedge the exceptional risk of researching and developing technologies that will push humanity forward.
Cracks in the ecosystem have been steadily growing, and COVID-19 has revealed many of them.
Large, established organizations — whose primary interest is often to reduce market competition — have the resources to cut through red tape and remove money from the pool. According to a 2015 report by the watchdog group Good Jobs First, from 2000–2015 large companies received 66% of US federal grants and allocated tax credits. At the same time, a lack of accountability has led to corruption on the government side. Take this man for example, who won a $60M ventilator contract after tweeting President Trump, which later went unfulfilled. Or this story about how California is so desperate for COVID-19 help that it’s spending billions on no-bid contracts with little accountability.
“In the middle of the 20th century, members of Congress and the voters who elected them saw federal R&D as a necessary condition for achieving important national objectives like space exploration, disease eradication, and addressing looming energy crises. Today, for many Americans, these missions have taken a back seat to the growing demand for high economic returns-on-investment. State legislators, mayors, governors, and members of Congress rally when the possibility of a military base closure threatens jobs, but they are silent or perhaps clueless when cuts in research funds for the national laboratories and universities within their jurisdiction undermine regional innovation, jobs, and growth.”
This is not the direct fault of most government agencies, who are handcuffed by red tape, antiquated systems, and an absence of data.
The failure of the Paycheck Protection Program is a direct result of misunderstanding stakeholder needs, which can be mostly remedied with contextualized and actionable data. The private sector deeply understands the value of this data, as well as the nightmares caused by its absence. But the public sector has not been incentivized to adapt, and in some cases is oppositely incentivized through incumbent lobbying.
If we hope to fuel innovation and strengthen economic diversity to achieve prosperity, we must take it upon ourselves to create systems and business models that enable us to partner with the public sector, to quickly bring them up to speed.
We have to equip the public funding ecosystem with modern infrastructure and actionable data, which will improve capital efficiency and allow the government to achieve parity with private sector services.
The world is facing unprecedented challenges. Fortunately, the world’s smartest people are actively working to solve them. But we have to build the bridge that will bring these solutions to market. We have to ensure that these people have the resources they need to bring real innovation into the world.
As taxpayers and citizens, we deserve better from the ecosystem, which at its core is meant to serve the needs of the population as a whole. We need equity, accessibility, and transparency, and we need it now.
If you agree, join OpenGrants in our work to unlock public funding for people around the globe. Even if you’re not directly involved in a project that would be impacted by our work, sign up here to stay informed.