20 Jul America’s system of entrepreneurial innovation is under extreme stress
It’s no surprise that America is intently focused on daily COVID case and fatality counts, whether various curves are bending or flattening, and every bit of info about the latest vaccine trials. Every news cycle is an adventure.
But what about the day after tomorrow? What about the post-vaccine economy? Certainly much will depend on how successfully we support economic activity right now. Goldman Sachs warns that “operating well below normal for too long” will cause scarring effects on the business sector and labor market.
That isn’t the only long-term concern, however. Some key components of the American innovation engine are also at stake. R Street analyst Caleb Watney explains in The Atlantic how the coronavirus pandemic and Trump administration response “are damaging the engine of American innovation in three major ways: The flow of talented people from overseas is slowing; the university hubs that produce basic research and development are in financial turmoil; and the circulation of people and ideas in high-productivity industrial clusters, such as Silicon Valley, has been impeded.”
The recent threat to student visas encapsulates all of the above concerns. Its implementation would have massively disrupted the movement of bright immigrants from around the world through the American university system and then into the tech sector as highly skilled workers and entrepreneurs. As it is, the mere threat may have permanently raised uncertainty levels for potential immigrants, “signaling to young people overseas that, should they ever want to attend an American university, they might not be welcome,” Watney writes.
And if they still want to come, our public university system may be in bad shape to accept them if cash-strapped states slash higher education budgets. And if foreign students don’t come, things will be even worse. Watney: “Without further support, American colleges and universities face significant faculty and research budget cuts. The potential for disinvestment is greatest in the science and engineering departments, which rely most heavily on international students.”
And this is the big point: “What Americans should not do is expect past economic momentum to carry the U.S. through the present crisis. Just as the coronavirus won’t go away on its own, the sources of economic innovation in the United States won’t just maintain themselves.” No, we should not. Already facing a long-term “new normal” of historically slow economic growth, the pandemic may well have added to the challenge of moving from stagnation to acceleration. As policymakers continue to focus on economic support for individuals and business, they should make sure they are also supporting the American system of innovation — or at least not harming it further.
Learn more: How to avoid a double-dip recession | Are we in a dark age of invention and innovation? And if so, will we ever get out? | Can artificial intelligence reverse the productivity slowdown? My long-read Q&A with Nicholas Crafts
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