Debunking the "Corporate America and Entrepreneurship Is the “great Innovator” Myth.

On my way to Las Vegas for a business function — hosted by a company I helped create (yes, I’m one of those entrepreneurs I’m about to debunk) — I read an article in the November 2013 edition of Harper’s by Jeff Madrick, titled “The Future Progressive.” Madrick, a critic of mainstream economic dogma, challenges one of the most persistent myths in American life: that major innovations spring fully formed from the minds of heroic entrepreneurs, untouched by government help.

Let’s be clear: they don’t. Not even close.

I can’t say how much support inventors like Bell, Edison, or Ford got from the government — I’m 30,000 feet up and not Googling right now — but I can speak to the modern era, where the pattern is undeniable. According to Madrick and decades of evidence, most major innovations — or what economists call “general-purpose technologies” (GPTs) — weren’t born in garages. They were forged in the fires of war and national ambition: the Civil War, WWI, WWII, the Cold War, and the Space Race.

Entrepreneurs didn’t invent these technologies. They refined them, monetized them, or repackaged them. Steve Jobs didn’t invent the building blocks of the iPhone — he assembled components developed in government-funded labs and stitched them into a world-changing device. Just like Henry Ford didn't invent the engine or assembly line; he optimized them.

So if not private industry, who did the heavy lifting?

Government. Or, more precisely, government-industry-university partnerships.

Take the Internet — arguably the most transformative technology in recent memory. It wasn’t invented by Google, Facebook, or even Apple. It came from ARPA (now DARPA — the Defense Advanced Research Projects Agency), working with universities that needed to communicate securely and quickly. It was public funding, not private hustle, that birthed the digital age.

The same is true of countless pharmaceuticals. Basic research is risky, expensive, and often unprofitable in the short term — everything corporate America avoids. Instead, the federal government funds the research and assumes the risk. Once the science is proven, the private sector swoops in to patent, profit, and, far too often, bury the original inventor under legal red tape. (Remember the saga of automatic windshield wipers?)

Some hard data from Madrick’s article:

• In the 1970s, Fortune 500 companies averaged 36 major innovations per year. In the 2000s? Just 4.

• Government labs, on the other hand, rose from 9 to 32 major innovations per year.

• In 2011, 53% of basic research in the U.S. was federally funded. Private industry paid for just 23%.

• The iPod? It monetized the work of two European researchers funded by France and Germany.

• Voice recognition and touchscreen tech? Also spun out of government-backed research.

• Solyndra, the favorite conservative punching bag, cost taxpayers $535 million. Private investors lost billions.

• Of the renewable energy projects funded under Obama, 99% succeeded. You never hear about that.

And from outside Madrick’s piece:

• Sequestration canceled 700 National Science Foundation grants and gutted half the Army’s R&D programs.

So why are conservatives hellbent on dismantling government research?^1.2

Because they’ve bought their own myth: that capitalism is not only capable of driving innovation, but superior at it. The reality? Capitalism excels at short-term profits, not long-term progress. Its incentive structure isn’t built for basic research, which is expensive, slow, and often fruitless — exactly what investors hate.

Private industry can’t be the sole driver of innovation for two reasons:

1. It isn’t motivated to do so except in narrow, profit-rich circumstances.

2. It often doesn’t have the resources — or the patience — to fund long-term research that may never pay off.

Capitalism works because it’s self-interested. But that same trait makes it incapable of sustaining the foundational science needed for the next generation of technologies. Governments fund that work — and always have. Even Galileo got help from the University of Pisa.

So here’s the final question:

If conservatives succeed in gutting federal research, what happens when America produces only 4 major innovations a year… and China produces 40?

¹11/20/13: The President of Harvard just came out denouncing the Sequester and outlined the great damage it is doing to the Nations standing in the world community vis-a-vis keeping intellectual knowledge within our borders because of the huge cutbacks in government R&D efforts. She said there is a noticeable migration of brain power from the U.S. and its declining R&D programs to countries where the government does invest in its future.

² It is now 2025, and Donald Trump, who is now a convicted felon and found liable for sexual abuse, was elected for a second, non-consecutive term. He is completing what the conservatives started around 2013 when I first wrote this article - dismantling the federal government. A particularly favorite target of his defunding efforts is, you guessed it, funding federal research projects.