Innovation In Tech Is Key To Advancing U.S. Interests
The U.S. tech industry has been a core driver of innovation for Americans and businesses of all sizes. But overzealous regulation by bureaucrats and lawmakers threatens American innovation and American competition abroad.
Here’s what you need to know:
— Overregulation stifles American innovation
— Tech innovation supports U.S. competition abroad, especially with China
— Tech innovation benefits small businesses and consumers
Overregulation Stifles American Innovation
The U.S.’s innovation ecosystem is “the source of American leadership,” reports the Innovation Frontier Project. “American policymakers should try to nourish the source of American leadership: its innovation ecosystem, which excels in the discovery of new knowledge as well as the commercial application of that knowledge.”
Leading U.S. tech companies are the top global spenders on research and development, according to Statista. In 2022, the top five overall companies in the information and communications technology sector by R&D spending were all U.S. tech companies.
U.S. tech companies make up the most innovative companies according to BCG’s Most Innovative Companies, fueling “remarkable product innovations” and “major developments in technology.”
American companies “lead the world” in innovation because of the approach policymakers historically have taken towards regulation, finds the Information Technology Industry Council. “The U.S. policy and regulatory environment has enabled American companies to lead the world in developing innovative products and services, including groundbreaking, disruptive technologies that transform markets, address societal challenges, and allow us to imagine entirely new solutions that facilitate creation and commercial engagement by an increasingly wide range of firms, entrepreneurs, and individuals.”
Anti-tech bills would “sap our economy’s potential for future growth and innovation” warns Sean Heather, Senior Vice President of International Regulatory Affairs & Antitrust at the U.S. Chamber of Commerce. Writing on several anti-tech bills introduced last year, Heather notes that “A series of bills currently pending before Congress would substantively alter antitrust law in ways that would sap our economy’s potential for future growth and innovation.”
Anti-tech legislation would “limit these companies’ abilities to innovate,” writes American Enterprise Institute’s Mark Jamison. “These mandated business changes would financially weaken the U.S. information technology sector, severely limit these companies’ abilities to innovate, and significantly undermine their efforts to combat cyber threats and state-sponsored misinformation, disinformation, and malinformation.”
Tech Innovation Supports U.S. Competition Abroad, Especially With China
The U.S. must prioritize “rapid adoption” of new innovations in order to compete with China, writes Zak Dychtwald, founder of Young China Group, in the Harvard Business Review. “To compete successfully with China in the decades ahead, countries and companies will need to start strategically prioritizing not just innovation input, in the form of heroically imagined new tools and technologies, but also innovation output that becomes transformational through rapid adoption on a very large scale.”
“It is only the innovation and ingenuity of the American private sector that will stop Chairman Xi and the CCP from achieving this goal” warn thirteen high-ranking U.S. national security leaders in a letter concerning China’s efforts to dominate the tech space. “As you likely are aware, Chinese President Xi Jinping and the Chinese Communist Party (CCP) – through their ‘Made in China 2025’ policy initiative – have committed to invest 1.4 trillion dollars by 2025 to achieve global dominance over the West both economically and in the tech space.”
China continues to support innovation in its own tech sector, with China’s Henan Province “investing 50 billion yuan (US$7.39 billion) on a digital infrastructure expansion programme that will help move its industries up the value chain,” reports the South China Morning Post.
Generative AI has also spurred competition abroad, with China’s search engine Baidu announcing the development of a ChatGPT style AI chatbot called “Ernie Bot,” according to Reuters.
Former U.S. Senators Kent Conrad and Saxby Chambliss, now of the American Edge Project, explained that anti-tech bills could “make it harder for American tech companies to keep up the pace of innovation.” “Not only will these bills make it harder for American tech companies to keep up the pace of innovation, but they’ll also put serious roadblocks in the way of our country gaining leadership on the strategic technologies of the future. Instead, foreign companies, particularly companies in China, could easily gain the upper hand. The impact on our national security could be devastating.”
Anti-tech bills “would upset the entire tech innovation ecosystem,” according to Daniel Goure, Senior Vice President of the Lexington Institute. “To counter China’s tech aggression, the U.S. is dependent on a handful of private companies which have the skills and resources to compete with Chinese firms to develop precisely those technologies Beijing seeks to dominate. These are also the firms targeted by the antitrust bills your article references. The proposed legislation would not only harm these critical national assets and impede their ability to compete with Chinese firms, it would upset the entire tech innovation ecosystem as well.”
Tech Innovation Benefits Small Businesses And Consumers
“Our nation’s future economic success, growth, and competitiveness depends on a thriving and innovative technology sector,” and the provision of low-cost technology tools has a “real and meaningful impact” for SMBs, finds a U.S. Chamber of Commerce report on small businesses. “The differential of technology adoption has a real and meaningful impact for American small businesses. Small businesses that incorporate more technology platforms in how they operate are more likely to have seen growth in their sales, profits, and employment since 2020.”
— Data indicate that companies with the highest level of adoption of technology grew 19% more than their low-adoption counterparts in profits, 23% more in sales, and 20% more in employment.
Low-cost tools produced by more established tech companies “have helped reduce the cost of starting a business,” explains CCIA Director of Research and Economics Trevor Wagener. “Free and low-cost digital services and tools used by nearly all startups have helped reduce the cost of starting a business from $5 million in 2000 to as little as $5,000 today. Policymakers must keep in mind the interconnected and symbiotic nature of the startup ecosystem when they consider laws and regulations that would prevent leading digital service providers from continuing to offer such services to startups.”
“The IT sector’s products and services are essential tools of production for companies and organizations in all other sectors of the economy,” finds an ITIF study. “The IT sector’s products and services are essential tools of production for companies and organizations in all other sectors of the economy, powering growth by spurring innovation and productivity. The sector also serves as a deflationary force, as the prices of IT goods and services have been getting significantly cheaper compared with the rest of the economy. Policymakers should take none of this for granted.”