Those are Obama’s very
telling words and why he is a dangerous leader. This is exactly how a socialist
or even communist would think – that government intervention is the solution to
everything including innovation and all the products developed in our country. This
is why Obama and the left want to redistribute wealth and make sure every
American citizen is dependent on the government to survive – they actually
believe this leads to economic success. They believe spending is investment and
therefore, a dollar spent on welfare creates more than a dollar of wealth in
The below study will show
exactly why government intervention hinders innovation and product development
because it constrains the private sector with rules, regulation, mandates, and
other anti-business legislation.
According to a Patent Board
study (study done by the U.S. Government) from 2003 to 2007, the U.S.
government accounted for 1% of all patents developed internally, and 2% of all
patents developed in cooperation with private industry through federal funding.
The U.S. government is most active in patents owned and shared in fields of Biotechnology
(13%), Defense and Aerospace (8%), and Semiconductors (2%). In these fields,
government developed patents are rarely cited, but sponsored patents with
private industry do have some significant credence because they are widely
cited. The bottom line is that federal government has shown little innovation
with exception of the fields in Biotechnology, Defense, and Semiconductors
where their private sector funding patents have shown some broad success.
However, other than that, the government has shown little overall innovation in
other high tech, healthcare, energy, education, or financial fields.
This past year government
discretionary spending accounted for about 9% of GDP (total federal spending accounted
for about 25% of GDP). Yet, the government only account for 2% of the
innovation (patents). This not only illustrates how abysmal the federal
government is when it comes to innovation and research and development, but
shows the waste in government spending. If this is not bad enough, government
innovation numbers are much worse when we consider local and state government
discretionary spending versus GDP. Locality and state governments offer a very
few patents – about 0.1% of the total. Therefore, total government
discretionary spending (Local, State, and Federal) accounts for better than one
eighth of our national GDP, but only a little more than 2% of the total patents
or innovation. What’s worse, total government spending (Local, State, and
Federal) accounts for over 40% of total GDP in the country. Hence, the private
sector accounts for less than 60% of the GDP, but 98% of the innovation (99%,
if we include the 1% of the innovation that is done jointly between the private
and government sectors). And the private sector accomplishes this despite
government rules, regulations, mandates and other anti-business policies that
work to restrict innovation.
According to the above
analysis, Obama was right when he said NASA generated a lot of innovation (8%
of the patents with even a greater percentage of significant patents that were
widely cited). This is good considering government spending is only 6% of GDP on
Defense and Aerospace related fields. But remember Defense and Aerospace are
the fields that Obama, and progressives alike, want to significantly cut
funding. Obama has already killed our space program. Hence, it makes little
sense he would even point out the innovations made in the aerospace and defense
sector since he is obviously not a proponent for their existence.
Obama also pointed to the
public educational system as helping many American citizens. Sure, many of us
may point to a teacher that played a prominent role in our success. But the
dropout rate across the country is 25% - so our public schools are failing many
young people. And the unemployment rate of over 70% for recent college grads is
not encouraging news for the public school system either.
To summarize, private
sector's products are all around us -- food, shelter, clothing, automobiles,
home appliances, entertainment, for example. The public sector's products
include defense, the justice system, roads and highways, public schools, income
redistribution (welfare), laws, and regulations.
Many of the government
sector's outputs are more like anti-products than products. Regulations stifle
innovation, decrease productivity, increase costs, and generally drive people
crazy. Rather than wealth creation, regulations result in wealth prevention.
“Government innovation across multiple
Administrations has generally focused on learning from private sector processes
that can apply to support functions like technology, financial management, and
HR.” said one government study on innovation. In other words, the government
follows in the private sector’s footsteps when it comes to innovation.