Trump’s Industrial Strategy Fails Without Amping Up Science

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I think President Trump is on to something in trying to compel a change in China’s predatory trade practices and finally putting a spotlight on China’s government-orchestrated intellectual property theft.

I’d rather Trump and his top trade gladiators economist Peter Navarro and USTR Robert Lighthizer focus more on supercomputers, artificial intelligence, energy storage, materials science, advanced genetics and robotics, and other industries of the future than soybeans and steel, but the concern about China’s zero-sum approach to economic exchange is on target and is shared, albeit with less bluster, by most other G7 nations.

However, Trump’s trade zealotry can only help the American economy if the government simultaneously pushes innovation and investment in key sectors for which it is buying time and space. Tariffs and quotas drive up prices, for both consumers and producers. The hope is that while protection is established, a concerted push is simultaneously made to restore health to a beleaguered sector, to invest in it, to support a base of innovation from which that industry might leapfrog over its rivals, or at least be restored to competitive health.

Without coupling a domestic investment piece, trade brinksmanship just hurts Americans.

So what is happening on the investment front? Not a good picture.

Trump’s overall science and technology R&D investments, as reflected in his FY2020 budget, nosedive across the board.  Here is a good summary. Science investments throughout the government are given bloody noses if not decapitated entirely on the budget chopping block. ARPA-E, the wildly successful and popular next generation energy advanced research arm of the Department of Energy, is one of the many programs eliminated in this budget.

The White House should be given some credit within the text of the report for talking the talk recognizing the value of scientific, engineering and technological leadership.  But in practical terms, the numbers show declining investment in scientific advancement and research; the libretto doesn’t fit the music.

Without national investment, Trump’s industrial policy strategy lacks coherence. It is hard to see a beginning, middle and end to what Trump and his economic advisors are doing. Tariffs can make sense if they are designed to level a playing field, or even to protect a fragile but vital economic sector that needs space and time to grow or rejuvenate.

Compare two priorities in the President’s budget and a story of national decline becomes too easy to write.  $8.7 billion for a wall, “a big beautiful wall” that may be steel or may be concrete, standing at the US-Mexico border.  That’s the President’s self-professed highest priority.

$7.1 billion is the President’s request for the entire budget of the National Science Foundation which currently has an appropriation level of $8.1 billion per year, a 13% decline.  The NSF’s job is to further ‘all science’ that is outside the health science space. The returns that the NSF achieves for American taxpayers by supporting a national R&D ecosystem with American universities and research laboratories are staggeringly high, and yet, the Trump budget disinvests while pounding the table for the not so smart wall.

During a time of trade brinksmanship with China, the smartest move for the White House to make would have been to redirect that $8.7 billion entirely to the National Science Foundation, to turbo-charge its mandate to further American science as the other piece of what would then be a more coherent industrial strategy. America would then beat China in the game it has been playing, first catching up with US technologically, and now threatening to surpass.

As Richard Vague, and before him Michael Lind, remind in this excellent essay, Alexander Hamilton and other early American state-builders sponsored intellectual property theft from Great Britain’s textile industry and used a mix of subsidies and tariffs to seed the beginnings of American’s own textile manufacturing, eventually surpassing Britain’s output and becoming a global powerhouse.

Vague’s article, Technology: From Copycats to Innovators is part of a Symposium titled the US-China Future in the latest issue of Democracy: A Journal of Ideas.  The author profiles China’s mercantilist economic history and makes a compelling argument that China has reached an inflection point in forward-directed R&D investment that now prioritizes invention and innovation over stealing other’s innovations. Vague contrasts this with US declines in science and tech support.

Nations that invest in science and technology grow and deliver returns in power and wealth creation that non-investors don’t.  China and India are massive science and tech investors, and they are reaping rewards climbing the global power ladder. Those that don’t invest fall behind and are forced to ride in the wake of other nations defining the future.

Donald Trump seems to be guided not by ideology but rather by what enhances his mystique as a muscular, unorthodox leader. He doesn’t want to be the nerd who invests in scientific abstraction but rather wants to the tough guy who drives ever upward military spending.

But the nerds, the scientists, the men and women engineers, physicists, mathematicians, and on who have made America a science superpower unlike any the world had seen are the source of real American power.  Yet today, China is outproducing America in engineers, in patents, and most likely — without a change in course by the US — in innovation.

To save the nation and perhaps even his presidency, President Trump should find his inner nerd, spend time with scientists, and come to understand that his own ambitions depend on the success of science, not the gutting of it.

— Steve Clemons

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