Subscribe to Here’s the Deal, our politics newsletter for analysis you won’t find anywhere else.
Thank you. Please check your inbox to confirm.
The U.S. government spends about 0.7 percent of GDP on scientific research and development, down from 2 percent in the 1960s. Less investment means fewer chances for breakthroughs like the weapon-seeking robots that saved thousands of soldiers in Iraq and Afghanistan -- and created a new consumer products category. Economics correspondent Paul Solman reports on an effort to jump-start public R&D.
One of the major concerns about the American economy is whether there's enough real growth compared to the past, and whether that growth can be spread out more evenly to areas that need it.
Our economics correspondent, Paul Solman, has a look at a new call to spur that growth through major government investments in science and technology. The idea? Spread that investment, capital and potential jobs to cities in real need.
It's the focus of tonight's Making Sense report.
So, these are Roombas. This is the first Roomba.
At iRobot outside Boston, the flagship product is on prominent display.
This is the s9. This is like a monster. The eyes look left and right.
Nearby, products that flopped.
If that doesn't creep out your child, then nothing will.
We were working on robots that go down into oil wells. We were working on robot toys. We were working on robots that would clean industrial buildings.
And who's buying these things?
No one was buying them.
iRobot now boasts 1,000-plus employees in the U.S., but for years after its founding in 1990…
iRobot, I say nobly, we didn't take investment until year eight. What I'm really saying is, we couldn't get investment from a third party until year eight of our existence.
What kept them alive?
iRobot wouldn't exist without government contracts.
Starting with small contracts in the mid-'90s to research and develop military robots, culminating in a contract to build thousands of so-called PackBots, at $120,000 each, to search out weapons in Afghanistan and Iraq.
This used to be a robot.
And this is debris?
Yes, that's PackBot 129, or what's left of him. These guys literally have saved thousands of lives over in Afghanistan and Iraq.
And with the money and technology it earned on PackBot, iRobot launched a consumer business. Seventeen years later…
Twenty-five million robots sold. About a quarter of all money spent on vacuum cleaners are now spent on robot vacuum cleaners.
Due to government research and development spending.
When those big breakthroughs occur, you create a lot of good new jobs.
And if only we spent like we used to, say MIT economists Simon Johnson and Jonathan Gruber, the U.S. economy would be bigger, fairer, better braced for the future.
By the mid-1960s, we were spending 2 percent out of our entire economy, one in every $50, on public R&D investments. And that paid off in creating enormous new sectors of the economy. Remember, what was the first microwave called?
These Amana Radarange microwave ovens have Cookmatic power shift.
The radar range, because it came with the technology that was used to develop the radar.
Speed, for informed decisions.
Digital electronic computers come entirely out of this big postwar R&D government-led effort, modern pharmaceuticals, jet engines, civil aviation.
Liftoff. We have a liftoff!
And, of course, we had the space program, big, positive, lasting effects across the entire economy.
This was the norm for half-a-century. But, nowadays, says Gruber:
We have gone from 2 percent of GDP to 0.7 percent of GDP and, importantly, from by far the highest in the world to 10th in the world.
The top five, Austria, Denmark, Finland, Korea and Switzerland.
Thus, Gruber and Johnson's mission, "Jump-Starting America," the name of their new book, restoring government R&D spending.
We want more growth. We want more good jobs.
And they're on the stump making the case across the country, but not for spending just anywhere.
Hello, Rochester. It's great to be back.
They want to jump-start R&D hubs in areas that don't have them.
People talk about a rural-urban issue in America. It's not really that. It's sort of a superstar city-rest of America phenomenon.
The existing hubs on the West Coast and East Coast have become rather crowded, extremely expensive, actually quite difficult places to do business.
What we really need is growth that, as in the past, is much more widely spread across the country.
And that's why they and we were in Rochester, New York, which popped out number one on their list of 102 potential new R&D hubs.
We didn't know of Rochester. I'm pleasantly surprised as to how good a fit it is for us.
Is it a big place? Because this won't work unless it's in a big enough population center. Is it well-educated? Is there a good science education system? Is it affordable? Is there a low crime rate? How's the commute time?
How did Rochester come out on top?
Right now, you can get anywhere in 20 minutes.
How many universities?
What's it cost to buy a house around here?
The average price is less than $200,000.
Of course, admits Jennifer Leonard, who heads the Rochester Area Community Foundation, there's a reason for those low housing prices.
We are still the third poorest city in the top 75 metro areas, third highest in the top 100 cities for concentration of poverty. We need help.
But that's what jump-start means. And like so many cities, Rochester's deindustrialized past could be a key to its future.
Industries have developed here that have made the name Rochester synonymous with quality and precision manufacturing.
Kodak, Bausch & Lomb, and Xerox once employed over 100,000 locals — today, a few thousand total.
If you don't change, change will change you.
My mother worked for Kodak, and my dad worked for Xerox.
Lovely Warren is Rochester's mayor.
I don't think anyone ever imagined that the industry would change as rapidly as it did and that we would experience the economic decline that we did.
Jobs fled, but people stayed, with know-how, says the mayor.
Building on a legacy that was once here, that was large in Kodak, Xerox and Bausch & Lomb.
In an old Kodak factory and a former downtown department store, New York state grants have seeded high-tech incubators.
This is our spindle imaging system, and we enable you to see now with 10 times improved precision in three dimensions.
We use the front camera of these small devices and detect the subtle changes in the color of your skin that occurs each time your heart beats.
We have this innovative fluorescent microscope with small implants that go into multiple regions of the brain.
These things actually go into your brain?
Yes. And these tiny blobs that turn on and off are individual neurons.
Every one of the dozens of firms at this recent conference focused on optics and photonics, the science of light.
How much data can be transferred over what distance, at what power, using what cost? And it just so happens that photons beat electrons every day of the week.
Terry Clas, a longtime Kodak executive, chaired the conference.
Do I believe that Rochester, New York, or the Finger Lakes region could be the Photon Valley of the future? Absolutely.
And there's a huge opportunity, say Gruber and Johnson: The private sector doesn't invest in basic R&D.
Consider Yasaman Soudagar's brain implants.
So, if you understand exactly how the memory circuitry in the brain works, then when Alzheimer's is happening, we can understand what is going wrong in the brain that is causing the disease.
So, if this is technology which maybe reverse Alzheimer's in humans someday, then investors are throwing money at you?
No. No, they are not. Investors want to get 10 times return in three to five years on their investment.
And you know this because you have pitched investors?
And they have told us that we are just not advanced enough for them. They want us to talk to them when the device is ready to be used in humans.
We have all this investment capital in this country. We have all these venture capitalists whose job is to deploy that capital most efficiently. What's wrong?
If you want more growth, higher productivity, and you want that to be spread across the entire geography of the United States, the only entity that has deep enough pockets and the potential to deploy enough resources to make a difference is the federal government.
But hold on. Government picking winners? How about the failed solar panel firm Solyndra, which got half-a-billion dollars in federal loan guarantees?
Government invests in a company, company goes kaput, it's as if we burned the dollars.
That was less than 2 percent of the money we spent on this clean energy program, and all the rest of the portfolio was paid back. Indeed, all of the solar production in the U.S. — and, obviously, solar production is a key industry for the future — all of it grew out of that program.
And look at the Human Genome Project, says Simon Johnson, into which the federal government pumped some $3 billion.
That industry has created 270,000 jobs today. It pays about $6 billion in taxes per year. It's a win-win. It's a symbiotic relationship.
As it has been for iRobot and Boston's Route 128 science hub.
There are 25 companies founded by ex-iRobot employees in this 128 area. And those companies have made the Boston area the center of the universe for the robot industry.
As anyone who's watched Boston Dynamics videos on YouTube will understand.
iRobot itself perfecting more modest cyborgs these days, a mop, a lawn mower. Look, mom and dad, no hands.
For the "PBS NewsHour," business and economics correspondent Paul Solman.
And you can see if your own city makes the list of potential new technology hubs on the Web site, jump-startingamerica.com.
Watch the Full Episode
Paul Solman has been a business, economics and occasional art correspondent for the PBS NewsHour since 1985.
Support Provided By:
Additional Support Provided By: