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December 20, 2004
Keep Government Out of Innovation
The Council on Competitiveness has released recommendations from its research project, the National Innovation Initiative (NII). The premise of this group is that America can't compete in the global marketplace without a governmental plan. I disagree.
Here is a summary of the proposals of this study as reported by The National Dialogue on Entrepreneurship along with my thoughts:
* Build 10 regional Innovation Hot Spots in the next five years
Governments should not be in the business of picking economic winners. Rather than spending funding on pork projects like this, cut taxes and focus efforts on cutting needless red-tape that gets in the way of entrepreneurial development.
* Designate a lead Federal agency and an inter-agency council to coordinate economic development programs around innovation-led growth.
Whenever I hear of a government agency wanting to "coordinate" anything I am reminded of the first words uttered by Frosty the Snowman, "Let's Run!" Coordination leads to control. Control leads to bureaucracy. We don't need governmental officials helping entrepreneurs find opportunities in the marketplace.
* Increase the availability of early-state risk capital with tax incentives, expanded angel networks and new seed capital funds.
Cut taxes for everyone and there will be even more money available for all entrepreneurs.
Posted December 20, 2004 07:13 AM
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Comments
It is hard to believe that the government, an agency known for its ability of mass confirmative, would create an “innovation” committee.
However its findings are no real surprise. I am always surprised when a government body attempts to assist or direct a private industry. The last time I checked the government wasn’t in the money making business.
I might not always agree with you Dr. Cornwall but I do on this subject. The best thing for innovation is by cutting taxes and red-tape.
Merry Christmas,
Jim Greene
Posted by: Jim Greene at December 20, 2004 01:45 PM
Government attempts at "driving innovation" will almost always focus on what is fashionable at the moment. I know one small manufacturer who tried to get assistance from a country economic development program--this was circa 1999 and they weren't interested in anything but dot-coms and such.
If there is such a shortage of early-stage risk capital, why have most VC firms taken several years to invest the money from their last round of investment, or in some cases even returned money to investors?
Government does have a role in innovation: the funding of true basic research. Ideas like those suggested by the "National Dialogue" are just silly.
Posted by: David Foster at December 27, 2004 03:50 PM
at Belmont University in Nashville, Tennessee. He consults with a variety of businesses on start-up and growth related issues, and with larger corporations on re-establishing entrepreneurial cultures within their organizations. Dr. Cornwall's current research interests include entrepreneurial finance and entrepreneurial ethics. He has authored or co-authored four books.
