"When government industrial policy gets it wrong, the result is catastrophic. When decentralization gets it wrong, the losses are paid by entrepreneurs, not all of society. To say we live in perplexing times is an understatement. Everything seems to be shifting beneath our feet, often with seemingly little thought. One example is the move to change how the federal government supports research."
"In the waning days of World War II, President Roosevelt asked Vannevar Bush what the country should do with the impressive federal R&D system that helped win the war. For the first time, Washington had become a driver in research. Bush's reply came in his opus: Science, the Endless Frontier. He argued that the government should assume the non-traditional role of supporting basic research as well as continuing to fund mission research to increase human knowledge while strengthening the economy."
"That led to a flourishing of science but little was being translated into the economy because resulting inventions were made freely available. Basic research is where breakthrough technologies are most likely to occur but they require significant amounts of money and time from the private sector to turn them into useful products and that wasn't being done."
"It wasn't until the passage of the Bayh-Dole Act in 1980, which injected the incentives of patent ownership into the system, that the situation changed. And the result was dramatic. At the time it looked like the Japanese model of government-led industrial policy was the wave of the future, as the bureaucracy and a few chosen companies worked together to dominate key industry sectors. Many Beltway pundits urged the United States to adopt that model."
Government industrial policy failures can be catastrophic, while decentralization failures impose losses on entrepreneurs rather than all of society. After World War II, federal R&D expanded under a model that supported basic and mission research to increase knowledge and strengthen the economy. Basic research produced breakthroughs but often lacked private-sector investment to convert inventions into products because results were freely available. The Bayh-Dole Act of 1980 changed incentives by allowing patent ownership tied to federally funded research. Instead of centralizing industrial policy in Washington with selected firms, the approach decentralized technology ownership and management to those conducting the research, improving translation into economic outcomes.
Read at IPWatchdog.com | Patents & Intellectual Property Law
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