At his speech before the US Chamber of Commerce earlier today, Barack Obama tried to affiliate himself with rich businessmen and also touted his commitment to innovation and entrepreneurship:
As a country, we have a responsibility to encourage American innovation. Companies like yours have always driven the discovery of new ideas and new products. But, as you know, it’s not always profitable in the short-term for you to invest in basic research. That’s why government has traditionally helped invest in this kind of science, planting the seeds that ultimately grew into technologies from computer chips to the internet.
And that’s why we’re making investments today in the next generation of big ideas – in biotechnology, information technology, and clean energy technology. We’re reforming our patent system so innovations can move more quickly to market. Steve Case is heading up a new partnership called Startup America to help entrepreneurs turn new ideas into new businesses and new jobs. And I’ve also proposed a bigger, permanent tax credit for all the research and development your companies do in this country.
Austan Goolsbee explains the Startup America initiative in more detail here:
The problem with this, it seems to me, is that while “I love businessmen” and “I love entrepreneurship and innovation” do go hand-in-hand relative to hard-core Maoism, relative to the range of actual policy options facing the United States they’re totally different things. Egypt, as you’ve probably heard, has been stagnating economically for the past 20 years. But if you went back in time to find a rich Egyptian businessman circa 1990, it’s not like he’s had a bad time of it. On the contrary, the very things that make the Egyptian economy un-innovative, un-competitive, un-entrepreneurial, and un-dynamic make it a comfortable place to be an incumbent businessman.
Innovation is very problematic for existing large firms. The PC was bad for mainframe makers. The Internet’s been bad for newspapers. Cable was bad for television networks. Hulu is bad for cable companies. Ikea’s been bad for wherever it was that recent college graduates used to buy furniture. Business and businessmen are key to economic growth, but the firms that “win the future” are generally the firms that are small or non-existent today. Business groups like the Chamber of Commerce represent the interests of the firms that spent yesterday winning the future. They’ll of course gladly accept subsidies for their own R&D, but they have little objective interest in encouraging innovation and entrepreneurship.