Feeble policy responses that do not increase economic growth

The negative impact of globalization of the technology-based economy on domestic industries increased progressively over the four-decade period, 1980-2020, as emerging economies steadily learned how to increase both technological content and production efficiency. This strategy of “engineering innovation” (taking someone else’s technology and improving it) became widespread and devastated low-tech and even moderate-tech domestic industries in the U.S. economy. Conceptually, the growth policy problem has been the “black box” model, which has not recognized the multiple types of public-good content in the technology-based economy and hence the need for an expanded government role to help industry develop and commercialize technologies, even in the early phases of a technology’s development. In summary, the black-box model was based on the erroneous view that technology has little or no public-good content. Consequently, the results of all phases of R&D beyond basic research were viewed as pure “private goods,” implying no substantive public role.