Milken Institute/Google -- Innovation

• Event Context: The discussion is the maiden restart of "DC Talks" co-hosted by Google and the Milken Institute, featuring a panel on innovation and the "ideas economy."
• Panelists:
  • Anish Chopra: Former U.S. Chief Technology Officer (CTO) and advocate for open innovation.
  • Vijay Vaitheeswaran: Senior Economist and Journalist at The Economist, author of Deep Read and Speed.
  • Tony Prado: Founder of Handling Play Strategies and former Deputy Press Secretary in the Bush administration.
• Moderator: Brad Belk of the Milken Institute.

Government Roles in Innovation

• Infrastructure Investment: Government acts best by investing in traditional infrastructure (roads, railways) and expanding the definition to include R&D and digital infrastructure (e.g., the National Wireless Initiative for mobile broadband).
• Setting Rules: Government serves as an "impatient convener" to establish agile, voluntary enforceable codes of conduct, such as the international internet policy framework endorsed by 34 OECD countries.
• Open Innovation Strategy: Government releases or collects previously unavailable data and engages in standard-setting to lower barriers to entry for solving challenges in health, energy, and education.
• Prizes and Competitions: Administration utilizes prizes and challenges as complementary tools to traditional grants, using modest capital to pay for specific outcomes that inspire innovation.

Policy Shifts and Case Studies

• Health IT Standards: In contrast to inherited loan guarantee programs, the Health IT program set high, clear standards (Meaningful Use) rather than selecting a "chosen few," resulting in over 600 vendors (many under 50 employees) and a 46% increase in health IT investment.
• Solar Energy Barriers: The "Race to the Rooftop" initiative addressed specific permitting bottlenecks (a billion-dollar hidden tax) by incentivizing localities to streamline processes, rather than picking a specific technology winner.
• Energy Efficiency Data: The "Green Button" initiative standardized data formats for utility customer communication, enabling third-party applications through a private-sector-led convening role.
• Education Reform: The administration proposed an "ARPA for Education," noting K-12 spending exceeds $700 billion while R&D investment is less than 0.5% of the market.
• Summer Camp Initiative: A public-private partnership (Summer Q-A-M-P) offers hands-on Quality Assurance training to underprivileged youth, serving as an on-ramp to IT careers without requiring a four-year degree.

Critical Perspectives and Economic Philosophy

• Market vs. Government Intervention: Vijay Vaitheeswaran argues that while government should fix misaligned incentives (e.g., carbon taxes), it should generally avoid picking specific technologies; he advocates for technology-neutral reverse auctions to minimize taxpayer subsidies.
• Bottom-Up Innovation: Vaitheeswaran contends that "moonshot" top-down models fail to solve complex problems like climate change, which require bottom-up experimentation, tolerance for failure, and market connections.
• Innovation Definition: Panelists distinguish innovation from invention, defining it as "fresh thinking that creates value" (output) rather than just patents or PhDs (input).
• Manufacturing and Design: Anish Chopra cites the "Team Edison II" victory in the X Prize as evidence that local manufacturing capacity is vital for rapid iteration and design, which is lost in distant global supply chains.
• New Manufacturing Paradigm: The rise of 3D printing and computer-aided design allows for "democratized manufacturing" (e.g., Square's card reader made at TechShop), shifting the competitive advantage from low-cost labor to ideas and skilled tool usage.

Future Outlook and Systemic Challenges

• Converging Technologies: Vijay Vaitheeswaran predicts future breakthroughs will occur at the intersection of bio, info, and nano technologies, rather than in isolated silos.
• Exponential Growth: The next 10–30 years will see convergence of genomics, synthetic biology, and big data to solve "wicked problems" like clean energy and climate change.
• Productivity and Job Growth: McKinsey data indicates that job growth is driven by productivity growth in lagging sectors (health, energy, education) rather than just inventing "the next big thing."
• Learning Systems: The current education system is described as a "slow learning system" that needs to adopt faster feedback loops and experimentation models similar to the semiconductor industry.
• Intangible Assets: Panelists call for accounting standards that recognize intangible assets (IP, human capital, brand) on balance sheets and GDP calculations to reflect the true value of the knowledge economy.

Audience Interaction Highlights

• Education Data: To combat the "one-size-fits-all" school model, the Open Education Data Initiative aims to provide parents with "GPS-like" tracking of student progress via Common Core standards and liberated assessment data.
• Teacher Empowerment: Tools like the "Learning Registry" allow teachers to share and remix lesson plans (e.g., using Mars rover videos for teaching gravity), creating a competitive market for educational content.
• Khan Academy Integration: Experiments in California schools show teachers using video learning platforms to free up classroom time for one-on-one peer instruction and advanced problem solving.
• Startup Ecosystem: The "Startup America" initiative identifies that net new jobs come from companies under five years old; it addresses barriers through crowdfunding rule changes and corporate partnerships (e.g., Google providing $1.2 billion in in-kind resources).
• Fiscal Context: The discussion notes that the 1930s (Great Depression) saw the greatest productivity growth and innovation, suggesting companies should invest in R&D during downturns rather than cut "to the bone."

Forward-Looking Statements and Calls to Action

• Investment Recommendation: Anish Chopra urges maintaining investment in innovation drivers (infrastructure, R&D, education) even during fiscal austerity, citing historical data on innovation during economic hits.
• Tolerance for Failure: Vijay Vaitheeswaran advocates for building "learning systems" that reward failure gracefully (e.g., W.L. Gore's "kill project" parties) to accelerate the metabolism of the global innovation economy.
• Global Workforce: Anish Chopra emphasizes the need for lifelong learning and retraining to address the shortage of skilled workers in the "ideas economy," where 80% of U.S. GDP now relies on brainpower rather than brawn.
• Policy Engagement: The Milken Institute invites participation in their April 29–May 2 innovation summits and the White House Science and Technology advisory webcast regarding bio/info/nano convergence.