This piece originally appeared in American Compass's The Commons.
On October 8, 2005, an assortment of scientists, CEOs, and mechanics crowded in the Nevada desert for the hottest race of the season. Fifteen teams and their custom-built cars hurtled towards the $2 million prize and champion title. As the first car passed the finish line, there was not a driver in sight. They had created a fully self-driving car.
The grand challenge, set out by the Defense Advanced Research Projects Agency (DARPA), started as a government program for developing American autonomous vehicles. The winning team morphed into Waymo, which was later acquired by Google, serving as another catalyst for what is now a multi-hundred billion dollar industry. And despite the modern self-driving car being lauded as a triumph of private enterprise, it continues to be one of many success stories of state-induced technological innovation.
Today, only one in four people believe that the federal government’s role in science is essential. This couldn’t have been more different in mid-twentieth century America, where frontier technological exploration was near-synonymous with state-funded research. This period, sometimes dubbed the “Endless Frontier,” marked the high point of technological statecraft, with federal R&D investments reaching their all-time peak in 1964. Most of today’s major scientific institutions were created during this golden age, including the National Science Foundation to be the central hub for research, NASA to explore the frontiers of space, and DARPA to garrison national security. The National Institutes of Health were expanded to push the limits of biology, and many programs were founded in those years that would later meld into the Department of Energy.
The state’s contributions extended far beyond merely funding research. Federal procurement subsidized early markets for titanium and the transistor before they were commercially profitable. U.S. advanced manufacturing reached its peak in the post-WWII period, aided by tax credits, the Marshall Plan, and the Air Force’s contributions to inventing CNC machines & CAD software. Public-private partnerships of unprecedented scale were initiated, such as NASA’s coordination of 400,000 people, 20,000 organizations, and 4.4% of the federal budget to propel the Apollo missions. This was a culture that understood “progress is a policy choice.”
Where the state of 1964 was associated with ambition and innovation—a place that attracted the likes of Admiral Hyman Rickover and JCR Licklider—the state of 2024 is associated with sclerosis, regulations, and bureaucracy. Today, many have forgotten the state’s potential to advance science and technology.
This amnesia could not have come at a worse time. After decades of assisting the Chinese Communist Party’s (CCP) ascent, the United States now faces its strongest geopolitical competitor ever—which makes securing technological leadership existential to safeguarding U.S. security and economic interests. To make matters worse, the U.S. must also overcome decades of de-industrialization that prevent this country from manufacturing production-scale semiconductors, munitions, ships—and everything in between. This is a far cry for a nation that once boasted the greatest industrial capacity in the history of the world.
Today’s technological ecosystem is far more globalized and complex, with private sector entrepreneurship and capital driving much of the development of emerging technologies. As a result, some claim the state is no longer needed, that state interventions are “socialist,” and that technological progress is assured in the hands of free markets. Industrial policy critics point to legitimate concerns. Political incentives can introduce systemic biases to decision-making processes, over-optimistic forecasts can induce waste, and bureaucratic hurdles can stifle implementation.
Nevertheless, historical evidence proves these failure modes are far from preordained. Democracies like Israel, South Korea, Taiwan, and Japan have shown for decades that government levers can be an economic force-multiplier for capitalism, if done right. The U.S. understands this too, having provided decades-long oil and farm subsidies; we just don’t like to admit it under free market fundamentalism. In the 20th century, America threw its intellectual capacity and industrial might at the Manhattan Project and the Apollo missions—decisively ending WWII and the Space Race.
In recent years, an anti-establishment, bipartisan coalition has emerged in Washington, united in its belief that to meet the economic and security challenges of our times, we must unleash the techno-industrial state. This coalition has passed immensely crucial legislation already, from the recent CHIPS and Science and ADVANCE Acts to creating new institutions for funding and procuring advanced technology, including the National Science Foundation’s (NSF) $880 million applied research directorate, the Department of Defense’s (DOD) $1B Defense Innovation Unit, and the Department of Health and Human Services’s $1.5 billion ARPA-H.
While these new initiatives are great early signs, we have only scratched the tip of the policy iceberg. Unleashing a true techno-industrial state requires more than mere billion-dollar bills—it demands state capacity reforms to fix underlying process bottlenecks, institutional sclerosis, and resource mismanagement—all the things industrial policy critics mistakenly believe are intrinsic features, instead of fixable bugs. These refinements increase the effectiveness of each taxpayer dollar while not requiring a single cent of new spending. In layman’s terms: two birds, one stone.
For instance, the Department of Defense’s procurement process is infamously difficult and expensive to navigate, with notable examples of startups having to sue the government to consider their solutions over worse, more expensive options. The DOD can purchase better capabilities at lower costs by simply making it easier to work with new entrants, from updating commercial data rights to promoting rapid technology transition pathways (it has made major strides in recent years). Similar progress has been made by the NSF, which recognizes the limitations of its traditional grantmaking process and thus partnered with the Institute for Progress in 2023 to explore alternative funding mechanisms such as milestone payments, prize competitions, and grant lotteries.
Other pillars for techno-industrial policy should include:
- Targeted investment for critical industries, such as U.S. shipbuilding, which accounts for 0.13% of global capacity compared to China’s 47%.
- Removing legal barriers that hinder development, such as reforming the National Environmental Protection Act, which contrary to the name, has destroyed countless clean energy projects and even prevents proactive mitigation of forest fires.
- Developing talent and workforce, such as reversing our record declines in basic math, fixing the high-skilled immigration backlog, and rethinking non-degree technical pathways—starting in high school.
At the same time, we must take care to not overextend ourselves. We must resist the urge to copy the techno-industrial model of East Asian countries, which can perform long-term planning due to the advantage of centralized authority. We must be wary about inflating our historic debt even more.
Instead, the U.S. approach should lean into our unique strengths. We are blessed with the world’s best and brightest talent and most dynamic capital markets, owing largely to unparalleled political freedom. A U.S. techno-industrial state should seek to amplify these forces, not through state-owned enterprises or five-year plans, but by unburdening scientists and entrepreneurs, developing our workers, and addressing market failures.
A nation’s ability to innovate does not only encompass its ability to invent things, but to make them—profitably (in the long run) and at scale. This requires more than just R&D labs and Silicon Valley startups. Affirming American technological exceptionalism requires winning at all stages of the techno-industrial pipeline, from invention to commercialization, lab to factory, from K-12 education to deregulation, high-skilled immigration to bureaucratic reform. If we take care of these inputs, the score will take care of itself.
