The Seventeen Solutions by Ralph Nader

Author:Ralph Nader
Language: eng
Format: epub
ISBN: 978-0-06-20854-8
Publisher: HarperCollins

9

Use Government Procurement to Spur Innovation

According to corporate boosters, and more than a few presidential candidates, private business is the only real source of technological innovation. All we have to do is get government out of the way, and business will unleash its creative zeal. What these business mouthpieces don’t want you to know, however, is that government spending also promotes innovation in a wide variety of ways. Since World War II, the government has financed at least half the nation’s R&D budget, generating advances in aviation, containerization, electronics, pharmaceuticals, biotechnology, computers and the internet, medical devices, consumer safety, environmental technologies, and countless other applications.

The government is also a significant force for innovation because of its immense market power as a purchaser. In 2010, the U.S. Federal Government spent roughly $528 billion on goods and services. That represents over 3.5 percent of GDP spent on everything from office equipment, cars, drugs, food, energy, furniture, appliances, paper, building materials, and road pavement every year.

Yet our government uses too little of its immense market power to stimulate change.

For example, on both technological and economic grounds, the government has more than enough power to develop robust new markets for alternative energy. But government agencies, no doubt cowed by opposition from fossil fuel lobbyists, have failed to develop and deploy any significant new technology and failed to promote the growth of renewable energy by pioneering its use in federal projects. The General Services Administration (GSA), the Department of Defense, and the Obama White House have taken some steps forward on this issue but haven’t gone nearly far enough. The government’s overall shortfall in this regard has made our energy system less resilient and more vulnerable than it could be.

Government purchases can instantly create a large market for some new technology or service. This, in turn, improves producers’ and vendors’ economies of scale, lowering their unit costs and their risk in investing in new technology and resources. The government, in other words, can make it possible for producers to invest in innovations before a consumer market emerges—helping these new ideas and products reach the market more quickly and affordably, and thus making them available to a wider consumer public.

By mandating standards more advanced than those of the usual consumer products, government can stimulate innovation even more aggressively. When officials spend taxpayer money to buy computers, batteries, paper, or thousands of other products, they don’t have to accept whatever choices an industry happens to offer. Instead, they can encourage that industry to produce more imaginatively, more efficiently, more responsibly. The government’s massive pool of organized purchasing power can jump-start the adoption of new or dormant products and technologies to promote higher productivity, greater human safety, a cleaner environment, and taxpayer savings. This kind of aggressive procurement cannot take the place of government safety and quality regulations, but it can produce some of the same results—and often more quickly.

Government purchasing has long been a force for stimulating technological advances. Standardized clothing sizes were first introduced during the

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