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The Anti-Innovators

How Special Interests Undermine Entrepreneurship

A series of tubes: programming a U.S. Army computer in Philadelphia, 1946 APIC / Getty Images

For much of the last century, the United States led the world in technological innovation—a position it owed in part to well-designed procurement programs at the Defense Department and NASA. During the 1940s, for example, the Pentagon funded the construction of the first general-purpose computer, designed initially to calculate artillery-firing tables for the U.S. Army. Two decades later, it developed the data communications network known as the ARPANET, a precursor to the Internet. Yet not since the 1980s have government contracts helped generate any major new technologies, despite large increases in funding for defense-related R & D. One major culprit was a shift to procurement efforts that benefit traditional defense contractors while shutting out start-ups.

Bad procurement policy is just one reason the United States has begun to lose its technological edge. Indeed, the multibillion-dollar valuations in Silicon Valley have obscured underlying problems in the way the United States

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