Almost all transformative new technologies of the past few decades — nuclear energy, advanced jet aircraft, integrated circuits, computer networks — rose the same way. They were developed in the United States and seeded by the federal government, typically through defense spending.

This “weaponize to monetize” model served the U.S. well. In addition to enabling the world’s most powerful, technologically advanced military, it funded basic research in universities and applied research in corporations, making technology a substantial component of America’s exports. In 1989, the first year for which there are data, high tech — meaning products that require intense research and development — made up a third of U.S. exports, worth $77 billion. The U.S. was the global leader, and it retained its lead through the boom, bust and boom-again years of the Internet.

Then something changed.

The next major technology revolution after the Internet itself has been the “Internet of Things,” a ubiquitous ad hoc open network of sensors for information systems, which I helped to conceptualize and develop (and name) in the late 1990s. Like the Internet or the integrated circuit, the Internet of Things is really a fundamental infrastructure that enables new technologies and applications, and, like them, it will transform every part of the global economy.

Early Internet of Things development more or less followed the standard U.S. model. My colleagues and I, for example, did most of our work at the Massachusetts Institute of Technology with funding from the Department of Defense, as well as forward-thinking U.S. corporations like Wal-Mart, Procter & Gamble and Coca-Cola.

But as other governments began competing aggressively in the Internet of Things economy, America loosened its grip. This was partly because of two wars, which focused the Pentagon on immediate combat needs, and a recession, which reduced government spending. But there was a bigger problem lurking behind those emergencies — one that remains today, long after the wars and recession have ended: The U.S. government doesn’t invest in basic science and visionary technology anymore. Or, to be more precise, it does not invest like it used to.

Last year, federal investment in research and development sank to 0.69 percent of GDP — a level not seen since 1958. That year, not coincidentally, was the year President Dwight Eisenhower authorized the creation of the Advanced Research Projects Agency to, as The New York Times described it at the time, “explore and develop any novel idea, regardless of whether it seems practical at the beginning.” (It’s now called DARPA, for Defense Advanced Research Projects Agency.) In 1959, because of ARPA and similar initiatives, the U.S. government’s R&D spending doubled to more than 1 percent of GDP. In 1962, the Apollo space program followed. At Apollo’s peak, the U.S. government was investing more than 2 percent of GDP on R&D — over three times today’s amount.

ARPA and Apollo were visionary government programs. There are visionary government programs for the Internet of Things, too, but they are almost everywhere but the United States — in China, the European Union, Korea, India and Singapore, for example. Over the past 10 years, heads of government from all over the world have shared their visions for the Internet of Things. China’s sixth premier, Wen Jiabao, called it the “Wisdom of the Earth”; India’s Narendra Modi declared it the path to “zero defect, zero effect” manufacturing; and Britain’s David Cameron described it as “a huge transformative development … the brink of a new industrial revolution.” As far as I know, neither George W. Bush nor Barack Obama, the U.S. presidents in power during this period, have ever mentioned it.

And, while they were not mentioning it, some key indicators began swinging away from the U.S. In 2005, China’s high-tech exports exceeded America’s for the first time. In 2009, just after Wen Jiabao spoke about the Internet of Things, Germany’s high-tech exports exceeded America’s as well. Today, Germany produces five times more high tech per capita than the United States. Singapore and Korea’s high-tech exporters are also far more productive than America’s and, according to the most recent data, are close to pushing the U.S. down to fifth place in the world’s high-tech economy. And, as the most recent data are for 2013, that may have happened already.

This decline will surprise many Americans, including many American policymakers and pundits, who assume U.S. leadership simply transfers from one tech revolution to the next. After all, that next revolution, the Internet of Things, was born in America, so perhaps it seems natural that America will lead. Many U.S. commentators spin a myth that America is No. 1 in high tech, then extend it to claims that Europe is lagging because of excessive government regulation, and hints that Asians are not innovators and entrepreneurs, but mere imitators with cheap labor. This is jingoistic nonsense that could not be more wrong. Not only does Germany, a leader of the European Union, lead the U.S. in high tech, but EU member states fund CERN, the European Organization for Nuclear Research, which invented the World Wide Web and built the Large Hadron Collider, likely to be a source of several centuries of high-tech innovation. (U.S. government intervention killed America’s equivalent particle physics program, the Superconducting Super Collider, in 1993 — an early symptom of declining federal investment in basic research.)

Asia, the alleged imitator, is anything but. Apple’s iPhone, for example, so often held up as the epitome of American innovation, looked a lot like a Korean phone, the LG KE850, which was revealed and released before Apple’s product. Most of the technology in the iPhone was invented in, and is exported by, Asian countries.

It’s easy to look at global tech giants like Apple, Facebook and Google and assume the U.S. can’t be slipping behind when these American corporations are doing so well. That gets their lesson wrong. Apple, Facebook and Google are not examples of pure, unfettered, free-market entrepreneurial success but beneficiaries of government policies past, harvesting the last few fruits of Eisenhower and Kennedy-era investments. Apple, for example, found its first opportunities in the personal computer revolution, built on the integrated circuits that emerged from U.S. defense spending on ballistic missiles. (It was the Apollo space program, where NASA’s bulk purchases helped prices fall from thousands of dollars to tens of dollars, that eventually made them cheap enough for mass markets.) The government’s investment in ARPA, which built the Internet, enabled the foundation and development of companies like Google and Facebook.

That does not mean private-sector investment does not matter. Far from it. Technology investment moves through stages, like gears in a gearbox. Private money is the higher gears, most appropriate once there is momentum, and when the technology is less risky and more mature. Government money provides the low gears and is essential to get things moving, when inertia and risk are high and the final destination — a profitable mass-market product — is far in the distance. In short, high-tech economies need both public and private money in order to thrive. Public money buys a deep foundation of basic science and technology that private money builds on for decades.

That’s why the U.S. high-tech sector did so well in the late 20th century and is faltering now. It’s been 25 years since the federal government started reducing its investment in R&D, and we are starting to see the consequences. Even the exceptions prove the rule. Google is one of the few big American companies that is reasonably well positioned for the Internet of Things, and it has achieved its place the old-fashioned way, by reaping returns from government investment. Google’s self-driving car technology originated in work done at Stanford for government-organized competitions; it acquired a Japanese robotics company that won a DARPA robotics challenge; and it owns another robotics company, Boston Dynamics, that was spun out of MIT and built mainly on contracts with DARPA and the Naval Air Warfare Center Training Systems Division. Another U.S. Internet of Things leader, Tesla Motors, a pioneer in networked electric cars, benefited from a half-billion-dollar Bush-era loan from the Department of Energy, as well as government rebates to its customers.

But these government investments are piecemeal and only incidentally related to the Internet of Things. The DOD wants autonomous robots and vehicles; the DOE wants electric cars. Neither is thinking much about the underlying Internet of Things vision. And where America sees only patches of opportunity, foreign governments often see the big picture. I have met with many government officials, both foreign and domestic, over the past 10 years, and the foreigners make a starkly different impression. Our foreign rivals are hungry, humble and in a hurry; our national representatives seem complacent and often believe their only role is to publish a report and then stand aside.

PUBLICATION AND ABDICATION is not what America needs from its technology policymakers. That will only accelerate the decline of our high-tech economy. We need the opposite, and we need it urgently: a new federal program that invests specifically and speculatively in advanced, visionary Internet of Things technologies and the universities and companies that develop them. There are great precedents: Apollo is one; ARPA’s original effort to build the Internet and DARPA’s grand challenges are others. There is also the Strategic Environmental Research and Development Program, or SERDP, one of the surviving bright spots of federal technology policy. Authorized by Congress in 1990 as a joint activity between the DOD, the EPA and the DOE to develop clean energy, SERDP and a related technology transfer program (called ESTCP, for Environmental Technology Certification Program) have helped drive U.S. development and adoption of renewable energy production and energy efficiency technology, even while Congress has been ambivalent about climate change.

The government could create a new program that replicates one of these models — say, an ARPA-IOT, focused on funding advanced Internet of Things research programs, or a NASA-based, Apollo-style program for the Internet of Things. (NASA is about to open a small Internet of Things lab at Johnson Space Center in Houston, so such a program already has a potential home.) Or it could expand an existing program with new money, for example by giving SERDP a more general technology mandate and adding an Internet of Things Technology Certificat ion Program.

The Internet of Things is bringing change to the world and a major choice to America. It will either be the challenge we forfeit, forever yielding technology leadership to China, Germany, South Korea and the others, or it will be the bugle that calls us back to battle and revives the visionary government approach that got us here. The 21st century will be the age of the Internet of Things. It's up to us whether it's also the moment America returns to the forefront of the global high-tech economy.

Kevin Ashton, the co-founder and former executive director of the MIT Auto-ID Center, coined the term “Internet of Things.” His book “How to Fly a Horse: The Secret History of Creation, Invention, and Discovery” was published by Doubleday earlier this year.



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