Romney Talks Technology Innovation, Hands-off Government
Branding Obama stimulus endeavors the work of a 'crony capitalist,' GOP frontrunner Mitt Romney outlines innovation strategy to nourish tech startups.
By Kenneth Corbin
RESTON, Va.– Republican presidential hopeful Mitt Romney on Friday pitched a message of hands-off government to a regional technology group here, arguing for an innovation policy that would see lower corporate taxes, fewer regulations and a more generous immigration policy for skilled workers.
Romney’s remarks turned on the axis of the appropriate role of government in the technology sector and the broader economy, foreshadowing a philosophical debate that figures to emerge as a prevailing theme in the general election, regardless of which GOP candidate squares off against President Obama.
Indeed, Romney’s message to the Northern Virginia Technology Council was a vigorous appeal for government restraint, particularly in the tech sector, which Gov. Bob McDonnell called the “heart and soul of Virginia’s economy” in introductory remarks.
As Romney would have it, the government is best-positioned to nourish innovation by creating a business-friendly tax and regulatory environment, and then removing itself from the market.
“You have to have regulators in government who see their job as encouraging innovation and the private sector, as opposed to killing all potential risk,” Romney said, drawing applause from the an audience of around 900.
The former Massachusetts governor positioned his policy on startups and venture capital in stark contrast to the stimulus programs that the Obama administration has advanced. The government has no role as a venture capitalist, Romney argued, citing the now-bankrupt solar-energy firm Solyndra, a recipient of half a billion dollars in stimulus funding, as a cautionary tale.
“When they put $500 million in Solyndra, they thought they were encouraging solar energy in this country. They did the opposite,” he said. “Because when they put $500 million in Solyndra, the other hundred entrepreneurs in America working on solar energy just lost any potential to get capital.”
The reasoning follows that angels and venture capital firms would be unlikely to back other startups in the sector with early-round funding, commonly on the order of a few million dollars, after the feds had thrown a hefty investment behind a single company.
“Government action in an economy stifles innovation when it chooses winners,” Romney said, branding the Obama administration’s backing of individual businesses the work of a “crony capitalist.”
“Government choosing companies to invest in kills the very innovation that’s so essential,” he said.
Romney allowed that the federal government does occupy a proper regulatory role, one generally limited to seeking out and punishing bad actors in an otherwise unfettered marketplace. Additionally, he encouraged initiatives such as the funding of basic laboratory research and development, so long as the feds aren’t picking winners and losers.
Romney also spoke broadly about other initiatives that appealed to an audience of tech leaders, including greater domestic energy production, boosting exports and revamping K-12 schools and universities to better equip graduates with the skills employers are seeking.
So too Romney argued for slashing the corporate tax rate, another measure he sees as essential to nurturing the development of new ventures in tech and other innovative sectors.
“You do have to have a tax structure that encourages people to take risks,” he said. “Because starting a business or taking an innovation and trying to grow it is risky. And so there has to be an incentive to take that risk, because most of the time you will lose.”
That mentality of accepting and even embracing failure, Romney said, is anathema to a risk-averse government, another argument GOP leaders commonly level against bureaucratic intrusion in the private sector.
In broad strokes, Romney’s innovation pitch is about the competitiveness of the United States in the global marketplace, where the nation competes with the more statist economies of Russia and China.
For tech companies, a longstanding policy priority on that front has been a reform of the country’s immigration laws to allow for more highly skilled foreign workers to remain in the country under a special class of visa. When asked about his immigration policy, Romney did not directly address the issue of H-1B visas, but instead spoke generally about the need to pad the domestic workforce with world-class talent, again drawing applause from the audience.
“Our strategy must include welcoming the best and brightest in the world,” he said. “So my view — if someone’s got a PhD, particularly from a U.S. institution of higher learning, or even an accredited foreign institution, staple a green card to it.”
Kenneth Corbin is a Washington, D.C.-based writer who covers government and regulatory issues for CIO.com.