How Superstar Companies Like Apple Are Killing America’s High-Tech Future

by Lynn Parramore on December 09, 2014

Few would argue that America’s fortunes rise and fall on its ability to generate technological innovations — to put bold ideas to work and then bring them to market. William Lazonick, professor of economics at the University of Massachusetts Lowell, and Matt Hopkins, research associate at the Academic-Industry Research Network, have investigated how the technology knowledge base gets created, what has gone wrong in America’s approach to innovation, and why the truth about who invests in the process is poorly understood. In the interview that follows, Lazonick shares findings from two recent papers that are part of the Institute for New Economic Thinking’s project on the “Political Economy of Distribution.” He explains why successful companies like Apple need to make fundamental changes to the way they allocate resources and stop throwing away America’s most valuable asset for future innovation — you.

Lynn Parramore: Let’s talk about where high-quality, low-cost technology products actually come from. Who pays for the research that goes into creating a product like the iPhone?

William Lazonick: The iPhone didn’t just magically appear out of the Apple Campus in Cupertino. Whenever a company produces a technology product, it benefits from an accumulation of knowledge created by huge numbers of people outside the company, many of whom have worked in government-funded projects over the previous decades. Öner Tulum, a researcher at The Academic-Industry Research Network (theAIRnet), has shown how all of the technologies in the iPhone ­– things like touch-screen technology, GPS, and so on — originated with government spending, funded by taxpayer money.