Are Trump's policies stifling American innovation?

S1: Hey , San Diego , it's Andrew Bracken in for Jade Hyneman. Next. What Trump's economic policies mean for the future of American innovation and research. This is KPBS Midday Edition. Connecting our communities through conversation. As the Trump administration rolls out policy after policy. World renowned academics are sounding alarms. One of those academics is a regular on our show. His name is David Victor. He's a professor of innovation and public policy at UC San Diego School of Global Policy and Strategy. Professor Victor spoke with host Jade Heinemann on Friday. Here's that interview.

S2: My first question here is , you know , your recent piece in the magazine , Foreign Affairs , warns about how Trump's policies could impact American innovation. Walk me through your central argument there. Yeah.

S3: Yeah. The core argument is that the long term source of growth and strength in the United States is innovation. That's what causes the economy fundamentally to grow. Our military is based on this and so on. And the American innovation system is the world's best. It's just extraordinary. And it really hinges on three things. One is federal support for research and development at universities and other places. The second is people access to the best people in the world. They come to our universities , they learn , they stay here. Many of them , they create companies. And then the third is a is a big market where we can sell our products and make our products globally competitive and across all three fronts. The new Trump administration policies are really causing a lot of a lot of trouble. Some of these are bipartisan problems. The anti-foreigner bias has been around for for the Democrats and for the Republicans alike. But but the assault on science that's going on with the Trump administration right now is really unprecedented and deeply harmful.

S2:

S3: It can just add a lot of people , it can add capital , it can extract natural resources , but those all become more valuable over time. And so the way an economy , a mature economy grows is it finds ways to do more of what we want from the economy , welfare output , goods and services with fewer inputs , people , capital and so on. And innovation allows us to to do that. And so that's why it's so important for the long term health of the economy.

S2:

S3: And in fact , it's getting harder to keep track of them because the chaos and the policy environment makes it very hard for people to make long term plans. Long term investments and innovation is a patient business. It requires confidence and patience in a long term , long term perspective. One of them clearly is the assault on funding for science. You've seen Harvard in the crosshairs , but here at UC San Diego , we've also experienced this with cutbacks and funding for from the National Institutes of Health and from NSF. A lot of stuff is tied up in the courts , but it's just chaotic , ambiguous directions for for funding and then a slowdown just in paying grants , even grants that have been awarded. So those are all policies that have had a big impact. The other thing that I'm watching very closely is immigration. We've as a nation , have become much less welcoming of foreigners. We're seeing this on a regular basis with with efforts to get visas for foreign students , foreign workers of various types. In particular , it's targeted China and the US. Chinese relationship is really pivotal here because China is an innovation powerhouse , just like we are an innovation powerhouse. We benefit from closer connections between the two countries. We have to manage the politics of that. But the United States innovation system has become enormously dependent upon the import of Chinese brains , if you like , in the form of students and and and young scientists. And cutting that off quickly will will mostly harm us.

S2:

S3: Federal government , private sector philanthropy , the United States. Right now , the federal picture is cloudy at best. Private sector still has been pretty strong , and philanthropy is playing a pretty significant role , so support is a key part of it. Sufficient openness to migration , or at least migration for purposes of studying and doing and doing science. Many of our competitors , Australia and Canada , for example , even the Europeans are doing better on that front. And then reasonably open markets , lower tariffs , fewer restrictions on foreign ownership. And and it's in the it's in the market area where we have a tremendous amount of chaos right now because people just don't know what rules apply. They don't know whether their foreign goods and services are going to be taxed to the border , a tariff. We don't know whether the agreements that we've made , for example , between the United States and Mexico and Canada , whether those agreements will even hold. And they've turned this turned North America into just an innovation powerhouse and also a vibrant , interconnected economy.

S2: Well , you know , earlier you mentioned China , and I want to talk about the the international implications of where we are right now , because you argue that that China will reap the benefits of America's loss of innovation.

S3: And other countries , meanwhile , are moving forward. So before we talk about China , I should just note that Canada is looking at various ways of attracting U.S. talent that would otherwise be here. I hear almost on a daily basis from scientists in Europe who are trying to recruit American scientists. Japan will do well. Australia. So lots of countries are watching this , but it's the Chinese response that's really been most pivotal. China continues to expand its investment in R&D. This year will probably be the first year where total Chinese spending on research and development will be bigger than the US spending. Now , many more people in China , but that's a clear area of direction. And then the Chinese economy and the innovation system aren't what we think of as our parents generation. It's a totally different economy. It's much more productive. Some of the world's top engineering programs are in China. Many of the sciences as well. And so Chinese scientists have options to stay in China. Go back to China in a way that they didn't a generation ago. And , you know , China has flaws , significant flaws. But across the board they're more or less doing most of the right things.

S2: You know , having global dominance in the digital economy has been a priority for the US. And that dominance hinges on the race between China and America to manufacture and design semiconductor chips. What's interesting is that while we have been in this race for years , the Trump administration , both this term and last term , has promised to get more manufacturing jobs back to the U.S. and even coal mining jobs. I was I remember interviewing Republican Darrell Issa back in 2018 , and his focus was to get programs in high schools that could teach students the manual labor of manufacturing.

S3: Trump , 1.0 and 2.0 have had a big effort to onshore manufacturing. The Biden administration did as well. They did it in a different way around clean tech and some other priorities. But but there was an active industrial policy under the Biden administration. There's been a big effort to try and bring more manufacturing back to the US and to to a little bit of to a little extent , it's a good idea for the US to have a greater manufacturing capability. You know , we want to be able to make some of the things that we use. But the big picture here is that manufacturing is a tiny part of the American economy. Services are a much bigger part. That's our comparative advantage. And so if we're embedded in a smart way in the global economy , we can take advantage of the fact that other countries are better at manufacturing lower costs while we're better at services , and develop those relationships through trade. And that's what we've been doing until fairly recently , and that's for the long term. Unraveling that system is the really big risk. Mm.

S2: Mm.

S3: So innovation and the development of new lines of business companies , technologies , they all are require patience in a long term perspective. And when you're when you're in a chaotic environment you don't do that. So something like half of all the investments that have been planned under the Inflation Reduction Act , the clean tech promotion program under the Biden administration , although a lot of the laws are still in place and the funding mechanisms are still in place , something like half of those investments , maybe more , are just on hold because of the chaos. So that's the big problem with the ideological explosion in American politics. The other thing that I think is is worrisome is there used to be a bipartisan consensus around the value of research and development. So when an administration would cut out funding for research and development in the president's budget , you know , kind of show that they were trying to get the budget under control. Republicans and Democrats would get together. They put it back in. That happened in the Reagan administration. Big cuts proposed. Basically , the money put back in. And because of that bipartisan support we've seen over time federal funding for research and development , roughly steady but reliable. That was true even in the first Trump administration. One of the big changes now evident is we just don't have as much support on the Republican or the Democratic side , but especially the Republican side for that long term investment in America.

S2:

S3: We're signaling that an area that was a traditional , enormous strength of America , which is where people could come for the best training and the best opportunities to build new businesses that's now in play in the United States. And other countries are watching this and they're responding. We talked about China the same. Something similar is happening in Europe. There's a lot of structural reforms needed in Europe. But the pressure in Europe to engage in those structural reforms is now much greater , partly because the opportunity is larger , because the United States is is tripping itself.

S2: And , you know , Professor Victor , you work at a prominent research institution.

S3: It's affected our own research. It's affected my colleagues. We've had colleagues who aren't sure whether they can pay lab technicians. And so they've had to lay them off and then rehire them because of this chaos. I have colleagues at other universities who tell stories about , you know , lab animals , for example , being used in research on new drugs and research on occupational safety. There aren't the people around to feed the animals. And so they've been euthanized. To me , what is most concerning is that the effect of all this is being felt disproportionately by young scientists , PhD students , postdocs , early on tenured professors. And so there's a whole. The longer this continues , the greater the risk that there's going to be a whole cohort of young scientists who move , who are basically missing from the system because they came here , or they thought about coming here to be part of the world's best innovation system , and it let them down.

S2:

S3: All I can do is try and put the pieces together. Some of the logic here is budget cutting. The obsession with the renewal of the tax cuts and other things is so great that they're willing to cut budgets , you know , almost anywhere you see that in the claims wild mostly that have been made by Doe. So that's that's part of it. Part of it is this project 2025 obsession with reducing the role of government in life and the size of government. And , you know , government needs to always be attentive to how it spends money and make sure it spends money wisely. But in research and development , government's actually done pretty good job. And then some of it is , is the war on these institutions , these elite institutions that are the that are the backbone of the American innovation system. And frankly , we need to do a better job of explaining why university based and other research is so important to the long term health of the economy. But we also need to help the public understand that that this is not just some kind of benefits that we're extracting from the government. These research contracts are contributions to how the American system functions over the long term , and they generate massive public benefits.

S2: You know , you write that it's not too late to save the U.S. innovation system.

S3: One of the things we have to do is rebuild more bipartisan support for research and innovation , so that we have more Democrats and Republicans. And frankly , Republicans need to do more work here in the Democrats. But both parties need to get their act together to be more supportive of this in federal funding priorities. We also need to develop , long overdue , to develop a coherent strategy around immigration and a particular about highly skilled foreign workers , so that we can send a clear signal to workers that America is open for business , in particular , open for for innovation. And the last thing is we have to stabilize our our rules around foreign trade and investment , the tariff chaos , and in particular , the chaos around limits on foreign ownership and foreign intellectual property , what are called foreign entities of concern. It's kind of Orwellian concept that's creating a lot of uncertainty for foreign investors who have some of the best tech. So it makes them wary about coming to the US. It also makes it harder for the US to go overseas , and all of that is reducing our competitiveness.

S2:

S3: Normally I'm a very optimistic person. I'm not optimistic about about the short term. There has been some discipline put on the Trump administration by by the markets in particular , fears around around rising public debt , but also fears about our loss of innovation system. But we haven't we haven't yet seen those turn into concrete policies that really restore the ship. And so I suspect we may be in for a few very , very difficult years when the cost of all this to the country will become more apparent. And also , I hope , the ability to articulate why why the innovation system is so central to our future , not just economic health , but our military power and our ability to project power and defend the country and create order. Why it's so important.

S2: I've been speaking with David Victor. He's a professor of innovation and public policy at UC San Diego School of Global Policy and Strategy. His latest piece in foreign affairs is called Trump is Killing American Innovation. Professor Victor , thanks so much for joining us as always.

S3: Jade , it's always great to be with you.

S1: That's our show for today. I'm Andrew Bracken. KPBS Midday Edition airs on KPBS FM weekdays at noon , again at 8 p.m.. You can find past episodes at KPBS or wherever you listen. Thanks again for listening. Have a great day.