The President’s Policy Changes Are Already Hurting U.S. Innovation

feb17-01-dv562024

President Trump’s action to deliver on his campaign promises has been swift. On the campaign trail he talked about the importance of creating jobs, reforming the corporate tax code, and improving national security. All of these issues are legitimate concerns of the American people and deserve to be the topic of serious policy debate. And now that he’s in office, Trump has every right to deliver on those promises. But another of his promises was to bolster the American economy. The executive orders he has signed in his first two weeks in office (and the manner in which those orders have been issued) already undermine that goal.

This week a European technology business I’ve invested in was due to come to San Francisco, where I live, to launch its first product targeted at the U.S. market. The Bay Area is the heart of innovation in the software industry; coming here to bring their businesses to life is the dream of many tech founders. While the entire European team maintains German citizenship, one of the employees, a German college student, has dual Syrian citizenship. At the last minute, she was informed that she could not enter the U.S. due to the Trump administration’s executive order on immigration. The moment I heard this, my heart sank. Not just for her, but for all the talented people who want to build businesses and drive innovation in the United States.

The next day, I was discussing the differences between software vendors with a major IT buyer. Companies and countries are already wary of relying on U.S. technology firms due to the perceived risks of a government-sanctioned backdoors in a post-Snowden world. After the unexpected reshuffle of power on the National Security Council — political strategist Steve Bannon joining and the Joint Chiefs of Staff and director of national intelligence being dropped — the IT buyer suggested that it might be prudent to forgo the best U.S.-based software vendors to work with foreign competitors that are beyond the reach of U.S. executive orders. Hosting the company’s critical business data and intellectual property in U.S. data centers suddenly became a real concern when opaque executive action might threaten their privacy at any moment. For the first time, I was seeing in the U.S. the same type of concern over losing intellectual property or sensitive financial information that I’ve observed when companies I’ve worked with consider working with Chinese institutions.

These two examples point to the unstable foundation that business leaders have to look forward to over the next four years unless the Trump administration begins treating the country and the economy with far more care.

So far, it seems that the administration has neglected to consider the second-order effects of its actions. For example, legislating to protect our borders is sensible. But the order issued by the Trump administration threatens the well-being of legal American residents, talented students from around the globe, and even people traveling to the U.S. on business. That makes it harder for American companies to recruit the people they need to drive American innovation forward. How can companies convince people to pursue the American dream in the U.S. when that dream may be revoked at any time? Talented people will now rightfully turn to other technology hubs to seek their opportunity. How can our partners be confident in working with us when the rules may change any day?

For years, talent has been the United States’s competitive advantage. The U.S. has attracted the best science and technology talent from around the world — people who combine the skills and vision of artists, architects, engineers, and construction crews, who are capable of dreaming up a beautiful world and working to make it a reality. But when highly skilled recruits worry about their ability to build a life, maintain a livelihood, and avoid religious and ethnic persecution, it becomes vastly more difficult for American companies to recruit uniquely qualified data scientists, mechanical engineers, software professionals, and the like.

The immigration ban is not the Trump administration’s only early decision with the potential to harm the economy. The quick and unexpected change in the composition of the National Security Council also affects American businesses’ ability to continue powering the innovation economy. Foreign investors and customers have trusted American companies not just because we’ve managed to offer competitive products but also because our country has been stable and, for the most part, predictable. America has been a safe bet.

It’s not clear that the administration grasps how abrupt personnel changes in the National Security Council, State Department, Judiciary, and other organizations that aren’t explicitly business focused feel threatening to companies that do business in the United States. This is especially true for companies that rely on data, which is already so hard to protect and which is the lifeblood of the innovation economy. Companies around the world rely on American industries to handle data adeptly and safely — managing data storage, delivering predictive analytics, and so on. Trust is necessary whenever data is involved, and wild swings in policy will inevitably erode trust in the United States.

In the past 10 years companies from around the world have flocked to build innovation centers in U.S. locations like Silicon Valley and New York. If we want to preserve our position at the forefront of the innovation economy, we must act more thoughtfully when creating policy.


Source: HBR