The U.S. needs legal reforms to maintain and improve its “ecology of innovation” says the former president of the National Academy of Engineering William A. Wulf. In this New York Times story Wulf inveighs that innovation is not just a product of education and R&D spending but that:
An innovation economy depends on intellectual property law, tax codes, patent procedures, export controls, immigration regulations and factors making up what he calls “the ecology of innovation.”
Amen to that. Note that the items listed are legal matters. I would add securities regulation and of course contract law to the list.
In my business law courses I constantly try to show how the legal environment makes possible modern business practices, not just burdens and constrains business, as some students (and many business people) initially perceive.
Sometimes people think innovation is about “culture.” Well, yeah. But you have to include legal infrastructure in your definition of culture for this explanation to be sufficient. Otherwise, how do you explain the wild success of immigrant entrepreneurs from risk-averse, less innovative “cultures” becoming leaders in Silicon Valley?
Immediately after the bit quoted above, the Times notes:
Unfortunately, [Wulf] argues, in the United States too many of these components are unworkable, irrelevant, inadequate, outdated or “fundamentally broken.”
Wulf has it right—law matters, and reform is needed. However, I might put it as, “in the United States these legal components have worked brilliantly to produce the world’s leading innovation-driven economy, but now as always we must reevaluate things in light of changing circumstances in order to keep our lead and make things even better.”
Wulf has been a leader on that front. Bravo.