Could innovation grow economy, reverse brain drain?
Published 5:22 pm Monday, December 9, 2019
Technology stocks are on pace for a record year. For the past decade, the tech sector has led the bull market. While the overall S&P 500 has enjoyed a 24 percent increase in 2019, the S&P’s tech sector is on pace for a 41 percent gain this year. Big tech controversies, private data use, tariffs, and free speech debates aside, investors are convinced that consumer demand, creativity, competition, and private capital will continue to feed strong revenue and earnings.
While certain sectors in tech will do better than others and some tech stocks will surely falter, it is clear that tech innovation is going to be a big part of our future, no matter where we live. Why should this matter to Mississippi or Jackson? Because nothing has the potential to dramatically improve our economy like tech innovation.
Last month, a conference on technology innovation was held in Jackson. The conference featured AOL founder and billionaire Steve Case, who shared the stage with Jackson’s own Jim Barksdale. They told some fascinating stories about their decades working together through the AOL’s acquisition of Netscape and the eventual merger with Time Warner. But the most valuable information came from Case. Now a venture capitalist, Case provided some sage advice about where he’s putting his money and why, and he gave Mississippi’s political leadership some very specific direction about the future.
Case recently announced the establishment of Rise of the Rest Seed Fund II, a venture capital fund led by his investment firm, Revolution. This is his second fund designed to support entrepreneurs, start-ups, and early stage tech companies in underserved areas in the United States. Amazon founder Jeff Bezos also backs the fund along with a host of highly successful entrepreneurs, like Spanx founder Sara Blakely. Blakely says, “geography should not be the reason bight ideas don’t come to life.”
Partly due to overvaluation in places like Silicon Valley and partly due to a wide distribution of talents and ideas across America, Case is looking in cities and states outside of the traditional tech incubation zones. According to Case, roughly 85 percent of all venture capital investments are made in three states – California, New York, and Massachusetts.
His message to the leaders in Mississippi was a hopeful one. He chided lawmakers to eschew the normal corporate welfare and incentive hunting competition and instead think about better ways to get sustainable economic growth – like encouraging tech innovation.
He suggested policy makers in Mississippi should think about how to permit tech innovations, rather than how to protect incumbent industries. He spent some time discussing how tech innovation could lead to a faster economic recovery than anything the government could try to orchestrate. He even suggested a robust tech innovation sector in Mississippi could be the antidote to brain drain, causing a “boomerang effect,” bringing talented and ambitious Mississippians back to the Magnolia State for jobs, opportunities, and improved quality of life.
At the Mississippi Center for Public Policy, our job is to recommend evidence-based policy ideas to help our political leaders make prudent decisions. This is why we are beginning an effort to encourage leaders to adopt a “permissionless innovation” policy. We should welcome and encourage creative disruption and work to reap the benefits of technological progress. We must not let existing or new regulatory policy act as a barrier to tech innovation. We recognize that long-term economic growth and human flourishing necessitates the promotion rather than the diminution of technological innovation.
To accomplish this, we ought to seek equally innovative policy solutions, which can jumpstart local entrepreneurship and economic growth. Our goal should be to build into our regulatory code a presumption of net good when dealing with new technologies and innovation.
In so doing, it is our belief that we can energize the existing marketplace and encourage businesses and entrepreneurs to see Mississippi as a more friendly state for risk-taking and creative disruption…and perhaps encourage some of our best and brightest to come back home.
Jon Pritchett is president and CEO of the Mississippi Center for Public Policy, the state’s non-partisan, free-market think tank.