Throughout most of American history we were not that inventive. In the first and second industrial revolutions – the steam era and the electricity era – all of the major technologies were invented in Britain, Germany and France, for the most part. For example, steam engines were invented in Britain, as was the locomotive. Electricity and electrical motors were developed primarily in Europe. Thomas Edison and others adapted the technology and made their own incremental improvements on it, but essentially it was European technology. The automobile was invented in Germany and then was perfected in France. What the United States did all the way up to World War II was that it took foreign-invented technology and then applied it on a massive scale, in the same way that China is now doing with technology invented in the United States.
The other point I would like to make is that not only is the period of American R&D leading the world fairly recent – it only goes back to World War II and the 1950s – but that it was consciously modeled on the research venture capital system of imperial Germany, of all places. In the Kaiser’s Germany before World War I, the government began funding research institutes as distinct from universities. You also had in Germany the development of research universities. Americans were inspired by this to create new institutions like MIT, which was devised on the German model. If you look at MIT and Stanford – these two German-inspired research universities – they’ve contributed disproportionately to America and world inventiveness. So just as the American System started out as the French system of manufacturing with interchangeable parts, we essentially took the German idea of the research university and we integrated it with government and venture capital funding in a highly successful way, and it continues to be the most successful part of the innovation ecosystem in the U.S. But it doesn’t mean that we can be content with that alone. The idea grew up during the tech bubble that we could invent things and then outsource all the manufacturing. That may have worked in consumer electronics and a few other things, but in the long term, most innovation actually comes from the factory floor or people closely working with it. You cannot specialize in invention alone. There’s a circular flow between manufacturing and invention, and you really need both.