JUDY WOODRUFF: One of the major concerns about
the American economy is whether there’s enough real growth compared to the past, and whether
that growth can be spread out more evenly to areas that need it. Our economics correspondent, Paul Solman,
has a look at a new call to spur that growth through major government investments in science
and technology. The idea? Spread that investment, capital and potential
jobs to cities in real need. It’s the focus of tonight’s Making Sense report. COLIN ANGLE, iRobot: So, these are Roombas. This is the first Roomba. PAUL SOLMAN: At iRobot outside Boston, the
flagship product is on prominent display. COLIN ANGLE: This is the s9. This is like a monster. The eyes look left and right. PAUL SOLMAN: Nearby, products that flopped. COLIN ANGLE: If that doesn’t creep out your
child, then nothing will. We were working on robots that go down into
oil wells. We were working on robot toys. We were working on robots that would clean
industrial buildings. PAUL SOLMAN: And who’s buying these things? COLIN ANGLE: No one was buying them. PAUL SOLMAN: iRobot now boasts 1,000-plus
employees in the U.S., but for years after its founding in 1990… COLIN ANGLE: iRobot, I say nobly, we didn’t
take investment until year eight. What I’m really saying is, we couldn’t get
investment from a third party until year eight of our existence. PAUL SOLMAN: What kept them alive? COLIN ANGLE: iRobot wouldn’t exist without
government contracts. PAUL SOLMAN: Starting with small contracts
in the mid-’90s to research and develop military robots, culminating in a contract to build
thousands of so-called PackBots, at $120,000 each, to search out weapons in Afghanistan
and Iraq. COLIN ANGLE: This used to be a robot. PAUL SOLMAN: And this is debris? COLIN ANGLE: Yes, that’s PackBot 129, or what’s
left of him. These guys literally have saved thousands
of lives over in Afghanistan and Iraq. PAUL SOLMAN: And with the money and technology
it earned on PackBot, iRobot launched a consumer business. Seventeen years later… COLIN ANGLE: Twenty-five million robots sold. About a quarter of all money spent on vacuum
cleaners are now spent on robot vacuum cleaners. PAUL SOLMAN: Due to government research and
development spending. SIMON JOHNSON, Co-Author, “Jump-Starting America”:
When those big breakthroughs occur, you create a lot of good new jobs. PAUL SOLMAN: And if only we spent like we
used to, say MIT economists Simon Johnson and Jonathan Gruber, the U.S. economy would
be bigger, fairer, better braced for the future. JONATHAN GRUBER, Co-Author, “Jump-Starting
America”: By the mid-1960s, we were spending 2 percent out of our entire economy, one in
every $50, on public R&D investments. And that paid off in creating enormous new
sectors of the economy. Remember, what was the first microwave called? NARRATOR: These Amana Radarange microwave
ovens have Cookmatic power shift. JONATHAN GRUBER: The radar range, because
it came with the technology that was used to develop the radar. NARRATOR: Speed, for informed decisions. SIMON JOHNSON: Digital electronic computers
come entirely out of this big postwar R&D government-led effort, modern pharmaceuticals,
jet engines, civil aviation. MAN: Liftoff. We have a liftoff! SIMON JOHNSON: And, of course, we had the
space program, big, positive, lasting effects across the entire economy. PAUL SOLMAN: This was the norm for half-a-century. But, nowadays, says Gruber: JONATHAN GRUBER: We have gone from 2 percent
of GDP to 0.7 percent of GDP and, importantly, from by far the highest in the world to 10th
in the world. PAUL SOLMAN: The top five, Austria, Denmark,
Finland, Korea and Switzerland. Thus, Gruber and Johnson’s mission, “Jump-Starting
America,” the name of their new book, restoring government R&D spending. SIMON JOHNSON: We want more growth. We want more good jobs. PAUL SOLMAN: And they’re on the stump making
the case across the country, but not for spending just anywhere. JONATHAN GRUBER: Hello, Rochester. It’s great to be back. PAUL SOLMAN: They want to jump-start R&D hubs
in areas that don’t have them. JONATHAN GRUBER: People talk about a rural-urban
issue in America. It’s not really that. It’s sort of a superstar city-rest of America
phenomenon. SIMON JOHNSON: The existing hubs on the West
Coast and East Coast have become rather crowded, extremely expensive, actually quite difficult
places to do business. What we really need is growth that, as in
the past, is much more widely spread across the country. PAUL SOLMAN: And that’s why they and we were
in Rochester, New York, which popped out number one on their list of 102 potential new R&D
hubs. MAN: We didn’t know of Rochester. I’m pleasantly surprised as to how good a
fit it is for us. PAUL SOLMAN: Their criteria? JONATHAN GRUBER: Is it a big place? Because this won’t work unless it’s in a big
enough population center. Is it well-educated? Is there a good science education system? Is it affordable? Is there a low crime rate? How’s the commute time? PAUL SOLMAN: How did Rochester come out on
top? JENNIFER LEONARD, Rochester Area Community
Foundation: Right now, you can get anywhere in 20 minutes. PAUL SOLMAN: How many universities? JENNIFER LEONARD: Eighteen. PAUL SOLMAN: What’s it cost to buy a house
around here? JENNIFER LEONARD: The average price is less
than $200,000. PAUL SOLMAN: Of course, admits Jennifer Leonard,
who heads the Rochester Area Community Foundation, there’s a reason for those low housing prices. JENNIFER LEONARD: We are still the third poorest
city in the top 75 metro areas, third highest in the top 100 cities for concentration of
poverty. We need help. PAUL SOLMAN: But that’s what jump-start means. And like so many cities, Rochester’s deindustrialized
past could be a key to its future. NARRATOR: Industries have developed here that
have made the name Rochester synonymous with quality and precision manufacturing. PAUL SOLMAN: Kodak, Bausch & Lomb, and Xerox
once employed over 100,000 locals — today, a few thousand total. NARRATOR: If you don’t change, change will
change you. LOVELY WARREN, Mayor of Rochester, New York:
My mother worked for Kodak, and my dad worked for Xerox. PAUL SOLMAN: Lovely Warren is Rochester’s
mayor. LOVELY WARREN: I don’t think anyone ever imagined
that the industry would change as rapidly as it did and that we would experience the
economic decline that we did. PAUL SOLMAN: Jobs fled, but people stayed,
with know-how, says the mayor. LOVELY WARREN: Building on a legacy that was
once here, that was large in Kodak, Xerox and Bausch & Lomb. PAUL SOLMAN: In an old Kodak factory and a
former downtown department store, New York state grants have seeded high-tech incubators. WOMAN: This is our spindle imaging system,
and we enable you to see now with 10 times improved precision in three dimensions. MAN: We use the front camera of these small
devices and detect the subtle changes in the color of your skin that occurs each time your
heart beats. YASAMAN SOUDAGAR, Neurescence: We have this
innovative fluorescent microscope with small implants that go into multiple regions of
the brain. PAUL SOLMAN: These things actually go into
your brain? YASAMAN SOUDAGAR: Yes. And these tiny blobs that turn on and off
are individual neurons. PAUL SOLMAN: Every one of the dozens of firms
at this recent conference focused on optics and photonics, the science of light. TERRY CLAS, AIM Photonics Institute: How much
data can be transferred over what distance, at what power, using what cost? And it just so happens that photons beat electrons
every day of the week. PAUL SOLMAN: Terry Clas, a longtime Kodak
executive, chaired the conference. TERRY CLAS: Do I believe that Rochester, New
York, or the Finger Lakes region could be the Photon Valley of the future? Absolutely. PAUL SOLMAN: And there’s a huge opportunity,
say Gruber and Johnson: The private sector doesn’t invest in basic R&D. Consider Yasaman Soudagar’s brain implants. YASAMAN SOUDAGAR: So, if you understand exactly
how the memory circuitry in the brain works, then when Alzheimer’s is happening, we can
understand what is going wrong in the brain that is causing the disease. PAUL SOLMAN: So, if this is technology which
maybe reverse Alzheimer’s in humans someday, then investors are throwing money at you? (LAUGHTER) YASAMAN SOUDAGAR: No. No, they are not. Investors want to get 10 times return in three
to five years on their investment. PAUL SOLMAN: And you know this because you
have pitched investors? YASAMAN SOUDAGAR: And they have told us that
we are just not advanced enough for them. They want us to talk to them when the device
is ready to be used in humans. PAUL SOLMAN: We have all this investment capital
in this country. We have all these venture capitalists whose
job is to deploy that capital most efficiently. What’s wrong? SIMON JOHNSON: If you want more growth, higher
productivity, and you want that to be spread across the entire geography of the United
States, the only entity that has deep enough pockets and the potential to deploy enough
resources to make a difference is the federal government. PAUL SOLMAN: But hold on. Government picking winners? How about the failed solar panel firm Solyndra,
which got half-a-billion dollars in federal loan guarantees? Government invests in a company, company goes
kaput, it’s as if we burned the dollars. JONATHAN GRUBER: That was less than 2 percent
of the money we spent on this clean energy program, and all the rest of the portfolio
was paid back. Indeed, all of the solar production in the
U.S. — and, obviously, solar production is a key industry for the future — all of it
grew out of that program. PAUL SOLMAN: And look at the Human Genome
Project, says Simon Johnson, into which the federal government pumped some $3 billion. SIMON JOHNSON: That industry has created 270,000
jobs today. It pays about $6 billion in taxes per year. It’s a win-win. It’s a symbiotic relationship. PAUL SOLMAN: As it has been for iRobot and
Boston’s Route 128 science hub. COLIN ANGLE: There are 25 companies founded
by ex-iRobot employees in this 128 area. And those companies have made the Boston area
the center of the universe for the robot industry. PAUL SOLMAN: As anyone who’s watched Boston
Dynamics videos on YouTube will understand. iRobot itself perfecting more modest cyborgs
these days, a mop, a lawn mower. Look, mom and dad, no hands. For the “PBS NewsHour,” business and economics
correspondent Paul Solman. JUDY WOODRUFF: Very cool. And you can see if your own city makes the
list of potential new technology hubs on the Web site, jump-startingamerica.com.

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