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.