Lowering the Regulatory Burden on Tech Development is Vital for National Security

By Matthew Nicaud
July 9, 2021

In recent years, the Department of Defense has increasingly emphasized the need for defense technology developments and innovations from the private sector for the United States to maintain its military advantages. From a public policy perspective, few issues impact the private sector as much as the regulatory burden. With the private sector playing a growing role in national defense technologies, it is essential to consider the impact that such regulations have on private-sector research and development for technology.  

In the context of defense, innovation is not simply a matter of improving a consumer’s quality of life or economic outputs. The extent of innovation can ultimately mean the difference between victory and defeat. History demonstrates the role of the private sector in the development of technologies that are then utilized for military purposes. History also shows the tragic results on the battlefield that will occur if the private sector of an enemy nation is able to create superior technology and innovations.

For instance, it was the Wright Brothers who invented the airplane in 1903. Just six years later, in 1909, innovations and improvements encouraged the United States military to purchase the world’s first military aircraft from the Wright Brothers to be used for aerial scouting.  By the beginning of World War I in 1914, further innovations were built on the Wright Brothers' concept of a working flying machine. The planes were then used for fighter missions, bombing raids, and other military activities.

Lagging behind in the race to innovate the airplane had real consequences for the Allies in World War I. An innovation introduced in the German Army Air Service’s Fokker Eindecker fighter aircraft enabled them to achieve total air superiority for several months during a period in 1915-1916. This relatively simple innovation developed by a private sector airplane manufacturer in Germany used a timing mechanism that allowed a machine gun to fire in-between the propeller blades. Unfortunately, after the Allies began to have four losses for every aerial victory, Allied pilots got the nickname "Fokker Fodder." These losses continued until the Allies were able to study a captured Eindecker and replicate the technology.  

World War I and the Wright Brothers are in the distant past, but the strategic significance of private sector innovation is more critical than ever. The American regulatory environment compares relatively well against the regulatory boundaries for technology development compared to some other nations. However, America will have to work hard to maintain its place at the top as other countries reform their regulatory policies and use the results to develop military technology.

Ironically, despite being a totalitarian regime, China has recently introduced a plan to spur on “private sector” research and development in order for the nation to become more economically and militarily competitive. With a goal to become among the most technologically innovative nations in the world by 2035, China has introduced policies to lower regulations on banking, research, venture capital, and development. This should serve as a significant consideration for the United States as China continues to emerge as a growing security threat.   

In light of the significance of private sector innovation for national defense and international competitiveness, policy makers should pursue measures that lower the regulatory burden so that the private sector can more easily develop and innovate technology for defense use. Instead of using antiquated regulatory models to regulate cutting-edge technologies, regulatory frameworks should be implemented that are designed with innovation in mind, such as regulatory sandboxes.

The stakes are too high for American regulatory policy to justify hindering technological research, development, and innovation. The lessons of history and the importance of America’s international competitiveness are essential to preserving a strong national security.


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