Public-Private Investments Must Shift US Tech Power and Security

As the US lags behind China in most critical technology sectors, a new calculus is needed to align private-public sector interests in a shared purpose to regain and sustain competitive advantage.

Industry should take more steps to adapt national security interests with corporate investment objectives, and public-private efforts should point weight and strength of US markets toward developing economies and guardrails for emerging technologies of strategic importance.

To maintain competitiveness, the US must continue to be the top magnet for talent, tech, and low-cost capital in the world, all in support of a democratic model of economic statecraft. Injection of financial capital into innovative projects is the first step in tech advancement. Herein lies the national security investment imperative.

Major geopolitical conflicts are increasingly being fought and won on battlegrounds of economic, financial, and digital competitiveness. As the primary creators and wielders of innovation and financial capital, the private sector and strategic forces that forged New York and Silicon Valley as global epicenters of influence and growth play a foundational role.

Realities of our political and economic systems define how we wage competition. The efficiencies of autocratic models enable China to direct the resources of industry in decades-long coordination for its technological priorities, challenging our own inefficiencies of short-term budget cycles, political turnover and conflict, and extensive procurement timelines.

Yet democratic governance and free markets provide their own advantages, positioning for industry scalability. American global leadership and military strength are built on economic and technological prowess, rooted in a foundation of democracy and human rights.

The idea of private business supporting a broader social good beyond direct business interests isn’t new. Driven by regulatory pressure and increasing social consciousness, environmental, social, and governance and impact investing are now firmly integrated with corporate practices and investment.

Five years ago, the Business Roundtable’s historic proclamation signed by hundreds of CEOs asserted that a corporation’s purpose goes beyond profits to build an economy that supports “all Americans.” National security interests belong alongside these objectives as a recognized source for good and focus for private investment.

Key areas ripe for national security investment are critical emerging technologies that support US economic and military competitiveness and trust and safety tech. Industry investment in guardrails for highly sophisticated, scalable tech such as AI will protect the promised trillions in positive economic growth while inhibiting risks like massively scaling fraud and cybercrime.

Thousands of industry and academia leaders signed a letter in March urging a “pause” on giant AI experiments. This effort could have been much more impactful if it had committed to a surge of R&D investment for tech compliance and safety solutions to oversee and guide responsible AI growth.

A national security investment strategy should also focus investments on other developing economies and sectors that are critical to our interests—for example in ports, energy resources, critical minerals, transportation infrastructure, and tech.

It could provide important alternatives to significant capital injection from China, which often brings one-sided terms or corruption, in regions like Africa, South America, southeast Asia, and the Pacific Islands. US influence may be waning in these areas, but regional dissatisfaction with China’s exploitative practices opens the door to US investment.

There is great potential and urgency for alignment. The US reportedly trails China in most critical technology sectors, and China leads in contributions to the growth of worldwide R&D.

Looking back, adoption curves for advances like the Model T and electricity took around 10 to 25 years to gain majority use. Many groundbreaking innovations are rising at the same time today—advanced computing and manufacturing, energy sustainability, AI, fintech, and biotech. Where industries and products once had decades to evolve, there is now closer to a two-year runway.

Our government that funded the rise of Silicon Valley over 50 years ago is now trying to scale to meet this challenge, with investment in semiconductors under the CHIPS Act, defense investment, reduced bureaucratic barriers to procurement through programs such as In-Q-Tel and DIU, and insurance to attract capital into war-torn Ukraine.

Government has many tools to lure commercial capital investment, and should consider new instruments such as a US sovereign wealth fund or government-backed innovation bond pointing to strategic national security investments that people can safely fund into.

Private equity firms and tech developers can find a strategic north star for national security product development and investment in government strategy documents, regulatory objectives, and agency R&D guidance.

Government seeks to balance regulatory sticks with subsidy and funding carrots that target adversarial nations’ unfair trade practices and acquisition of sensitive data, technologies, and investment. Thus agencies have an opportunity to craft a clear, comprehensive vision for industry and competitiveness.

Adapting lessons from industrial mobilization of the early 1900s, US industry and agencies must rise at this critical juncture to reinforce financial and technological competitiveness.

The right people are also critical to manifest these partnerships. The government should build a team of industry leaders as contemporary models to the influence of Lt. General William Knudsen, whose heroic efforts aligning business expertise with industrial mobilization saved the free world.

Government can’t act alone; it needs industry to meet the pace and adaptability required to harness technologies’ transformative potential to bolster national security.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Carole House is an executive in residence at Terranet Ventures, fellow at the Atlantic Council GeoEconomics Center, and advisory member at financial regulatory agencies including the CFTC. She previously held leadership roles at the National Security Council, FinCEN, Office of Management and Budget, and US Senate.

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