In 1903 Orville and Wilbur Wright, bicycle mechanics in Dayton, OH, earned their place in history by inventing, building and flying the world’s first successful airplane. Their invention revolutionized transportation and opened up a new world.

At the same time, the U.S. Army had paid Samuel P. Langley $50,000 to design a flying machine, which crashed in the ocean twice, ending the project. The Langley debacle was one of the first of many government contracts trying to force innovation.

Innovation is the process by which individuals and organizations generate new ideas and put them into practice. Innovation leads to increased productivity and is the foundation of American economic growth and national competitiveness.

“Top Ten American Inventions” posted by the intellectual property law firm of Schmeiser Olsen and Watts LLP on Oct. 4, 2024, included the steam-powered engine, the telephone, the lock-stitch sewing machine, the light bulb, the airplane, the Internet, the electric motor, the microprocessor, the polio vaccine and the personal computer.

Others may hold different opinions as to which inventions should be in the top 10; however, they all have one thing in common: Private individuals or employees of private companies are responsible for these inventions.

Saranya Akharamahaphanit, wrote “Privately Held Companies and the Innovation Edge” on Dec. 9, 2024, in which she said that “all else being equal, privately held companies are in the best position to innovate and gain long-term competitive advantages from these innovations. The first priority of any company, private or public, is to make a profit. Unlike privately held companies, publicly traded companies have a responsibility to their shareholders to show constant growth.”

She gave as an example the reluctance of a public company to invest in innovation projects that may not succeed on the first attempt. Private companies are unencumbered by this and have more strategic freedom.

Akharamahaphanit said one of the biggest advantages privately held companies have is that they can act without having to explain themselves to outside parties. It is easier to get the entire organization on board with a new project much more quickly and efficiently than their publicly traded counterparts.

Privately held companies, who have only themselves to answer to, are often the better vehicles for unfettered growth. There may be a cause and effect. She noted the number of publicly traded companies has been in steady decline, while the number of new privately held companies continues to grow.

In his October 14, 2023, article, “Are You Free to Innovate?” Eugene Ivanov pointed to freedom as one of the most powerful drivers of innovation. He emphasized that restrictions on liberties have a chilling effect on the corporate innovation process. He said a reasonably strong correlation exists between a country’s ability to innovate and the level of political freedom in the country.

Cecily Tyler seems to agree with Ivanov in her April 2024 article entitled, “What is Innovation? Exploring Public and Private Sectors.”

“The private sector generally seems to be granted more freedom with the capital it has access to when innovating,” she said. “Public sector budgets are subject to more oversight and bureaucracy.”

As the Wright brothers’ invention of the airplane demonstrated, individuals have creative abilities that are waiting to be unleashed. Paying someone to innovate may not be the very best use of public funds, as the failure of Langley’s airplane design exemplifies.

History is replete with examples of great innovators who came from humble beginnings. Bill Gates started a trillion-dollar company in his parent’s garage. Because of the Internet and other technological advancements, individuals have unprecedented access to information. This fact alone empowers and stimulates creative thinkers to innovate.

A plethora of examples of disastrous results from government funding innovation can be found such as Solyndra, Synthetic Fuels Corporation, Clinch River Breeder Reactor and the Superconducting Super Collider.

A common critique of government efforts to spur innovation is that they should not be picking winners and losers. Throwing taxpayer funds at companies to force specific inventions has not proven to be particularly effective.

The most beneficial action any local, state or national government can take is to remove onerous restrictions and excessive taxes that stifle innovation. Those same governments should protect intellectual property rights and enforce contracts.

When governments remove stumbling blocks, innovation can flourish.