Google CEO: We Need an 'Innovation Bailout'

In a speech Tuesday at the New America Foundation in Washington, D.C., Google (Nasdaq: GOOG) CEO Eric Schmidt called for an innovation bailout, a bold government-funded effort to create jobs by rebooting America's energy infrastructure, and a reformation that restores trust in government by using technology to increase openness and civic participation.

"This may be the toughest economic time that most of us will face in our lifetimes," said Schmidt, who also serves as chairman of the board for the New America Foundation and as a member of President-elect Barack Obama's Transition Economic Advisory Board.

Nonetheless, Schmidt proclaimed his optimism. "I'm an optimist," he said. "It's important to say that up front. America is a remarkable place."

One reason for that is the vast amount of information now available to people around the world, a revolution in which Google has played a major part. "In our life time, almost all people will have access to almost all the world's information," he said. "That is a remarkable achievement." He expects that trend to accelerate as billions of people start accessing the Internet through their mobile phones.

America now has the opportunity to apply the technological principles that created the Internet economy to the nation's energy infrastructure, Schmidt suggested. And what's needed, he believes, is a balance between unfettered capitalism and socialism."The right answer is a balance between these," he said. "The objective is to win as a country."

It's vital, he said, "that small startups with funny names get founded and get funded in the new regime. That's where the wealth will be created."

Openness is critical for that, he argued. The end-to-end principle that underlies the Internet, the open network, is a must. "It is that openness, the ability that anyone can play ... that drives the modern economy."

"Why don't we do the same thing with the energy grid?" he asked. "Isn't it obvious?"

Fixing the energy grid to work along these lines, he suggested, is just a design problem, just a matter of will. And doing so will benefit our economy. "Infrastructure is the foundation upon which wealth is created," he insisted.Schmidt praised the FCC for opening up underutilized portions of the spectrum but said more needs to be done to promote access to information.

"We invented this stuff and we're now 15th in the world," he said, in reference to broadband penetration. "It's a big problem."

The problem, he said, is there's almost no competition for high-speed broadband connectivity in most markets in the United States.

"We have to move from a regulatory framework ... and build an economic framework," he said.

"The alternative is the case of Ma Bell," he suggested. "You can have any telephone you want as long as it's big, heavy, and black."Where the government does have a role, he argued, is in funding the country's future.

"Why do we fund research and development?" he asked. "Because no one else does.

"Businesses by law have to serve their shareholders," he explained. "They're not going to invest in R&D. ... It takes government policy."

Schmidt decried the fact that the budget for basic scientific research went down last year and praised the incoming Obama administration for its promise to double science funding.

He also criticized the current policy toward skilled foreign tech workers, calling it "bizarre" and "disgusting.""We train these people, we bring them to the country, then we don't give them the visa to work here where they would pay lots of taxes," he lamented. "I just don't understand."

Pointing to Google's 2030 Energy Plan