Google's Schmidt: Innovation must come first

The US government needs to pump billions of dollars into alternative energy efforts, broadband infrastructure and research in an effort to rebuild the nation's economy, Google's CEO said Tuesday.

It's time for the government to take a new approach toward issues such as energy independence and broadband adoption, after recent years have shown that private efforts are not enough, said Eric Schmidt, Google's chairman and CEO, said during a speech in Washington, DC.

The economic bailout plans now being debated in the US Congress should focus on rewarding innovation and putting people to work by building broadband or energy-grid infrastructure, instead of propping up bad investments, said Schmidt, who has served as an economic adviser to US President-elect Barack Obama.

"To address our economic problems and create jobs, we need to put innovation first," Schmidt said. Out-of-work contractors could be put to work building a smart energy grid or broadband infrastructure, he added.

Schmidt decried US government policies of the last eight years, which in his eyes have relied on the private sector to fix many ills. It's time to look for new ways for government and private businesses to work with each other to address problems, he said. His ideas, however, will likely face opposition from lawmakers concerned with federal deficits; at one point Schmidt talked about US$10 billion just for tax incentives for alternative energy companies.

But the US is facing a major crisis in energy, with dwindling oil supplies and global warming that could cause significant problems "in our lifetime," said Schmidt, speaking at an event sponsored by the New America Foundation, a think tank focused on broadband, wireless and other issues. "We're at the point where we've got to get this right," he said.

Schmidt talked about Google's plan to wean the US off fossil fuels by 2030. He called on the US government to tie any bailouts of the US auto industry to fuel economy standards, and for more states to follow California's lead and create regulatory incentives for power companies to save energy.

If US automakers began to produce plug-in hybrid electric vehicles, customers could double their gas mileage, he said. Some research has shown that through hybrid power and lighter materials, vehicles could increase gas mileage by a factor of 30, Schmidt said. Those technologies need to be put into action to wean the US from its addiction to foreign oil, he said.

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In addition, the US government needs to give billions of dollars worth of tax breaks to producers of solar, wind and other alternative energies, he added.

"We can reduce energy costs, create jobs and generate enormous economic benefits for generations to come," he said. "The missing ingredient has been political leadership."

Schmidt laid out a wish list for legislation in the next Congress, with patent reform and loosened standards for allowing foreign graduate students to stay and work in the US at the top of the list. Schmidt's call for allowing more foreign workers to come to the US may conflict with Obama's; the president elect has been cool to the idea of expanding immigration programs such as the H-1B skilled worker program.

The US should want the best and brightest workers to remain here, Schmidt said. Making foreign students go home after educating them is "bizarre, it's disgusting," Schmidt said.

He called on the US government to investment in broadband, allowing customers more choices of providers and bringing broadband to the corners of the nation that still do not have it. Only about 55 percent of US residents have broadband, ranking it about 15th in the world, according to the Organisation for Economic Co-operation and Development.

"We invented this stuff, and now we're 15th in the world," Schmidt said.

Broadband is an essential piece of infrastructure to build a 21st century economy, he said. Obama has also called for new broadband incentives.

Schmidt also called for a more open government, in which citizens can be more heavily involved in decision-making. He called on lawmakers to involve citizens while writing legislation, and he praised Obama for putting a recent speech on Google's YouTube, where it can be debated.

Government needs to encourage more debate and involve more citizens in its processes, he said. "People care passionately about these things, and they obviously have a lot of time on their hands," he joked about bloggers and Internet users who held candidates responsible for misstatements and lies during the campaign.

He also called on government to embrace video, blogging and other online technologies. "Government hasn't embraced, generally, the tools we use every day," he said. "It's time."