Despite our shiny new iPhones and flat screen TV’s, the June 15th cover story in Business Week laments that in the last decade American innovation has failed to live up to its promises. No cure for cancer. Still driving gas guzzlers.

In fact, Mandel suggests that our inability to commercialize the breakthroughs of the late nineties has contributed to our trade deficit and our financial mess. From hydrogen fuel cells to biomedical advances, everything proved more difficult to get to market than they anticipated.

What he doesn’t mention, however, is the role of public policy in those delays. Stem cell advances were waylaid by inserting religion into the scientific realm. Lobbyists for the big car companies fought funding for alternative fuels (and how is that working out for us—or them?). Massive off-the-books expenditures on the Iraq war precluded even modest research spending on new science, health care and technology.

If, as most economists agree, we must innovate to climb out of the recession and fuel a new economy that will put our educated work force to work, we must have public policy that supports innovation. There are some promising baby steps in the stimulus bill, but the recession has forced cuts in programs for fuel cells and other scientific advances. And private industry is not in a position to make up for government shortfalls.

While Mandel cites several areas where new products are about to be launched—like the first new drug for gout in 40 years—if government and private industry don’t invest in education and innovation now, we could spend another decade falling behind.