Yes, actually, we do need massive long-term government intervention in the economy

Fareed Zakaria:

The wide [competitiveness] gap between the United States and the rest of the world is closing...

Beginning in the Great Depression but accelerating dramatically during World War II, the federal government began showering money on research and development, and channeled most of it through universities—a brilliant innovation that has endured as an American model. After World War II, the Cold War drove this funding to new highs, so that by the 1950s, the United States was spending 3 percent of GDP on R&D, which amounted to a majority of the total spending on science on the planet. Government funding of basic research has been astonishingly productive. Over the past five decades it has led to the development of the Internet, lasers, global positioning satellites, magnetic resonance imaging, DNA sequencing, and hundreds of other technologies. Even when government was not the inventor, it was often the facilitator. One example: semiconductors. As a study by the Breakthrough Institute notes, after the microchip was invented in 1958 by an engineer at Texas Instruments, "the federal government bought virtually every microchip firms could produce." This was particularly true of the Air Force, which needed chips to guide the new Minuteman II missiles, and NASA, which required advanced chips for the on-board guidance computers on its Saturn rockets...

With the end of the Cold War, Americans stopped worrying about the Soviet threat and, as a result, R&D funding for applied science plummeted, dropping 40 percent in the 1990s. It has picked up since then, but the government's share of overall R&D spending remains near its all-time low. And while corporations still spend on R&D, they do not fund the kind of basic research that leads to breakthroughs...

American culture is open and innovative. But it was powerfully shaped and enhanced by a series of government policies. Silicon Valley did not arise in a vacuum. It grew in the 1950s in a state that had created the world's best public-education system (from kindergarten through Ph.D. programs), a superb infrastructure, and a business-friendly environment that attracted defense and engineering industries. Today California builds prisons, but not college campuses. In 1976 it spent 18 percent of its budget on education; that figure now is about 10 percent. The state is permanently bankrupt, saved only by massive, continual borrowing. Are these the foundations for future scientific achievement?...

For the past three decades, funding for science research has slipped, the education system has continued to decline, and immigration policy has become less and less rational...

Conservatives often say: All we need for a successful economy is low income tax, low government spending (except on defense), and low regulation. Zakaria gives great examples of why that is a giant stinking load of BS. For a rich country to sustain economic growth, it needs to stay on the cutting edge in terms of both research and human capital. This absolutely requires big government programs, especially basic research, public education, and infrastructure. There are just no two ways about it.

The ideal situation would be if liberals could win conservative support for these government programs in exchange for enacting the (few) conservative policies that really would boost our competitiveness - a cut in the corporate tax rate, tort reform, etc. The problem is that this is not even remotely an even trade. If our nation is going to regain its strength in the long-term, people are going to have to learn that liberal economic ideas are currently far ahead of conservative economic ideas. People are not yet learning this.