Is the US becoming a third-world country of innovation?
“When It Comes to Innovation, Is America Becoming a Third World Country?” That’s a question addressed at a panel discussion at a conference sponsored by The Economist, as reported by Arianna Huffington. If so, what can be done? An Obama administration official, two Republican and Democratic senators, and Huffington herself have some suggestions.Writes Huffington, “Once upon a time, the United States was the world’s dominant innovator — partly because we didn’t have much competition. As a result of the destruction wreaked by WWII, the massive migration of brainpower to the US caused by the war, and huge amounts of government spending, America had the innovation playing field largely to itself. None of these factors exist as we enter the second decade of the 21st century.” She cites the Information Technology and Innovation Foundation 2009 study that ranks the US as dead last out of 40 countries evaluated in efforts to become more innovative. (The US ranks 6 out of 40 overall but is losing ground.)
So what’s the problem? As Huffington tells it, the US has lost its educational edge and isn’t investing in innovation. And the solution? She writes, “For starters, we need to kick our high-speed Internet plans into high gear. A robust, broadband-charged, countrywide information superhighway is going to be key to staying ahead of the innovation curve.”
Granted, Huffington undoubtedly wants people to be able to spend a lot of time at her busy and multimedia-heavy Website, but I agree with her. She writes, “As FCC Chair Julius Genachowski explains, broadband isn’t just important for faster email and video games — it’s the central nervous system for democracies and economies of the future: ‘Broadband is indispensable infrastructure for the 21st century. It is already becoming the foundation for our economy and democracy in the 21st century [and] will be our central platform for innovation in the 21st century.’”
Backing up the contention that broadband isn’t just for video games, Huffington cites a Brookings Institution study of 120 countries that shows that every 10 percent increase in broadband adoption increased a country’s GDP by 1.3 percent.
Huffington goes on to discuss innovation in the green economy and supports a group called the Coalition for Green Capital, whose goal is “to establish a government-owned, wholesale, nonprofit bank that would fill the void that exists in clean-energy legislation in America today.” She says a green bank would create four million jobs by 2012.
Immigration policy is also ripe for innovation, Huffington says, writing, “Great ideas come from all over the world,” as is evident in the EDN Innovator of the Year finalists, which are profiled here. And as Huffington notes, “…if we don’t welcome the people with those great ideas and make it easy for them to come here, they will go elsewhere.”
But immigration reform is a tough sell when many Americans are out of work. Fortunately, US Senators John Kerry (D-MA) and Dick Lugar (R-IN) have a solution, which they outline in the San Jose Mercury News. They write, “Job creators want to come to America, hire Americans, and create jobs right here for Americans that won’t be outsourced or shipped overseas -and we should be helping them come.” They propose the Start-Up Visa Act, which “…will grant a two-year visa [called EB-6] to an immigrant entrepreneur who can show that a qualified US investor is willing to dedicate a significant sum - at least $250,000 - to his or her startup venture. If after two years the immigrant businessperson can demonstrate that he or she has generated at least five full-time jobs in the United States, attracted $1 million in additional investment capital, or achieved $1 million in revenue, then he or she would receive permanent legal resident status.”
The bipartisan proposal sounds to me like a win-win for immigrant entrepreneurs and Americans seeking jobs.
At the same Economist event that Huffington attended, Christina Romer, Chair of the President’s Council of Economic Advisers, spoke with the Economist’s US economics editor Greg Ip. (You can view a video of the interview here.) Romer said the US economy is recovering, “… yet we haven’t started to add jobs, and that is truly the gold standard.” She did say that production is surging, hours are increasing, and temporary employment is increasing, and she said she expects employment to follow.
When Ip asked her if unsustainable bubbles were now a necessity for economic growth, she said we are not addicted to bubbles and said that before the financial crisis set in, Obama campaigned on alleviating middle-class stagnation, rising health-care costs, lack of investment in education, and the deteriorating status of ordinary families. The challenges can be met, she said, with good, solid innovative growth without speculative excesses.
Elaborating on innovation, Romer said, “The key thing about innovation is there are externalities,” and as a consequence, “the social rate of return of innovation is much higher than the private rate of return.” What government can do to foster private innovation, she said, is provide intellectual property protection, make R&D tax credits permanent, support science and math education, and spend federal money on R&D.
Playing devils advocate, Ip suggested the US adopt an industrial policy. Romer declined to endorse an industrial policy, explaining that the government could subsidize green energy, for example, but it should be up to entrepreneurs to decide whether solar, wind, nuclear, or other technologies are the most promising areas that could benefit from subsidies.
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Publio commented:
If you want to see your future, check New Zealand. Dreams of being a "knowledge economy", lost almost all of the manufacturing, now everyone thinks innovation happens in marketing and accounting. And believes Kiwis are the most innovative species in Universe.
Doc commented:
When one is in a minefield, the only safe spot is the ground beneath your shoes.
America has created a risk-averse business culture where innovation is a dangerous concept.
I have sat in meetings with top firm outside corporate counsel where the legal advice was to NOT introduce an innovation and instead wait for a competitor to do it so see if there were regulatory implications.
Lawyers and the business executives who bow to them have had a big hand in deciding that America is not the place for success.
arclight commented:
All: Step by step...
First, all those folks who believe that the Left or the Right has all the answers, or creates all the problems, are principal contributors to the problems we have and the principal inhibitors to solving any of them.
Step 1: Ignore their emotional cries, defeat them in the polls and the marketplace, and in every other way defang their influence until they return to reality.
Step 2 has to be to assure our leadership that we won't melt if we really confront the nature of the problems in front of us. What are those problems?
a. We already know that we are broke and $60T in debt (per the former Comptroller of the Treasury, with some buttressing from GAO).
b. We have no real measure of how much public spending can sustainably be done with the private wealth base that we have. Money doesn't grow on trees, and we can't tax to the point that we are eating our seed corn. Time for a reality check.
c. We have infrastructure that is crumbling and in many cases in dire need of a tech refresh to make it more maintainable.
d. Our education system is not turning out responsible adults who can execute the responsibilities of citizenship. In many cases the graduates don't even KNOW that such responsibilities exist. Additionally, our education system isn't capable of retraining the adult population to cope with changes to or destruction of jobs due to the implacable advance of automation and the continuing changes in technology.
e. We have no long-term sustainable energy plan.
f. We don't know what a proper defense should look like.
Out of these, (a) and (b) are the most important, because if we don't correct those two, we can't touch any of the others.
Step 3 therefore has to be: Elect leaders who will address (a) and (b), and throw out of office any leader who will not do so.
The other solutions will take lots of sacrifice, as well as some time to complete. That's OK...the Greatest Generation sacrificed immeasurably to defeat four tyrannical governments and take a trip to the moon, and they did it for us. The sacrifices we need to make now for the sake of our children and grandchildren are OUR WWII, and OUR "moon race". Time we were about it.
The preparation for electing good leaders in November starts now, as does the defeat of the partisans on Left and Right. Who's with me?
M. Simon commented:
Senator Chris Dodd has a plan:
venturebeat.com/2010/03/26/angel-investing-chris-dodd/
Make venture capital investment more difficult.
It is not lack of brains, ideas, or money that is hurting us. It is government strangulation.
Scott commented:
Wow. Never thought I'd see a COMPLETE TOOL like Huffington quoted in a legitimate magazine like this one. What's next? Al Franken or Dick Cheney comments?
Charles commented:
I'm not s sure broadband or immigration will do it. We need home grown innovation. There's no belief that Americans can do this anymore! But I believe Americans can but are reluctant. Why create something and watch the invention walk off to China. Why Create something and build it in the US when we are battling ridiculous pay structures overseas. We will fail. American's have to know they can win in business, right now they don't and can't! The deck is stacked.
x6mp9 commented:
There are many starts to good thoughts in the sound bites, but as one person stated, no one starting to do anything. Very soon it will not be relevant about whether the USA is innovative, the horse has left the barn.
Voice of Liberty commented:
It's hard to grasp the concept of innovation when one looks only to left-wing or protectionist sources that promote top-down bureaucracies that try to mandate and centrally plan innovation. Many recognize that the education system is broken, but after decades of throwing more money at the problem and creating an increasingly government-controlled and funded system, insulated from reality and true market pressures, it is no surprise that costs have risen exponentially and quality has gone down. The education system has also focused on teaching left-wing views and preaching political correctness instead of fostering independent thinking and diversity of viewpoints. You can't indoctrinate one to think independently or "program innovation". With more and more corporations (like mine) adopting bigoted hiring practices that discriminate against straight white males and education systems that "equip" graduates with uncritical, conformist thinking, poor scientific method, and unquestioned acceptance of the conclusions of politically anointed "leaders" or "experts", it's no wonder that engineering is no longer an attractive profession and innovation is declining in the U.S. Some of the same politically-correct corporations that focus on "diversity" hirings not surprisingly also promote outsourcing engineering functions and intellectual property to offshore countries, so big government and big business are largely on the same page to construct domestic institutions with no innovative ideas and future high taxes, burgeoning deficits, and economic stagnation.
This article also offers some common economic fallacies. One is "apparent correlation proves causation". An increase in access to broadband internet may slightly increase efficiency, but implementing such an infrastructure through government funding does not "create wealth". It is much more likely that the increase in broadband internet access is an effect of a more prosperous society, which demands such access and can pay for it. Another economic fallacy touched upon in this piece is "the only attributable effects of an economic policy are those that are seen". What is not seen in any redistributionist policies are the jobs that were never created and the innovation that never resulted because the capital had been siphoned from the productive, competitive private sector and given to expensive, wasteful bureaucracies that enjoy coercive monopolies and insulation from consumer choice. There are sound economic studies that demonstrate that economic freedom is the principal cause of economic prosperity (see the non-partisan Cato Institute). While government command and control policies are quite impotent at creating wealth and innovation, they certainly work much more effectively at destroying them.
Adam Mickiewich commented:
believe or not all that has a common denominator; the limitless greed, the obsession with money controls everything here, the US will not become a third world country, it is already one, of course, you see it only if you see the rest of the world, but they are not so many who could afford that luxury
savroD commented:
You know folks....
coming from the side of an actual innovator, I would like to take this time to point out that the greatest innovations one can imagine usually boil down in something people can build with their hands. I would like to thank all those people out there in America, who may not have sought high education in their lives, but who have worked with their hands. They serve to point out some crucial distinctions that go into the total equation of making a manufactured item, a product indeed. So often us educated people get caught up in discussions like these as total abstractions. The fact is that the skills to build something go hand-in-hand with the ability to make an innovation just that. Too often the corporate leaders and politicians have demonized the blue collar working class in this country. I just want to remind everyone of the innovation that happens everyday on the factory floor, as opposed to the risk adverse, lazy, and self-delusional business management class!
Not a GOP commented:
I was going to comment here, but it appears that only crackpots, right wing zealots, and bible thumpers need apply. No thanks.
TheH1B commented:
All of you who bash H1Bs and India and China for every problem in the USA have really no idea of the real situation of the H1Bs and their contributions to this Nation.
Most H1Bs work over 60 hours per week. Many have high hopes of getting their Green Cards and the Industry and their lawyers systematically ensure that the same get processed at the slowest possible pace. Many wait for years for their immigration to process coughing up money for this application or that to the lawyers all the time.
Many survive this life of stress while simultaneously being creative as evident from the patent applications filed by companies and their H1B inventors here in the USA. Many must continue to work as "documented" in their H1B applications that is "at the site specified, at the wage specified, and in the role specified" and get denied any promotions or merit increases or leadership opportunities which effectively get reserved for the US Citizens despite the fact that the H1Bs are equally committed to their employer and are often the reason why companies enjoy high stock prices.
It is often hard to face the reality. I hope the smart people reading this will rethink and be honest and don't chose the easy path of H1B bashing!
H1Bs are human beings with aspirations and hopes of being free individuals who can contribute to this nation, be entrepreneurs, generate employment and fulfill their own destiny. This helps and not hurts America.
Markus Unread commented:
You can't innovate if you don't MAKE anything. The pretending that a country can run on IP is insane. The worst part is that companies who want to pull manufacturing back to the US can't find employees that do, or be trained to do, much of what's required for high-tech manufacturing.
Our schools have gone from training people with usable skills to training kids to be consumers and "service" workers.
Then on the college side, the obvious choice is to get a degree in "business" which teaches how moving money around creates value and how the legal industry is there to protect that model.
What could possibly go wrong?
Older_engineer commented:
Many of thoughts here echo my own, so no need to rehash those. I deal with companies in both Japan and China. The main comment from those who live there is how we(USA) allowed our leaders to give away those things vital to a growing economy. We allow imports from countrys that do not allow our products in without very high import tariffs, and which have very few enviromental laws. That practice has decimated our steel and auto industries to the point that we are at now. Without a large steel industry it is very difficult to have a large manufacturing industry. As to education, just look at average pay for the top 5% going out 15-25 years. An engineer and lawyer will have similar pay for the first 5-10 years, but after that the lawyer pay scale will keep increasing, while the engineers flattens out. And please, any engineer who is still employed has not worked 40 hour weeks for a long time! NOT very difficult for bright minds to see where the better career path would be. Most of the children who have parents in the engineering fields have seen what the visa programs have done, both to wages and availability of jobs. Again, it does not a take a sharp mind to see which path to embark on.
China and India have a very long way to go, as any person who deals with companies from there will tell you. They can copy, emulate, and steal very well, but not much real innovation comes from there. At least not yet. Hopefully we can regain some of what has been lost, but the current path we are on will have the USA looking like a large 'copy' of France. A very sad prospect.
Dr. Gene Nelson commented:
Here is the conclusion to Dr. David Goodstein's 1991 article, "Scientific Ph.D. Problems" which appeared in the American Scholar.
....The American taxpayer (both state and federal) is supporting extremely expensive research universities whose main educational purpose is to train students from abroad. When these students finish their educations, they either stay here, taking relatively high paying jobs that could have gone to Americans, or they go home, taking our knowledge and our technology with them......
Congress and the public doesn't seem to have noticed that, while largely ignoring our own students, we are putting our money and our best talent into training our economic
competitors. Just wait until this one hits the fan. The two articles below expand on Professor Goodstein's 1991 commentary. Use Google to locate them - and select the PDF versions.
"Colleges Have Become Career Destruction Factories"
"The Greedy Gates Immigration Gambit"
Until the "government subsidy" program called H-1B is abolished, this nation does not have a prayer. Please use the no-cost citizen activism tools at NumbersUSA dot com to demand this long-overdue action.
hjweedon commented:
Hi
Since none of you ever were innovators and inventors, you know very little about what caused the innovation explosion following WWII. Statistics say nothing, it is just confusing. Education is probably not the way either.
The real draw towards America was the possibilities of success. Success is all people really strive for, I did and I cherish mine. I grew up in a WWII devastated country with lots of small possibilities, but no world-shaking outlook. My peers and I all wanted to go to MIT, HARVARD, CALTEC, STANFORD etc. for our education, but none of us could afford it or were good enough to ever get in. This was the unreachable peak of our future.
A few managed to scale that peak and were accepted into one of those dream educational institutions of our desires. This selection process put the most aggressive innovators of the whole human race at the doors of US.
This is what put US in a very competitive position as far as innovation goes for a few years. Lots of engineers and scientists with a fertile minds, attended those dream institutions and learned how to innovate and invent. The problem is that after some years very few of us were able to cross the barriers imposed by the contempt of and affluent society. Some of us saw our problems and solutions as breakthrough events. But in the face of Real-Estate moguls or Investment gurus with no technical insight whatsoever that made 10 times as much money as anyone with our brilliant insights would ever make, we quietly gave up before we even started.
Money makes the world spin.
The innovation problem in the US is that one can not distill giants from a content society. The real innovators are found in societies without possibilities, only devastation. A society in cultural balance and affluence does not generate enough innovators and inventors to support a rapid technological growth.
An old proverb says that “need teaches a naked woman to weave” a stable and content society will only innovate, marginally. If you can feed yourself and your family by what you do, why change status quo.
Hans Jørgen Weedon
Ms Muffet commented:
Wow! Some great comments but what a frightening lot of crackpots, rednecks and bible belt hillbillys. For Bob Lathrop (and others afraid of socialism) - Socialism is a dominant party system and there are choices but normally they dont have a chance to win.Socialism is an idealistic system that at the core looks to protect people who need it most, it is just hard to achieve.
If we can point to one reason why US may be slipping it's EDUCATION. America rose to power on the backs of hard working, hungry, physically working, "nothing is too hard" people. It's not enough in the Knowledge economy. With the proliferation of user generated content businesses like Facebook, you perhaps dont need to know how to spell, because it's all free crap. But if you want to be Google or Apple, you need to be educated. The only difference between India and America now is the accent. Come again!
TerryG commented:
I find it quite fascinating that you would turn to Huffington for insight into anything economic or educational. This person respresents all that is wrong with the economy and our system of education. Just consider the left liberal view on capitalism and free market solutions to healthcare, education and you name it. Get real. I suggest you consider what the teacher's unions are doing to enhance or curtail improvements in our public educational system. Bandwidth? I am amazed that anyone would literally take this seriously, since most performance parameters have nothing to do with internet access. Good idea, but come on, do some critical thinking here.
Jun D commented:
US became one of the most successful country because of the main fact that the bible is the foundation of its constitution, however as years passed by, the truth based on the bible is being neglected, take for example, at schools, no praying, no bible, no name of Jesus being mentioned - whats the aftermath - shootings at schools, bullying become the norm....etc.
So hows the government now? Instead of the government governing the people, it looks like, the people are now governing the government - and we hv seen the results alredy - very obvious and US is acting blurr on this aspect....how to recover? Always go back to basics, then maybe God may pour out His mercy upon US. How tyragic it is to fall into the hands of God Almighty.
Bill commented:
You need to have manufacturing, design and marketing/sales located in one place to have high impact innovation. When anyone is remote it creates an unacceptable delay in the process. Education helps, capital helps but it is a futile effort unless we get back to manufacturing the products we design.
Mildly Angry Scientist commented:
We hired a dozen people in the last year, and more than half of them needed H-1 Visas. We cannot find US citizens who are willing to study math, physics and engineering and work at $70,000 a year jobs. We find a lot of under qualified smug individuals who feel they deserve to be rich in a few years for working 8 hours a day. The best and the brightest are becoming lawyers and financial experts, not engineers. Then instead of innovation, they are promoting the latest dot com BS techno babble which the public dumps a billion dollars into and then realizes the original investors dumped the stock the day it went public. VC should have to hold stock for 5 years. Bankers should be allowed to fail. How can I find a good engineer when the bankers get bonuses for doing a bad job?
Policebox commented:
Can we talk about solutions instead of problems? It seems to me that we have millions of people that see a problem, and very few that want to do anything about it. So, it stays a problem. We seem to be all agreed that education is failing. What can we do about it?
- Volunteer as an education resource or tutor.
- Find out what it takes for a kid to smoothly reach an advanced degree and demand of our school boards and lawmakers that high school diplomas not be granted until the kid has those skills.
Add any more constructive ideas you wish. Wake up people! Fussing won't solve anything. If a large number of people each DO a small thing, big things will happen. Don't point fingers. If you aren't moving, the finger points at you.
BTW I am a volunteer in an educational program that I created, so don't point at me.
Tom commented:
There is no common sense prevailing anymore. Consider the following...if the government doesn't allow foreigners to design and produce its secret military assets, why does it allow commercial manufacturing capacity and engineering expertise to be offshored? Both swords and plows are equally strategic to the preservation of the American dream. We are really in trouble when lawmakers are "throwing in the towel" on the next generation, as evidenced by this new visa class for importing entrepreunerial "brainpower". (What an admonition that public schooling is a failed institution beyond hope of remediation.)Instead, they should be providing substantive educational and monetary incentives for our nation's youth to pursue technical careers. It's clear the present ruling regime has outlived its usefulness and no longer serves our best interest. Basically, they have let the proverbial Trojan horse inside the gates. We need to exercise our remaining constitutional privileges and "vote the bumbs out"...while we still can...before they do more damage.
John Clothier commented:
Hey, until the Demo loonies understand that the unions have exported their own jobs to Asia, there is nothing that the govt can do. Now, even our machine tools have been auctioned off to Asia. Understand this: manufacturing capability and labor is the driver of innovation. Labor is now an international commodity, like grain or silver. Labor is $1 per hour. There is no market for union labor at $20/hr and up. And therefore no market for innovation on an island of unemployed consumers.
Gus S. Calabrese commented:
Why does it matter ? Phase 2 entities recognize that everyone benefits from innovation anywhere as long as governments and national patriots stay out of the way. The crucial issue is whether folks in the US toss the lousy politicians that are sucking away their life energy.
Bob Lathrop commented:
You completely missed the isea of innovation. Sure you have to have funding and you have to have brainpower but, more importantly you need the "can" in American. Just look at the socialist countries and you will not see the innovation that the US has created. There is no motivation for innovation outside of the US. When innovation does come, it comes from the individuals and not the companies or countries. This is why it is important to fight against Socialism because it will errode our freedom and will eliminate the motivation for innovation. Government should support innovation as romer said but it should not try to manage or control it. The middle class is the greatest opportunity for "any" individual that dreams to become "anything" that they want. There is an open door if you are willing to work for it. Socialism is a two party system. There are not choices. Better go with the flow. Where is the innovation in that? Socialism is what will make the US just like any other 3rd world country. Innovation is not luck. It takes a desire and a lot of work and a lot of opportunity. People that are big innovators started as little innovators. they realized some successes and saw the opportunities and went to the next step. This is not just a matter of education and funding. this takes a real desire and it is what the American Dream is all about.
Chris P commented:
Absolutely, with most of the population believing in a crazy vengeful god that will solve all their problems. A Republican party of no that is only interested in god, guns, abortion and war and doesn't believe in global warming or even understand finite resources.
Nobody wants to know.. We are running out of water and fundamental resources and the people are too poorly educated to understand.
In fact many people are standing in the way of progress.
Paul F Perry commented:
Innovation occurs when you have three things in the one place: manufacturing, surplus capital, and a well-educated mind.
Once, you could find that combination in the USA fairly easily.. not so much, today.
Running the figures, you can see that the probability of a key breakthrough in any field is going to be much likelier in China or India, and increasingly so.
Innovation Theory commented:
Interesting theory; although our innovation did exist prior to WWII, it no doubt accelerated afterwards. And I do feel that much of America perpetuates the myth that we're the only real innovators and everyone else copies - but I've felt that way since 1975. The Kerry/Lugar proposal seems equally interesting, but I fear that Van Neumann in the post above is likely right. Two years to get a startup off to the races; not that easy. But then, we're also a nation of instant gratification over long-term planning.
Jim commented:
Without an industrial policy that normalizes labor, safety, and environmental requirements, there will be no manufacturing in the US long term. And why should US folks go into science and engineering if it is going to be a forever shrinking universe?
Jeff LaCoss commented:
The US is certainly well on the way to 3rd-world status, and we're going after it with both hands:
1) education is expensive. We're assessing ignorance right now. Our buddies the TEA-baggers are seeing to it...
1a) fundamental intellectual skills aren't taught. my daughter is somewhat innumerate, brought about by calculators in the classroom. (math with calculators = literature with books on tape.)
1b) critical thinking isn't taught until it's too late to really ingrain the habit. (critical thinking probably sounds like secular humanist drivel, I suppose)
1c) we're educating the world with our technical methods to bring money to our state (Land Grant) universities. Why? How many Americans qualify for technical education? Isn't that number falling?
2) we're exporting jobs from the technology sector. McJobs don't pay for a lot of new cars.
3) we're exporting technology. We tried this once with TVs. How many US-manufactured TVs do you see in a store?
4) we've given up manufacturing of basic goods except food. Can't drive a car made at a McJob, or receive TV, or type snide messages like this one...
5) everyone is so pre-occupied with the "good life" that we've devalued basic skills.
Wake up, folks! India and China are HUNGRY. They'll take anything they can to improve their economies or employment rates.
There is only so much money circulating in the world economy. A 20% increase in India's and China's general (not industry-specific) standard of living would cut the US level by 50%.
Our "captains" of industry are focused on one thing: maximizing profits. They need ROI to justify inflated salaries. They DO NOT care about anything that impacts their income.
bff commented:
This is not just a problem with people who are tyring to get into the US. The PHD programs in the US have mostly foreign students. These students are required to get an H1 visa to stay in the US for 2 years. Why are we not opening the door to these people who were trained here.
Van Neumann commented:
But our immigration policy is to let in penniless, uneducated individuals from south of the border. How is this going to spark innovation? If anyone was to come up with an idea for a product or business, our present government would tax him out of business or place so many mandates on his business, he could never make a profit.
