America at the crossroads: A path to growth and prosperity

Gary Shapiro

Guest Column by Gary Shapiro

The United States is at a crossroads. Down one path, we will find perennially high unemployment, low GDP growth and the end of American economic dominance. Down the other path, we see a rejuvenated economy, a thriving business culture that rewards risk and creates jobs and the continuance of American global leadership in innovation and creativity. Which path we take depends greatly on Washington’s actions in the near term.

Unfortunately, Washington’s policies in the past few years — decades, in some cases — does not augur well for our economic future. As president and CEO of an association representing more than 2,000 consumer technology companies, I have watched with increasing alarm our elected leaders enact policies that have hurt not only my industry but every jobs-producing company in the United States.

The unemployment rate hasn’t dipped beneath 8 percent since January 2009. Meanwhile, first-quarter GDP growth was a sputtering 0.4 percent, causing many to worry about a double-dip recession. Whether the U.S. enters another recession, we can’t characterize the current state of things as a “recovery.” Rather, what we’re experiencing today might be the “new normal” for the U.S. economy: Slow growth and chronically high unemployment.

Although few politicians will ever say it, no doubt many hope the “new normal” persists. That way, their designs for expanding the welfare-state model will get an added boost: If the U.S. is no longer the world’s economic superpower, then we must stop pursuing free-market, pro-growth policies that require low taxes, free trade and reduced government spending. Instead, we must turn inward and protect what we have left.

The debt-ceiling talks that dominated Washington this summer were conducted with the “new normal” as the backdrop. In fact, the level of the debt ceiling had little to do with it; the debate was about spending and whether or by how much we must cut it. Republicans wanted massive cuts in entitlement spending, while Democrats balked at any proposal that undermined the nation’s social safety net.

To bolster their particular arguments, both parties promoted polls showing how the American people supported their side. Americans want to curb government spending; Americans don’t want to cut entitlements; Americans don’t want higher taxes, except on the “rich”; Americans think the U.S. economy is headed for long-term decline; and so on. All of this goes to show that gauging public opinion to decide policy is not an exact science.

Indeed, movements, not polls, decide policy. We saw it with the anti-war movements during the Bush years, and the Tea Party movement today. Committed, grassroots activists catch the ears of Washington. This is one reason why the Consumer Electronics Association created the Innovation Movement in the first place and wrote the Declaration of Innovation, which lays out the steps needed for a true recovery.

As I write in my recent book, The Comeback: How Innovation Will Restore the American Dream, America’s competitive advantage is and always has been innovation. It is what we do best — not because Americans are better, but because we were blessed with an economic system that cultivated and encouraged the best and brightest among us to take a chance.

With more than 120,000 members, the Innovation Movement is a bipartisan mix of Americans who believe innovation is critical to American global leadership and economic growth. Above all, the Innovation Movement rejects the “new normal” as nothing more than an acceptance of the death of the American Dream. But to resist the “new normal,” we need to enact pro-growth, pro-innovation policies that encourage entrepreneurship, reward risk, increase investment and create jobs.

Stop the spending

For too long, a national policy of unbridled government spending has promoted economic turmoil by stifling innovation and entrepreneurship. The problem is exacerbated when the government responds to economic turmoil by increasing spending even further.  And increased spending has been the Obama administration’s response to our current economic troubles. Our insane national debt destroys investor confidence, chokes consumer confidence and saddles the next generation with obligations that will consume all other economic activity.

Pass the free trade agreements

Backed by Big Labor, Washington’s typical response to a poor jobs market is to enact tariffs or “Buy American” provisions. But this only stifles American industry. We have to accept that other countries do some things better than us, and we do some things better than other countries. It’s better to tap into those markets by passing the stalled free trade agreements with Colombia, Panama and South Korea than trying to go it alone. Fortunately, after years of dithering, Congress is finally bucking Big Labor and moving forward on passage.

Enact strategic immigration reform

Some of America’s biggest and most successful tech companies — such as Google, Intel, eBay and Yahoo! — were founded by people born outside the United States. Right now, U.S. policy is to educate foreign-born students, then kick them out once they receive their degree. Does that make any sense? Immigration laws, particularly visa reform, that encourage the world’s best and brightest to bring their talents and ambitions to America would mean more important innovation investment at home, as well as a boost in job creation.

Build a 21st-century wireless broadband system

Although U.S. wireless companies have invested billions in building their networks, there’s a finite amount of broadband to go around. With much of our underused wireless spectrum in the hands of the broadcasting industry, the rest of the world is surpassing the U.S. in this key area for future innovation. It’s time we auction off the broadcasters’ underused spectrum to wireless providers to begin building the broadband infrastructure we need to compete with our foreign competitors.

Enacting these reforms is only the beginning of sparking a true American comeback in innovation and creativity. But they are essential to restoring a measure of confidence and growth that is so visibly lacking in the U.S. economy at the moment. With America at the crossroads, there is only one path we should take: Restore the American Dream.

Gary Shapiro is president and CEO of the Consumer Electronics Association, the U.S. trade association representing some 2,000 consumer electronics companies, and author of the New York Times best-selling book The Comeback: How Innovation Will Restore the American Dream.