In the midst of the Federal government’s needless shutdown drama, a thoughtful voice has gone largely unnoticed — it is a voice from the future asking where the U.S. is headed. The voice is that of the Business Roundtable, an organization comprised of CEOs of the nation’s top companies. For the first time in quite awhile, it is raising some probing and important questions about American leadership. At a time where the country is clownishly thrashing about distracted by an ill-conceived border wall, more voices need to be asking about the nation’s future investment strategy.
The current president ran on a platform of innovative investment in infrastructure that would enable the U.S. to stay competitive. Two years into his presidency finds us without a credible infrastructure investment plan. The Business Roundtable essentially calls out the Trump Administration, in a report issued two years after Trump came into power. It complains that “U.S. government “has grown complacent — resting on legacy achievements while under-investing in the drivers and enablers needed to build on these achievements in the future.” And it correctly notes that: “The United States cannot remain a global leader in innovation unless its policy and regulatory infrastructure is responsive.”
Both Democrats and Republicans (and every other party) should pause from The Wall-mania and take a moment to consider four compelling points made in the Roundtable Report.
CONTEXT OF THE REPORT
The report points out that during the Cold War, the United States had a national strategy for innovation — one that put a man on the moon, created the internet and the modern computing industry, and established the United States as the global leader in the development of cutting-edge technologies for several decades.
However, today, the country is still riding the wave created by that strategy, but government commitment to innovation has waned. While America remains the global leader in innovation, there are legitimate concerns that it is losing ground. The foundation upon which U.S. leadership in innovation was built is being eroded by diminished investment in human capital, persistent regulatory barriers, and significant interventions by foreign governments and state-owned enterprises.
It points out how under-investment in science, technology, engineering and math (STEM) education; skilled worker training; basic research and development (R&D); and infrastructure undermine U.S. leadership. The United States, it argues, is at risk of losing its edge as the governments of other countries pour massive resources into R&D, advanced infrastructure, education and acquiring market access for their industries. For example, U.S. federal spending on R&D as a share of gross domestic product (GDP) remains at historically low levels. When it comes to basic research, federal spending levels are less than half of private-sector spending. In a similar vein, it notes that the manufacturing sector’s share of GDP (measured in terms of value added) has fallen from roughly 16 percent to just under 12 percent in the past 20 years, and its share of total U.S. employment has declined from 14 percent to 8.5 percent over the same period.
THE ROUNDTABLE’S FOUR-PRONGED PLAN
The Roundtable Report calls out U.S. leaders to refocus their efforts away from wall building and towards coming together on a national agenda to ensure that the country remains the global leader in innovation. It looks to the federal government to help build a modern and high-skilled workforce, increase support for foundational R&D, modernize regulations for emerging technologies, position America to compete and thrive globally in the innovation race, and pursue innovation inclusively. It’s four specific asks are:
- The Need To Invest in People. “America needs to build a diverse, modern and worldclass workforce for innovation across all sectors of the economy. The country should have the best education system and the most skilled workforce globally.” It warns of a serious shortage of highly skilled workers and a deteriorating, overpriced education system that has failed to fully unlocks the potential of its human capital.
- Strategic, long-term investments in science and technology. America needs to turn its attention to funding foundational research, make strategic investments in science and technology, and deploy enabling infrastructure to sustain dominance in underlying technologies, such as artificial intelligence, quantum computing, advanced robotics, aerospace and advanced medicine. “The country needs a national innovation strategy to pursue ambitious, exploratory and ground-breaking projects to solve the toughest challenges in fields as varied as health, energy, transportation, education and national security.”
- Remove roadblocks to innovation. The United States is the top global destination for developing and bringing to market innovative technologies and processes because of its market-based economy and culture of entrepreneurship and risk-taking. “The United States needs to create a regulatory environment that encourages and enables innovation.” (Editor’s Note: the regulatory appointments by the Trump Administration have been marked by scandal and incompetence, with only a few exceptions. See our ongoing blog on Trump’s regulatory lapses)
- Position America to compete and thrive worldwide. The report explains that the country that wins the innovation race wins the future. Other countries, in particular — China, are challenging U.S. leadership in the competition to secure capital and talent, bring new products and services to market, set technology standards, and dominate strategic technologies. The United States’ failure to respond to their actions while promoting market access for U.S. innovations as well as rules to protect those innovations and investments will undermine U.S. competitiveness.
It may be futile to think that Congress could come together and redouble its efforts on creating a vision for the nation’s future. But that doesn’t make it any less important.