What’s the Best Way to Promote Our Future Competitiveness?

This was a post on the Doing What Works project’s competitiveness blog.

Our nation’s ongoing competitiveness is key to our future prosperity. If future generations of Americans are to enjoy rising living standards, we need to ensure that American firms and workers continue to compete successfully in an increasingly globalized world.

Our new report, “A Focus on Competitiveness,” published on December 1 , looks at how federal government currently organizes itself to develop policy to enhance U.S. competitiveness. We find significant room for improvement in two key respects. First, there is insufficient focus on developing a long-term strategy on competitiveness because of the urgency of current economic problems. Second, responsibility for competitiveness is diffuse in the United States. That is, we lack a strong department tasked with championing competitiveness.

We recommend that the president issue an executive order that commits the United States to a Quadrennial Competitiveness Assessment conducted by an independent National Academies panel. In addition, the president should issue a Biannual Competitiveness Strategy, and he should be advised by a new Competitiveness Advisory Panel drawn from business and other fields. Work on long-term competitiveness should be coordinated by a new deputy director in the National Economic Council.

We also believe there is a strong case for creating a new powerful department with lead responsibility for competitiveness issues in the administration, perhaps by combining agencies responsible for trade, commerce, science, higher education, and workforce development. We recommend further work by the National Academies on this.

We want to hear your views on our proposals on this blog. We also want to hear your views on the policy issues around competitiveness. Although our report does not cover that ground, we believe there needs to be a stronger strategic agenda on competitiveness—and we want your input.

Today’s discussion features guest commentaries from Pennsylvania Gov. Ed Rendell and Kevin Sharer, chairman and chief executive officer of Amgen. For the next two weeks, we’ll post one new commentary a day from leading voices like Randall Stephenson, chairman and chief executive officer of AT&T; Bruce Mehlman, former assistant secretary for commerce; and Laura Tyson, former chair of the National Economic Council.

Most importantly, we want to hear your views—so please contribute to our online forum.

Sarah Rosen Wartell is the Executive Vice President and Jitinder Kohli is a Senior Fellow at American Progress.

This was a post on the Doing What Works project’s competitiveness blog.

Read other posts from the blog:

• An American Innovation Agenda by Kevin Sharer
• The Infrastructure Edge by Edward Rendell
• How Innovation Plays Second Fiddle by Rob Atkinson
• Feedback on the Center for American Progress’s "A Focus on Competitiveness: Restructuring Policymaking for Results" by Bruce Mehlman
• Role of Federal Government in Creating a Competitive Economy by Mark Levinson
• Accelerating Job Creation and Competitiveness from the Bottom Up by Dan Carol
• Bending the Curve as Key to Our Success by Randall Stephenson
• To Combat "Growth Deficit," Invest in R&D While Cutting Elsewhere by Laura D. Tyson
• How to Win the Race for Jobs by Jennifer Granholm

Reader’s comments for this post:

1. Brendan O’Connell

   on 01 Dec 2010 at 11:09 pm

   Wow! Streamline by creating new agencies for efficiency!
   Let’s first look at what we have and ask whether it is needed. Can we do without it? What would be consequences? Is it being done somewhere else? ( Eg. 69 different agencies are involved in some form of early chilhood education). Ask if the indivdual states could handle it better.

   A requirement for all taskforce members is that they read the Grace Commission report on reorganizing the Federal Government. Ask where we would be now if those recommendations were adopted?

2. Terry Gardiner

   on 02 Dec 2010 at 8:24 am

   As business owners we know that you must measure it if you want to change it. To change competitiveness of our economy versus our competitor nations we need to know how we are doing. We need a simple understandable measures of competitiveness where we can track our progress or lack thereof.

3. Jitinder Kohli

   on 03 Dec 2010 at 3:12 pm

   I agree Terry, we do need good measures on competitiveness. When I worked in the UK, we instituted a set of competitiveness and productivity indicators (http://stats.bis.gov.uk/competitiveness5/index.htm). Unfortunately, they were not updated as frequently as they might have been but they have been recently reinstated.

4. Michael F. Sarabia

   on 04 Dec 2010 at 12:33 am

   Three perspectives on “Competitiveness” in the USA:
   Baseline: The US Trade Deficit is approaching a Billion per working day. We buy what we need but seek the lowest prices, even if made overseas, which cuts labor here which means production and employment will continue to shrink.

   Three Alternatives:
   1. Wise Management: “Apple Research Solution”: DURING our Recession, Apple made higher profits than ever, every three months, for the last 12 months: opened 44 more stores, hired 12,300 workers and increase research by 38%, to $1.8 Billion per year. Evidently, Wise management can overcome a Recession. Apple became larger than Microsoft and it is on track to be the first $100 Billion USA company. But, The Apple Research Solution does not seem to follow set rules, maybe it follows good leaders. Or, many would follow. Apple lives in a world where they thrive doing fantastic things no one tried before.

   2. Long Deflation: “The Japan Solution”: Lower Production Costs by lowering salaries and prices. Deflation lowers salaries but brings all prices down in a “declining spiral” trend difficult to stop -like Japan found out, over about 8 years.

   3. Wise Training: “The Intel Solution”: Its focus is in lowering the Production costs instead of increasing research for new and better products. Their focus is to increase productivity by skill training and computer upgrades: Intel was offered a swamp and they built a $1 Billion factory on stilts. To increase labor skills Intel hired and trained 200 local teachers to train all workers the skills they needed. The factory started operations last month, in Vietnam. They were asked “Why there?”, Intel said “Salaries in India and China are higher and increasing.” The new version of : “Don’t lower the river, raise the bridge!” is “Don’t lower operator salaries, raise assembly line computer robot and operator skills!”

   The idea of increasing production efficiency by increased use of computers is not as widespread as it could have been. Japan has a factory with no workers or lights and produces computer-controlled robots for assembly line, sold worldwide but, not common in the USA.

   The lesson from “Wise Management” is that while in any economic situation some companies fail and others grow, it is under hard times that the management makes the greatest difference.
   Look at the “Apple Solution” and the “Intel Solution” both are great American companies that apply the lessons they know and did not wait for the Government to tell them what to do or how to do it.
   The term “Wise Management” implies the government cannot give directions that make one company better than another therefore, the government is unable to help an make one company do what may, or may not, be their own “path to success” which depends in so many variables that only the leader of a company, at one specific time and situation could write the textbook for others to repeat under similar situation. This brings up the first problem:
   A. Situations are often Unique. Lessons of the past can have factors that may be unknown but may be relevant under new situations.
   Wisdom cannot be taught in School For Wisemen and Wisewomen. The path of Apple is to push research that sells, the path of Intel is to push skills that lower production cost by use of unskilled and low price labor and bring them up to world where they can prosper.
   The highest government officials noted the benefit and not only gave Intel Tax Benefits but also gave him full access to the top leadership in government with a hot line, of sorts.

   My study of the three examples led me to the conclusion that the best, if not the only, way to bring jobs to a great number of people is not by increasing their pay for great work (fine for the special Apple work) but by increasing their working and earning skills.
   If Intel can go to Vietnam and build a $1 Billion factory with local workers taught by teachers taught by Intel on what each worker needed to know and do and how to do it, surely we can do as much here, and a lot easier since we have a common language.

   Allow me to introduce a side-issue which enhances the above and points to the importance of the need to increase worker skills.
   It is sad to accept that every year thousands of High School students graduate with no work skills and no hope of going to College either because of lack of funds or lack of minimal entrance knowledge. In some schools, the yearly tuition is over $10, ooo.

   How Europe does it: They have links between High Schools and Industry which allows students to learn about work and chose one they want to learn. The companies provide machinery, space and, even, instructors which are supplemented by school staff as deemed useful, mostly on theoretical aspects like chemistry, mathematics, physics, etc.

   The part we ignore is that a HS Graduate with no work skills and no college prospects is doomed to what? How much does a career in crime costs the population? It is cheaper to teach all HS students a career path of their choice, than to pay the increased Security costs.
   It is both a Moral and an Education Issue or, more precisely, a Moral and Education failure. costly also to the criminal to support himself -or herself (too many cities have areas where pedestrians are at risk at night from those trying to survive).

   Therefore, my recommendation is for
   I. A Federal Program to help all High Schools to train students in some job skills, even if they chose to go to college. No doubt, they will pick the least unpleasant path and they may, in time, be grateful for their choice.
   II. The very same schools would be required to offer night course, on the same topic, for all the unemployed and Low Income Workers that wish to upgrade their skills, salaries and future.

   Of course, a full program would require many pages but there are many in government much better acquainted with the need than I.

   Michael F. Sarabia
   Concord, California