Gary Shapiro2010-02-09T07:49:32-05:00Gary Shapirohttp://www.huffingtonpost.com/author/index.php?author=gary-shapiroCopyright 2008, HuffingtonPost.com, Inc.HuffingtonPost Blogger Feed for Gary ShapiroGood old fashioned elbow grease.How Union Pensions Will Challenge Our Economy, And Other Reasons to Avoid Card Checktag:www.huffingtonpost.com,2010:/theblog//3.4481562010-02-03T15:50:35-05:002010-02-04T08:10:55-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/
Pensions sound complex and boring, the very characteristics that have gotten us in such deep trouble today. Few politicians and reporters took the time to understand the implications and the costs of defined benefit pension plans.
Most union members are promised defined benefit pensions when they retire. A defined benefit plan pledges to pay a retiree a fixed amount (usually a percentage of final salary or compensation) monthly, from retirement until death. In reality, the employer cost of these plans is understated and delayed for years. Costs rise as retirees live longer, and a slow economy makes it difficult to find money to pay benefits. For years, the enormous costs and consequences of these plans were hidden, shielded by an otherwise healthy economy.
The U.S. federal government and nearly every state and local government have committed to defined benefit plans for their unionized sectors. These promises made by government would be fine if they were not so large and irresponsible. Over the years, politicians agreed to increasingly generous plans because they were easy promises to make - too easy. Any consequences would be in the future and would have little impact on the immediate next year's operating budget. Even today, despite what we now know, any challenge to existing plans or new participants would mean a controversy.
The programs are massive: the retirement program for the U.S. federal government supports more than 2.5 million annuitants. Plus, there are 50 states and thousands of local governments supporting more than 8 million current employees. California alone has 134 public retirement systems serving more than 4 million Californians, or about 11 percent of the state's population.
The payouts are generous. Most union government workers payouts are based on their years of service and total compensation in their final year. Generally the annual payout to retirees is two-to-three percent per year of service multiplied by final compensation. A 52-year-old worker making $100,000 in his final year before retiring could get $90,000 for life. In fact, in California some 4,000 retirees receive more than $100,000 annually. Many plans also provide lifetime medical benefits. These obligations are unsustainable in an economy with shrinking government revenue.
The sheer cost of these plans is suffocating government. Local and state governments are cutting to meet these costs. Furlough Fridays for students and teachers, reduced foreign language and music courses, and larger classrooms with fewer teachers, are just some of the cutbacks. Few talk about it, but the cuts combined with the payouts (plus medical care) mean a shift in spending from the young to the retired. We are now limiting children's education to pay for older Americans. This is inter-generational theft.
The high cost of pensions are not just a state and local government problem. First, 2.5 million federal government workers also have defined benefit plans. Second, the federal government is already shifting funds to state and local governments to help pay for their plans. Some one-third of last year's nearly $800 billion "stimulus" package went to states, primarily to allow state government to both avoid layoffs and pay pension obligations. No one knows what will happen when the stimulus plan funds to states run out in 2011. Yet, I could not find non-health coverage money for state and local government bailouts in the budget President Obama sent to Congress Monday.
Third, the federal government backs non-government pension programs through the Pension Benefit Guaranty Corporation (PBGC). The PBGC reported a $22 billion shortfall in 2009. Just last week, the PBGC had to rescue a union run multi-employer fund covering 5,200 unionized workers with a $117 million commitment. The plan had less than 10 percent of the required assets despite a law requiring 70 percent funding. Similarly, a United Food and Commercial Workers Local with 240 retirees became insolvent in January and required a federal bailout of more than $5 million.
These bailouts are the tip of the iceberg. Many plans are grossly underfunded. Federal bailouts will dramatically grow through the next several years. The unions are hungry for "card check" for several reasons, but one is for newly unionized companies to bolster underwater multi-employer plans. One reason Republican Senators are holding up former union leader Craig Becker's nomination to the National Labor Relations Board is because of concerns that he would seek to implement administratively "card check" without congressional approval. Testifying before the U.S. Senate Health, Education, Labor and Pensions Committee, Becker said that he would follow the law.
But unions are desperate for "card check" as new unions mean new pensions forced into multi-employer plans. This new money would bolster underfunded plan assets so unions can meet the unmet legal minimum funding levels. Moreover, it allows union overseers to justify continuing to pay themselves "administrative" expenses that are not part of their regular union salary.
Unions now have more members in government than in businesses, but the costs that union pension plans have on our nation's finances can no longer be kicked from one political administration to the next. We are in a national fiscal crisis, and union pension funding is gasoline on our financial fires.
Action is required. Here are five suggestions:
1) Immediately freeze all government defined benefit plans. This means no newly hired workers will benefit from the plans. They should be eligible for defined contribution 401(k) or 403(b) plans, which means you pay for these plans as you go.
2) Stop all consideration of any "card check" bills. The so-called Employee Free Choice Act if made law will allow secret unionization and will destroy the ability of employers to control their pension costs.
3) Stop requiring that federal government money go only to those using union labor - which is what the Obama administration and Democrats in Congress try to put in every stimulus and jobs bill. This not only raises the taxpayer cost of government programs, but it also expands the unfunded defined benefit obligations.
4) Stop "in-sourcing" Government work. The recent initiative to shift work from private employers to government does not consider the enormous future cost of government workers and the overhead that supports them.
5) Rescind state and government union defined benefit plan obligations as the sponsoring localities and states declare bankruptcy. This is unpleasant and unfair to those that have worked careers with a promised pension, but employees are creditors like everyone else, and unlike the pre-packaged GM bankruptcy, you cannot throw over all other creditors in favor of one class.
Unions, directly and indirectly, are now believed by many to be the largest source of political contributions. And judging by White House visitor records, no other interest group has such free and easy access to the Oval Office.
Some Congressional Democrats declare privately that they will never vote against union interests. Sadly, the commitment to what's best for the nation is just less important than union interests for these legislators.
It is tragic that we must focus on those who have worked their lives in service with an expectation of a fixed monthly payment, but as our nation's fiscal woes dramatically mount because of spending promiscuity, we must make tough decisions. Sadly, we will soon be trading off health care versus education versus military benefits versus pensions.
We face a looming problem, and first we must confront it. Our political leaders must make tough decisions - rather than keep putting the burden on the next generation.
Until we confront these problems, we will deepen the challenges we are creating as we put the largest portion of our resources into our retirees.
Gary Shapiro is the president and CEO of the Consumer Electronics Association, which represents more than 2,000 U.S. technology companies.
]]>State of the Union: Ask Us, Mr. Presidenttag:www.huffingtonpost.com,2010:/theblog//3.4383782010-01-27T09:57:50-05:002010-01-27T12:07:29-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/
Tonight in your State of the Union speech, I hope you challenge every American citizen. We need you to return to the frank talk that characterized your campaign. You impressed us with your honest assessment of the real issues we face and your willingness to make decisions that change the status quo.
Every day you are asked to do things for different groups of Americans and I suspect your compassion pushes you to accommodate as many of these requests as possible. This is why you are so passionate about health care and jobs. I believe it is why we had the stimulus bill, the women's wage parity law and why you are focusing on American's families.
But rather than working so hard to give, perhaps you can use your Presidential leadership to ask.
President Kennedy challenged Americans to "ask what you can do for your country." One of your top staff, Larry Summers, recently lamented that almost never has anyone come to his government office and asked what they could do for their country - rather they all ask for things for special treatment and favors from their government.
How can Americans not give when asked? We as Americans are united by our desire for a better, stronger nation. We share a love of country. We want a better future for our children and grandchildren. Our young soldiers are risking life and limb in Iraq and Afghanistan. So what is it that you could ask us to do that would be more difficult?
If you believe we need to cut down on foreign oil, then ask us. You don't have to complain about our addiction to oil, but rather challenge us to cut down on our use of oil. Set goals. Make carpooling patriotic. Offer recognition to areas that cut oil used the most. Encourage people to move near their employers. Challenge all of us for good ideas. And consider asking for support for step raises in the excise tax on oil.
If you want us to cut health care costs then urge every American to take responsibility for their health and treatment. Challenge them to lose weight and eat healthy and exercise. Ask them to state in writing their specific desires for end of life treatment. Simply knowing desires would save the family's guilty default treatment of keeping their loved one alive at any cost. Solicit expense-saving ideas and treatments from American doctors. Ask Americans to think twice before suing doctors and ask juries to reflect that not every outcome in risky medicine can be positive.
You are our national leader and leadership is about more than new laws and mandates and asking for support on votes.
If you believe in jobs and innovation as a decisive strategy for America then ask what it takes to create new jobs. Challenge employers to hire new workers and reassure them that they won't be hit with new taxes, mandates, or restrictions on trade. If you want millions of new businesses to sprout, then encourage them and ask for help in their funding.
If you are concerned about the deficit (and I know you are) then a modest freeze in spending is not enough. We need to make tough choices and you can ask for help. Ask how we can afford two wars - plus a war on drugs - plus Social Security, Medicare, agricultural subsidies, and thousands of government programs, each of which has a constituency. Tell Americans the truth about the likely bankruptcies of states and localities and the facts on the costly fixed pensions for government employees. As students are furloughed from schools, as states cut back services, Washington will be asked to spend more and Americans must know we have tough choices ahead.
You can get the help of the American people. The Detroit School Board head challenged parents and businesses, and in response, thousands have volunteered in Detroit schools. We cannot afford the government services we are getting, and we need to cut back - and you know that. The sooner you ask us to adjust and cut back our requests and expectation from government, the quicker we will.
Americans are not dumb, but we have been delusional. We have thought we could have it all - all the government service, all the new rules and mandates on business, all the lawsuits and an expectation that government will step in to support failed business models. But we know the party is ending. This is when great leadership is needed.
Anyone can lead in good times. It is tough times that challenge. Americans will stand up as long as they feel the sacrifice is shared and the result is worthy.
We need your leadership. We need you to ask. You have the bully pulpit. We are hungry for leadership.
Gary Shapiro is the president and CEO of the Consumer Electronics Association, which represents more than 2,000 U.S. technology companies.]]>Bravo, Tom Friedman: More Stimulation, Less Stimulus, and How CEA Is Building an Innovation Movementtag:www.huffingtonpost.com,2010:/theblog//3.4367252010-01-26T09:48:12-05:002010-01-27T15:02:09-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/writes in his Sunday New York Times column that: "What the country needs most now is not more government stimulus, but more stimulation."
"We need to make 2010 what Obama should have made 2009: the year of innovation, the year of making our pie bigger, the year of 'Start-Up America,'" Friedman continues. To get Americans excited about innovation and entrepreneurship, he counsels President Obama to build an "Innovation Movement" to rally citizens for positive economic change.
Friedman's perspective captures so well the sentiments of the existing Innovation Movement, a national campaign that the Consumer Electronics Association (CEA) launched six months ago, to rally the grassroots around innovation policies and entrepreneurial leadership that would help lead the economic recovery and spur job creation.
Today, more than 50,000 Americans have joined the Innovation Movement as they share a belief that our future is tied in with our ability to innovate. The Innovation Movement is urging the U.S government to focus on policies which help rather than discourage innovation. We've seek a climate favoring investment and entrepreneurship, a focus on science and math education, and trade policies encouraging exports and lower tariffs.
We've asked the Federal Communications Commission to help find more wireless spectrum for innovative broadband services. We've advocated for an updated H1B visa program to persuade the best and brightest immigrants, educated in the United States, to stay here and work. Through our "Apps for Innovation" competition, we are encouraging software developers to build apps that illuminate innovation at work and help others share that innovation across their social networks. The winning app, GovPulse, unlocks the Federal Register by making it easily searchable.
We believe innovation is the backbone of our economy and the foundation of our future prosperity.
Innovation is not a birthright, but a precious national resource
How is the U.S. government doing in terms of supporting an environment that fosters innovation? Innovation is a two-way street between innovators and the nation that supports them. Lately, we're not holding up our end of the bargain.
Just as we rely on innovators to develop the technologies and advancements that stoke our economic development, innovators rely on all of us to create and nurture a legal and economic environment that is friendly to innovation. As one side of the equation falters, the other suffers as well.
The U.S. Patent and Trademark Office recently reported that patent applications fell slightly in 2009, following years of steady increases. Taken as an isolated data point, the small drop-off may not be troubling, but in light of the larger economic picture, it becomes yet another indicator that innovation - the most important economic force of the past two decades - is under strain.
For more than a century, the United States has been a world leader in innovation. The two most ubiquitous technologies of our generation, the Internet and personal computer, are the products of American innovation, as are thousands of other products and devices used throughout the world. And for all the debate about our health-care system, American doctors and researchers lead the world in developing new treatments and technologies.
We experience the benefits of this innovative success every day, both in our standard of living and in the continued economic development spurred by our innovative industries.
If there is a downside to the United States' lengthy run as a global innovation leader, it's that Americans have come to take that success for granted. We have a tendency to think of innovation as a natural outgrowth of innate American ingenuity, rather than the result of a social and economic environment that has been carefully constructed to support innovation.
There is nothing accidental or ordained about our historic leadership in innovation. It has been painstakingly established through a commitment to free-market principles, and through a legislative environment that - with some notable exceptions - has consistently rewarded enterprise and hard work. And our culture of always challenging the status quo, fostered by the First Amendment and our immigrant heritage, has helped make America synonymous with innovation.
But by thinking of innovation as a birthright, rather than a precious and vulnerable national resource, we risk unsettling the balance that has supported decades of global economic leadership.
Innovation critical to future economic success: 96 percent of Americans
Americans know the importance of innovation. In a recent poll conducted by Zogby International for CEA, 96 percent of Americans said that innovation would be critical to the United States maintaining its global economic leadership. More than 68 percent said that innovation would be important to the future success of their employer.
Young people, in particular, are counting on the United States continuing its tradition of innovative excellence. Nearly 50 percent of respondents age 18 to 24 said that the technology industry would lead the way over other sectors in job creation.
What's less clear is whether most Americans - and indeed, even our elected officials - fully grasp the extent of their own responsibility for supporting the innovation economy.
The cornerstone of our innovative success has been a commitment to free-market economic principles and to a policy environment that encourages experimentation and enterprise. The reason that so many innovators have started their businesses here is that the United States has traditionally provided the best platform for success, with its strong consumer base, rich venture capital markets and open international trading environment.
At the same time, lawmakers have taken a big step back from our longstanding national commitment to trade, allowing key trade agreements to die on the vine and cutting American innovators off from emerging markets.
As we allow - and in many cases, encourage - these changes to take place, we need to be prepared for the consequences, especially as emerging nations step up to follow the blueprint we created.
Many Americans already sense the winds blowing in that direction. Some 40 percent of survey respondents from the Zogby poll predicted that "the next Bill Gates" would come from India or China, not the United States. Nearly 75 percent said it was "unlikely" that the United States would regain its status as the world's most competitive nation in 2010.
We can only hope that this bleak view of the future isn't set in stone, because, as Tom Friedman states so eloquently, while that may be the direction we're headed, it's still in our power to change the course. Our ballooning federal deficit and the notion that the government rather than industry creates jobs, are our two biggest threats to innovation in America.
I'd love to see President Obama initiate an Innovation Agenda this year that puts innovation and entrepreneurs at the center. Nothing could be more bipartisan than the desire to see our nation thrive and extend its track record of global innovation leadership. We know what it takes to foster innovation, even in the face of economic instability. Now we just need to be bold enough to put those policies back in place.
Gary Shapiro is the president and CEO of the Consumer Electronics Association. To join the Innovation Movement, visit www.innovation-movement.com.
]]>Must Dissent = Disloyalty?tag:www.huffingtonpost.com,2010:/theblog//3.4294242010-01-20T08:39:48-05:002010-01-20T16:33:37-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/Massachusetts's election of a Republican U.S. Senator on Tuesday night should give us pause. It should also give us hope that Americans are not sold on the extreme take-it or leave-it solutions from either political party.
The issues that split our nation into two camps are reminiscent of the late 1960s divide over the Vietnam War. My dad and I used to argue about the war - he, a WWII veteran in favor of the domino theory, and I, opposed to an immoral and unwinnable war. Turns out we were both right.
Today, my brothers and I argue over the policies of health care, the federal deficit, and the role of government. My dad listened to me on Vietnam and eventually opposed the war, as did many other members of his generation who took part in the debate over the war. However, today's times are different. I don't sense any real listening going on in the discussion on health care or the deficit, either with my brothers - or by anyone else.
Opinions have been formed. The political parties have their positions. Winning is more important than substance. You are either for health reform and government stimulus spending - or you are against it.
To Democrats and their health-care reform supporters, reform is solely focused on the millions of Americans who are unemployed or uninsured. Supporters trust their political leaders who declare the government is "creating and saving jobs." They believe health-care reform will not increase the deficit, cut innovative medical treatments, or reduce the quality of care they now receive. They deride their opponents as greedy, self-centered, "tea party" extremists unwilling to care about any others but themselves.
But how would so many who founded or died for our nation feel about the lack of real debate and the questioned patriotism by both sides in the stimulus and health-care debate? The $787 billion stimulus package was about 1,400 pages long and voted on by the House just 13 hours after it was printed. It was a leadership bill loaded with pork. The health-care bill has endured an even more wandering path (much of it crafted behind closed doors), with it ultimately being even longer than the stimulus bill and also stuffed with pork spending.
Supporters of these measures focus on the good they do. Helping the unemployed, stimulating the economy and giving medical care to the uninsured - what laudable goals! But each has its costs and every dollar spent on these programs is taken from some other program or future citizen. The record deficits for the stimulus package are worsened by the hidden deficits in the health-care package. The $500 billon dollars in undefined Medicare savings is an expense that Democratic legislators with a wink and nod say will be restored later.
And what of the substance? Where is the debate? Where is the fact that our nation is the most innovative in health care and this "reform" bill would shift us from a nation of innovators with highly trained specialists to a nation where health care is the lowest denominator? Is anyone paying attention to the fact that every organized group of specialists opposes the bill and only the American Medical Association (representing fewer than one in three doctors) tepidly supports it? Why is there no malpractice reform? Why do we ignore the end-of-life costs and discourage people from declaring their own intent, leaving instead to guilt-ridden families the hard decisions that invariably, artificially and expensively prolong lives of those no longer sentient?
The only substance debated and covered in the press was that of mistakenly called "death panels" and the so-called "public option." Yet, our world has been divided into those who support the bill and those whom our political leadership implies (or outright states) are disloyal, unethical or worse because they do not.
A great American once said: "There should always be room for dissent...It is a tragic period for a nation where we equate dissent with disloyalty." I heard this Monday as I celebrated Dr. Martin Luther King Day by watching him in a newly released television interview.
We are a great nation because we dissent and disagree, and we get the truth on the table. Americans are innovative because we want a better life for our children. Our First Amendment encourages this disagreement. Google just announced it may remove itself from China because of censorship - an American business forgoing profits because our right of dissent is so fundamental!
We must exercise this right! We must reject those political leaders who urge anyone to simply toe the party line and neither question nor dissent. Our nation is not a duopoly of two parties and two views. We are a mosaic where the best of each party and other ideas should be considered and if wise, embraced. This requires more debate, more thought and more work - but it produces a better result.
We can heal if we listen. We can listen if we engage. We can engage if we define what we want, and then we work for it.
I know what I want for our nation: a balanced budget that provides health care for everyone and encourages innovation. I want fewer lawsuits. I want us out of unwinnable wars.
What do you want: Blind obedience to a divisive party line or a long-term future for which your grandchildren will thank you?
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
]]>A Holiday Wish List That No One Should Fulfilltag:www.huffingtonpost.com,2009:/theblog//3.3957272009-12-17T11:46:03-05:002009-12-17T13:14:12-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/
So on the eve of 2010, here is my list of the "top ten" things our government could do in 2010 to reverse our nascent economic recovery. Of course, government shouldn't do any of these things - but its track record from 2009 causes me grave concern. [Note to Santa: if our government actually does any of the things on this list, please withhold presents from them in 2010.]
First, spend taxpayer money on feel-good programs, stimulus programs, rebates, cash for clunkers and anything else which has a short-term good feeling and a long-term hangover the next generation will pay for. This is a long-term investment in giving our kids a debt they cannot possibly repay. It will destroy their future and our nation - but hey - we feel good today.
Second, bail out the states so they don't have to make tough decisions about bloated governments. Give about one-third of stimulus money to states so they don't have to confront out-of-control spending and the high cost of defined benefit programs for their government employees. When this payment runs out in 2011, states will be worse off and still unable to meet the commitments they promised to their large workforces. Many states will be back in 2011 asking for an even bigger handout. And we can count these government jobs as "saved" by government scorekeepers! States will be more reliant on Uncle Sam (and this won't stop Congress from imposing new costs on states!).
Third, reward poorly run and inefficient American companies. Bailing out money-losing companies like GM, Chrysler and AIG is a great way to waste American taxpayer money and hurt better-run and more-efficient competitors. This rewards our friends the unions that brought down GM and Chrysler. The new union and government owners cannot make competitive decisions (a fact proven repeatedly in the last year by GM) but instead will be guided by political decisions. Their competitive future is dismal and we are guaranteed further American weakness as they return and insist on further bailouts and special treatment. This virtuous circle will allow politicians to claim they are protecting American jobs. Americans may still choose to buy cars from companies like Ford, VW, Toyota and BMW, which are not getting bailouts, but are making cars in the United States.
Fourth, bring down American crown-jewel companies that are the big job creators, innovators and the future of America. Companies like Google, Microsoft, Apple, Intel and Qualcomm are the envy of the world, and as the world comes after them you would expect the United States to stand up and protect them. Instead, as foreign governments challenge them with vague "monopolization" claims, the U.S. government appears to be mute. Instead, the U.S. government appears to be piling on - witness the Federal Trade Commission lawsuit against Intel.
Using some vague "unfair competition" complaint, the FTC is using new theories and an unprecedented "sue first and discover later" approach to challenge one of America's best companies. Worse, the government is insisting that Intel can only create products that are open to its competitors. It also seeks to ban volume discounts - a simple fact of a competitive world. Intel is a crown jewel of America, invests heavily in R&D on US soil, employs tens of thousands of Americans in good jobs and by any account has not hurt competition. This American attack on Intel is unprecedented and harmful to the future of innovation.
Fifth, raise taxes on job creators and make secret unionization possible. We must do everything possible to discourage successful U.S. companies from feeling comfortable investing in new jobs. That means we cannot allow a stable tax environment, a cautious approach to unionization efforts, and a resistance to further burdens on employers. Card check, health-care reform and several proposals on the table to raise taxes will push new burdens and costs on U.S. employers heavily, so that it is difficult to see why a company would choose to create new jobs in the United States.
Sixth, attack one of the most successful areas of American leadership - health care - by creating a lowest common denominator system. Health care is 16 percent of GDP, so it is a juicy target for mischief. And when doing so, make sure to protect America's one million lawyers so they can continue to be employed. They will also make sure doctors waste plenty of money testing patients unnecessarily so they don't get sued.
Seventh, make sure Americans spend heavily on a complex cap-and-trade system and do not invest in nuclear energy or use their own fuel in Alaska. Keep fuel prices low with low taxes so people feel no need to buy smaller, energy-efficient cars.
Eighth, continue to commit our armed forces to unending conflicts that drain our budget and resources without making America demonstrably safer.
Ninth, keep and put up barriers to trade. Pass more "Buy American" provisions so other countries can retaliate and put up barriers to American exports. Congress should also simply sit on the three free trade agreements that would remove high tariffs on American exports. Do the union bidding and hold up pending trade agreements with Korea, Panama and Colombia as American companies pay hundreds of millions of dollars more in tariffs, hurting our exports and ability to compete. Meanwhile, these countries have focused away from the United States and are cutting deals with a gleeful Europe and Canada. The world is amazed at the unique American botoxic arrogance to bite off the nose of trade to appease the incessant priggishness of the myopic labor leaders who fund them.
Tenth, and finally, make it as difficult as possible for business to occur in the United States. Block foreign investors and businessmen from getting visas to come to the United States to view products or attend trade shows. Make sure that we have ethics rules and policies that block anyone in government from helping host international visitors who flock to trade shows like the International CES, our event in Las Vegas. German Prime Minister Angela Merkel hosts dinners for international guests at our competitive event in Germany. Our White House could, but doesn't, help our economy by welcoming the 25,000 business leaders from abroad that the International CES brings to our country each January.
Here's to a happy, healthy and prosperous 2010 - and to policymakers who know how to get us there.
Gary Shapiro is the president and CEO of the Consumer Electronics Association. ]]>An Open Letter to President Obama on the Jobs Summittag:www.huffingtonpost.com,2009:/theblog//3.3800382009-12-04T10:10:49-05:002009-12-04T10:18:39-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/"What I'm interested in is taking action right now to help businesses create jobs right now, in the near term. " - President Barack Obama, Jobs Summit, December 3, 2009
I know you have received lots of ideas at this summit - many of which require even more government spending. As you head out to meet directly with small business owners in the coming days, you'll no doubt hear many new ideas for how the government can create jobs. Hopefully the message you'll hear loudest is that government doesn't create jobs - businesses do. And here are a few ideas that will create jobs so that more Americans with jobs can pay taxes and help reduce the deficit.
Get the trade agreements before Congress passed. Each of the agreements will cut tariffs for American exports thus allowing our companies to hire people. Ninety-five percent of the world's consumers live outside of the United States. Our companies need access to world markets, and the absence of free-trade agreements makes our products more expensive to global consumers. That forces American companies to compete with one hand tied back.
Take "Card Check" off the table. Entrepreneurial companies are less likely to hire people if they face a secret unionization movement. Unions are looking backward - rather than focusing on creating next-generation jobs. They are seeking to swell their ranks through anti-democratic and bureaucratic maneuvering. Union membership is falling because workers in an innovation economy need the flexibility to adapt their jobs to address market demands. Unions kill innovation.
Pass tort reform. The billions of dollars spent defending lawsuits comes off the bottom line and prevents investment in new employees and research and development. Whether it is a "loser pays" system or higher standards for liability - our nation's employers can no longer afford to subsidize the nation's more than one million lawyers. It is remarkable that opponents of tort reform could ensure that pending health-care legislation contains no tort-reform provisions. Don't let our entire economy be held for ransom by trial lawyers.
Stand by American's crown-jewel companies. We have great American companies that export. Our own antitrust regulators increasingly use vague definitions of monopolization, and this encourages Europeans to attack them. The record $1.5 billion fine against Intel is an example. Apple, Google, Qualcomm, Microsoft and others are all under attack. Defend them so they can hire more Americans. European governments stand up for their companies - we must too, particularly since our largest and best tech companies employ millions of Americans.
Encourage the best and brightest to come to the United States. This sounds counterintuitive, but every entrepreneurial immigrant in our country who creates a company and exports thereby creates additional American jobs. Many of our most successful tech companies were founded by immigrants and today employ millions. Where we once welcomed immigrants we now make it difficult for global entrepreneurs to take their ideas to America. Indeed, our convoluted visa process makes it nearly impossible even for business owners seeking to buy American goods and services to come to our country.
Ironically, then, out of control government spending will stifle the ability of the private sector to spark the very recovery you seek. Why? Interest rates are at historic lows, which would be a huge stimulant to private-sector spending if (a) the private sector had capital to invest, and (b) credit markets were sufficiently open to small businesses. By the time these two impediments to private-sector investment have lifted, the government's spending orgy will have created a public debt so momentous that only a massive interest rate increase can pay the government's bills. And sky-high interest rates will kill nascent private-sector investment.
Mr. President, your Jobs Summit is a great sign that you recognize the vital importance of job growth to a sustainable economic recovery. Government can't make companies hire - but there are many things government can do to make hiring possible.
On behalf of technology businesses across the country, I urge you to take the necessary steps - outside of additional government spending - to create an environment that creates new jobs.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
]]>Reflections on Lou Dobbs' Turbulent Departuretag:www.huffingtonpost.com,2009:/theblog//3.3565922009-11-13T08:59:34-05:002009-11-13T11:29:46-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/announced his resignation from CNN this week, terminating his reported multi-year contract with the cable network. I have been calling publicly for months for CNN to stop putting Dobbs on the air, so I think it worthwhile to reflect for a moment on why his resignation was the right decision.
Although some have decried CNN's censorship of a self-labeled opinionated voice, I reject that notion. First and foremost, I am a champion of the First Amendment. The Media Institute, a non-profit organization that includes CNN and many other major news outlets as supporters, recently honored me with their annual First Amendment award for my work in championing free speech.
I believe free speech includes the right to be heard, but not everyone has a right to his or her own television show. Lou Dobbs exploited his position as a news anchor with his own nightly show and used it as a platform to advance his xenophobic and anti-business agenda. Now that he has lost that platform, he can pitch an op-ed as readily as anyone else can - and indeed his opinions belong somewhere other than on a serious news network.
What I found most troubling about CNN's nightly airing of Dobbs' opinions and rants was the fact that CNN was carried on screens in our nation's airports. Why, I wondered, did airport managers force Americans, our overseas guests, and airline workers to watch the worst face of America?
Lou Dobbs was on at prime time for one hour every weekday on CNN, and CNN is on in 48 major airports in more than 2,000 passenger-waiting areas across America. CNN claims that more than 223 million people are exposed to its programming in American airports each year.
What did they see and hear? Dobbs railing against minorities and immigrants so much that outraged Hispanic groups formally challenged CNN. Dobbs seeking to block trade with other countries and insulting our best trading partners. Dobbs exaggerating the proportion of illegal immigrants in jails and giving air time to a white supremacist. Most significantly, what we got each day was not news, but Dobbs' opinions.
Dobbs was an opinionated bully and he used his one-hour daily forum to espouse his own brand of nastiness to those who do not look like him or have his American lineage.
Again, I believe passionately in the First Amendment. Dobbs has the right to his views, as repugnant as I find them, and CNN certainly had the right to air Dobbs. But what I objected to most was the quasi-government agencies - airports - making money by agreeing to expose those views to Americans and our international guests.
The American Association of Airport Executives ethical code is replete with bars on partisan activity and taking public policy prerogatives from the government entities that own the airports. I'm glad that Dobbs' departure from CNN means that those ethics no longer need to be translated to action. But there is still a lesson for the future in the fact that Dobbs was allowed in our airports at all.
CNN took the most trusted brand in objective news coverage and polluted it with the opinions of Lou Dobbs. No more could CNN claim to be the objective source of news it was when airports first started showing CNN in 1992.
Now that CNN has finally acted to get anti-immigrant, racist and protectionist xenophobe Lou Dobbs out of our airports and off its airwaves, this once well-regarded news outlet has an opportunity to reclaim its mantle.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
]]>Dear FCC, Please Don't Let Hollywood Break My TVtag:www.huffingtonpost.com,2009:/theblog//3.3551912009-11-12T09:47:23-05:002009-11-12T16:00:10-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/
By the end of the hearing, Committee leaders did not appear convinced that such analog connections on TV sets were in fact leading to piracy. In fact, as the transcript of the hearing reveals, Committee Chairman Arlen Specter challenged the head of the MPAA, Dan Glickman, to provide evidence in support of the alleged problem:
Chairman Specter. Mr. Glickman, lots of information about piracy from you and from the Department of Justice, but can you quantify any direct connection between piracy and the analog hole?
Mr. Glickman. We have just completed a major study called the LE case study which estimates that our companies lose about $6.1 billion a year in piracy, and as part of that--
Chairman Specter. OK. I mean from analog--I have only got 5 minutes.
Mr. Glickman. OK, $1 to $1.5 billion in what we call noncommercial copying of movies for family and friends. We believe a big part of that is due to the analog hole.
Chairman Specter. How do you arrive at the figure of $1.5 billion?
Mr. Glickman. The firm did worldwide and national piracy study focus groups. The methodology we considered to be quite good.
Chairman Specter. Well, let me ask you to supplement your answer with the specifics as to how you come to that conclusion.
Mr. Glickman. Sure, be glad to.
Chairman Specter. We would like to see the methodology because before we really tackle the problem, we want to know--before we really look for a solution, we would like to have a specification of the problem.
Mr. Glickman. We will get you that, Senator.
And what of that methodology that MPAA's Glickman said was "quite good"? It turns out it wasn't quite so good. Rather than provide the evidence requested by Congress, the MPAA was forced to confess that due to "human error" they "got the math wrong" and were unable to properly quantify piracy "losses" from analog TV connections. Forced to admit the much-ballyhooed study exaggerated the losses due to piracy, the MPAA repudiated its own analysis.
Now, having failed to make its case to the Senate, the MPAA is back - this time, before the Federal Communications Commission (FCC) - asking permission to disable lawfully purchased HDTV-capable TVs. Using an obscure procedural mechanism, MPAA is asking the FCC for authority to use "selectable output control" (SOC) to shut off TVs that do not use the motion-picture industry's preferred digital connections. (Again for the non-engineers, SOC allows content providers to shut off the video stream to any TV that is receiving content over a non-favored connection, such as analog.)
The procedural vehicle may be different, but one thing remains the same - MPAA is still unable to show any evidence of piracy through analog outputs. That is because this type of piracy largely does not exist. Most movie piracy occurs before the studios release the movies on home video, much of it through the motion picture studios and their contractors - a fact that studios hide.
Indeed, some movie studio officials concede publicly that the biggest source of movie piracy is the old-fashioned video camera concealed by a movie patron under a coat. By the time a movie is being shown on cable TV, the file-sharing horse has left the barn. And so some forward-thinking studios, proving they don't agree with the industry's piracy argument, have begun releasing some films to video-on-demand even before DVD.
Given that at least some in Hollywood acknowledge their piracy argument makes no sense, why is the MPAA focusing its vast lobbying resources on this issue and trying to get the FCC to give them the right to shut off millions of TVs? The reason is that this is not about piracy, but about control of your TV. With the ability to turn off your TV at will, the studios gain veto power over TV design and the viewer's TV experience. If they are successful, viewers will only be able to watch movies when, where and how Hollywood says.
If the MPAA gets its way and the FCC grants its wish, then 25 million lawful TV viewers who rely on analog interfaces would be subject to being shut off by Hollywood. Millions of Americans could no longer be sure the technology they purchased in good faith would continue to be fully functional.
If the FCC grants Hollywood the power to turn off analog inputs soon they will return asking for permission to unilaterally disable other features and functions. This is bad for anyone thinking of buying a new product, or who bought something in the past thinking it would work a certain way.
As flimsy as Hollywood's case appears, don't underestimate the power of the MPAA. They are a Washington powerhouse, and they have retained a fleet of DC's top lobbyists to walk the halls of the Commission on this very issue.
This approach has paid off for MPAA in the past, but things may be different this time. The new FCC Chair has declared that this Commission's decisions would be guided by data, not which pleading industry had the most political heft.
Indeed, the FCC's new leader vowed to make this the most data-driven FCC in history. Now he faces his first test: a powerful, politically connected industry is asking for permission to inconvenience millions of consumers, without offering a shred of evidence that the result will reduce piracy.
We will soon learn whether the "new FCC" is a reality. We hope they understand that to take away the consumer's ability to shift lawfully acquired content based on the speculation and whims of the MPAA is bad policy. That is why every major consumer group is on record opposing it. That is why we oppose it.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
]]>American Exporters Bleeding to Death as Trade Deals Languishtag:www.huffingtonpost.com,2009:/theblog//3.3468552009-11-05T10:23:46-05:002009-11-05T10:29:36-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/ climbs toward 10 percent and the economy faces a lengthy and uncertain recovery process, Congress and the last two administrations have caved to political pressures by protecting domestic firms and jobs with taxpayer money. Throughout history, when times are tough, the government almost always feels the tug to embrace protectionism and limit global trade. But what is ironic about this need to achieve short-term gains is that it hurts our long-term interests.
When it comes to international trade, the detriments run sky high, and the government's failure to remove costly trade barriers and open new markets for U.S. goods and services is a ticking time bomb for many American companies, particularly small businesses.
For more than two years, Congress has let languish three trade agreements that the U.S. government has negotiated with South Korea, Colombia and Panama. By not passing these agreements, the U.S. government is not only missing out on an immediate economic stimulus to this country - possibly as many as 380,000 jobs - but it is also hurting our nation's global competitiveness.
Indeed, the World Economic Forum (WEF) reported recently that the United States has lost its place as the world's most competitive nation to Switzerland, while Canada, India, Brazil and China all experienced gains. International trade, WEF explained in its annual report, is a key component to measuring competitiveness:
"In today's highly interdependent world, recovery from the present downturn will require that countries increase the amount of goods that they purchase from each other, thus spurring demand. Further lowering barriers to trade would support this process."
While the U.S. government has been slow to put in motion this core economic principle that trade leads to growth, the European Union (E.U.) and Canada have fully embraced it as critical to their own recovery strategies - to the further detriment of U.S. competitiveness.
On October 15, the E.U. and South Korea signed one of the largest bilateral trade agreements ever negotiated. In 2008, two-way trade in goods between the two already totaled about $97.1 billion. Furthermore, the E.U.-Korea deal will immediately eliminate more than $2.3 billion in tariffs paid by European exporters and resolve market barriers in the telecommunications, financial and legal services industries.
The trade deal is just one measure of the European Union's continual efforts to strengthen its competitiveness. With a final signature received on November 3, all E.U. member states have now ratified the Lisbon Treaty, which will enter into force on December 1. This treaty will streamline decisions made in the E.U., including on trade issues, and will require consensus only from its governing body, rather than all 27 member states.
Meanwhile, Canada has signed a comprehensive trade deal with Colombia that is expected to receive speedy ratification by its House of Commons. Statistics Canada, the government's statistical research arm, reported this year that Canada's exports to Latin America grew nearly three times more than U.S. exports to the region. The Colombia trade agreement is expected to further boost growth.
As the E.U. and Canada forge ahead with trade agreements with Colombia, Panama and South Korea, it's U.S. consumers and exporters who are being hurt financially. Take Colombia as a powerful example of the lost opportunity. The third largest market in South America, Colombia's economy has experienced explosive growth, on average seven percent annually, over the past four years. The U.S. International Trade Commission reports that the U.S.-Colombia trade agreement would boost the U.S. GPD by $2.5 billion and save U.S. exporters as much as $2 million a day by eliminating existing tariffs.
The E.U. and Canada trade deals will help them succeed at increasing their global market share. Meanwhile, the U.S. government, by its simple failure to take action on trade, is slowly tightening the rope around the hands of American companies and their employees.
This inaction is all the more frustrating because President Obama and U.S. Trade Representative Ron Kirk have spoken positively on trade and pointed to its key role in reviving the economy and creating U.S. jobs. On September 14, speaking in New York, President Obama explained:
"A healthy economy in the 21st century also depends on our ability to buy and sell goods in markets across the globe. And make no mistake, this administration is committed to pursuing expanded trade and new trade agreements. It is absolutely essential to our economic future."
The president's words versus the government's dormancy on trade leaves me puzzled. At this critical junction in our economy, Americans need more than symbolism - they need government action. We are ready for the White House to translate promises into achievements. Oratory alone does not boost U.S. exports, lift the GDP and create jobs. Those policy successes will require President Obama and Ambassador Kirk to implement a trade policy that gets American back on track.
The first step would be for the U.S. Trade Representative to move forward on its trade agenda revealed earlier this year. For months, the trade office has told us they are "evaluating" the benefits and gathering public comments on the Colombia, Panama and South Korea. This evaluation period will supposedly enable the White House to establish "benchmarks" they say are needed before they can make a recommendation to Congress.
What the administration even means by "benchmarks" still remains nebulous, but the comments submitted on the pending agreements show a groundswell of public support. For the South Korean agreement, of the 342 public comments submitted, 296 were positive with more than 90 percent in favor of passage.
With each day that passes, American exporters are slowly bleeding to death as they wait for genuine leadership on trade to emerge from their government and a coherent trade policy, negotiated years ago with Colombia, Panama and South Korea, to be put in place.
If our elected officials are serious about enacting policies that will help the United States recover from this deep and painful recession, America must once again lead the charge to reduce export barriers around the world. Another stimulus package that will only add to the federal deficit will not suffice. Rather, history and simple economics have proven that trade works. Trade spurs innovation, creates good-paying domestic jobs, and boosts exports.
The Obama administration must stop trying to assuage party constituencies and instead demonstrate definitive leadership on an issue of utmost importance for America's future and global strength.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
]]>Innovation in America: An Autobahn, or a Suburban Street With Speed Bumps?tag:www.huffingtonpost.com,2009:/theblog//3.3435102009-11-03T09:35:39-05:002009-11-04T19:03:20-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/
The slow pace of innovation of my childhood is particularly stark to me given that I get to enjoy amazing new technological advances through the eyes of my own one-year-old child. Advances that took years in my youth will take weeks in his. My son's childhood will be filled with e-books, 3-D, GPS and more. I can't even imagine what astonishing technologies will be part of his life. But my fear is that his future won't include the rapid pace of innovation that we have enjoyed in recent years. What if decades roll by and innovation stands still?
Believe it or not, there is a crisis in the air - quite literally - that could threaten the innovation economy that is bringing our nation back from the brink. It is the current spectrum crisis - the impending exhaustion of our available wireless bandwidth - that threatens to halt innovation. If the current inefficient allocation and use of spectrum continues, I fear the millions of consumers demanding more robust connectivity will be left empty-handed.
I have had the opportunity during my 27-year tenure at the Consumer Electronics Association to see a limitless array of innovative new products come to market. I have stood on the show floor of the International CES and been blown away by ever-smaller and faster products that do things that were unimaginable only a few years ago. And over the past decade, what has been most obvious and spectacular to me is the trend toward limitless connectivity via spectrum.
Our products are no longer stand-alone electronics. Wireless no longer means battery-operated. Consumer electronics are amazing products, made incredible by their ability to connect anywhere and anytime.
Driven by spiraling consumer demand, next-generation devices allow us to work and play wirelessly and remotely. They can do things that just a year ago could only be done through a wired network. For many consumers, the voice capability on their phone is secondary to the ability to stream video from YouTube, listen to Pandora, or upload photos to Facebook. Many laptops today are not even sold with an Ethernet port - their only connectivity is via a wireless network.
These products power-up and begin to scan for a network. Over the past couple years, these networks have become ubiquitous. From the corner coffee shop to many cross-country flights, consumers are finding the networks that allow them anywhere/anytime connectivity and thus more freedom to live and work the way they want.
Throughout my career I have overcome many roadblocks on the way to seeing the anywhere/anytime principle come to fruition--from court cases in the 1980s advocating the rights of consumers to make home recordings, to the fight to ensure the success of the DTV transition.
I have fought to ensure the growth of innovation and mobility. Many of our victories over the years seemed to be the beginning of an open autobahn of connectivity and technology. I am still holding out hope that the spectrum autobahn is still possible and that innovation will not be thwarted.
As an industry we have fought to protect mobility from the moment it was threatened. And just as we are closing in on the ability to do absolutely everything on the go - audio, video, data, voice - I fear we are racing toward a brick wall. If we do not have enough spectrum allocated for wireless broadband, a brick wall will separate the United States from innovation.
The scarcity of spectrum threatens our national priorities and competitiveness. If our broadband networks can remain cutting edge it will allow consumers, businesses and public and private institutions to take full advantage of innovative new applications. From telework to telemedicine, this access will be life changing to Americans. We have always been the leader in innovation and in technology, but we are at risk of losing that coveted position.
There are swaths of inefficiently used spectrum that should be reclaimed and reallocated for use that best serves the public interest. And we must take the time to ensure that all policies for managing our spectrum are as efficient as the technology using it.
I don't believe all the answers are obvious yet. But I do believe before any decisions can be made an inventory must be taken of existing spectrum uses so that the future allocation of spectrum can be driven by facts, not rhetoric.
Times have changed. Innovation, as always, has sped forward. Our spectrum management must keep up, or the United States and its entrepreneurs, innovative companies, students, and consumers will be left in the dust, holding phones that are nothing more than fancy calculators with the potential to do more - if only the airwaves had room.
Our shabby treatment of international guests has cost us more than the 2016 Summer Olympic Games. It costs us billions of dollars of lost business each year.
U.S. companies that make large machinery complain that their overseas competition gets business from those unwilling to be subject to the harsh U.S. visa procedures or rude treatment upon arrival at our borders. When buyers from overseas face difficulty coming here, U.S. companies must travel abroad to get business.
This is no more apparent than the challenges we face producing the nation's largest annual event, the International CES, held each January in Las Vegas. We make our show a world-class event (we were recognized last month by Trade Show Executive as the nation's "most global event"), but our nation's visa policies work against us in attracting the world to our country.
Consider the challenges faced by a Chinese buyer who wants to visit the CES to buy products made by U.S. companies. The buyer must first travel to a Chinese city with a U.S. embassy or consulate. He must wait in line and pay a $131 fee (USD). He must buy a pre-paid phone card to call and schedule an interview and return months later for that interview with his personal financial statements in hand. But to get to that interview he may wait more than two hours in line -- all this for an encounter that could last just five minutes. Afterward, the buyer will be informed whether he will receive a visa.
A U.S. business executive would not suffer this treatment. For a respected and busy Chinese businessman this is more than an annoying process -- it is easier to simply go to our competitor show in Germany. The American embassy staff is hard working and well intentioned but forced to follow arcane and harmful laws.
The result of these policies is that the United States loses out to Europe competitively. European companies pay less to reach buyers. The European economy benefits from the money spent by international visitors. The American economy and American companies lose as international visitors feel unwelcome in America.
Consider also how German political leaders support a German event that CES directly competes with for buyers, exhibitors and attention. Chancellor Angela Merkel and other leaders do everything possible to support the event -- including attending the event itself. In August, I attended the German event and spoke to Chancellor Merkel about her support of major events. She recognized how important they are to the German economy and to facilitating German business.
Contrast that to how American political leaders approach world-class events. For the most part, they simply don't go near them. First, the American ethics laws have become so absurd that many leaders that do attend are barred from eating meals or staying more than a day. Can you imagine how difficult it is to host leaders, including political leaders from other countries, when our own political leaders are effectively barred from attending our events? And our leaders also suffer from not gaining firsthand knowledge of the dynamic technology industry on display.
Indeed, the entire event business has suffered not only because of the economy, but also after unfortunate remarks President Obama made in February about TARP recipients doing business in Orlando and Las Vegas. Both cities subsequently lost several business events as concerned organizers and companies were focused on the "optics" rather than the high value of these locations for doing business.
We can only move forward and learn from the past. We need to look at visiting America through the eyes of our prospective international guests. While maintaining security is paramount, we must learn to distinguish between potential threats and legitimate business people. We need to make the experience more positive -- including signage, comfort and approach from our immigration officials. We need to change the visa laws and other laws regulating government employee travel so our own leaders can help us host international visitors and make them feel welcome.
Moreover, President Obama has the ability to change the tone and extend the welcome mat to international visitors. I urge him to make a high-visibility appearance at a Las Vegas or Orlando trade show (Mr. President, please consider this an invitation to participate in the International CES in January 2010).
Our nation remains the greatest country on the earth. But we need a dose of humility. We have to make people feel welcome if we want them to come here.
Gary Shapiro is the president and CEO of the Consumer Electronics Association. ]]>Pittsburgh Model Dramatizes Lessons for G-20 Summittag:www.huffingtonpost.com,2009:/theblog//3.2959252009-09-23T09:55:08-04:002009-11-23T05:12:01-05:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/
When the bottom fell out of the U.S. steel industry, Pittsburgh suffered one of the most devastating collapses of a major American city. But now, Pittsburgh is in the midst of a renaissance, thanks to a shift toward innovation, 21st-century jobs and an economy that embraces, rather than hides from, the global economy.
A recent article in The Economist tracks Pittsburgh's rise from depressed steel town to innovation center. Jobs in the growing fields of bio-science, electronics and nuclear engineering have replaced manufacturing jobs so effectively that Pittsburgh's unemployment rate is nearly two percentage points lower than the national average.
Pittsburgh's experience offers a road map for American cities adjusting to manufacturing downturns and the new realities of the modern global economy. Pittsburgh experienced its manufacturing collapse sooner and more suddenly than the rest of the country, and has had more time to adapt to the new economic reality and thrive.
What's unclear is whether policymakers today will follow that roadmap - or even acknowledge that it exists. Since the start of the downturn we've witnessed a troubling shift away from global economic engagement and toward isolation and protectionism on Capitol Hill and around the world.
In the United States, free-trade agreements and other measures aimed at promoting innovation and competitiveness have faltered, while bailouts and protectionist policies have thrived.
Policymakers on both sides of the aisle may praise the Pittsburgh example, and encourage other cities to learn from it, but these words ring hollow when the same policymakers are hewing away at the policy framework that makes the Pittsburgh model possible.
How can national leaders urge distressed cities to embrace innovation and competitiveness one moment, and legislate against those very principles the next?
Learning from the Pittsburgh model requires an understanding of what made it possible - and what didn't. Cities emerge as innovation centers by embracing change, not by clinging to unsupportable, outmoded business models and labor practices.
Transforming old manufacturing centers like my family home of Detroit won't be easy under any circumstances. Creating modern innovation centers out of unionized industrial cities won't even be possible if we impose union straitjackets and costs and undercut the ability of innovators to thrive and compete.
Protectionism thwarts innovation. It is a tempting mistress during economic difficulties, but we cannot insulate our way back to economic prosperity. To grow and create jobs for American workers, cities need access to new markets and flexibility to evolve new business models.
The G20 nations set the example for the world to follow. In the run-up to the Pittsburgh meeting G20 leaders have spoken eloquently of the need to resist protectionist measures and ensure a continued commitment to trade, but recent actions have not matched that rhetoric.
New trade barriers continue to emerge around the world, even as the continued global commitment to bailouts and government subsidies compromises effectiveness of international markets.
Here at home and elsewhere in the G20, government budget deficits, reportedly a topic for discussion in Pittsburgh, have skyrocketed. These rising debts heap a mounting burden on our nation and the inevitable higher taxes will chill the very future innovators and entrepreneurs who we expect to create the next great global prosperity.
These issues are all linked, and it is encouraging that they're on the agenda for the G20 meeting, but paying lip service to opening markets and shrinking deficits won't solve the problems that governments are partially responsible for creating.
We can only hope that the leaders gathered in Pittsburgh take a few moments to appreciate the remarkable journey of their host city and make a real commitment to upholding the policy framework that allowed it to take place.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
]]>Technology Rx for Health Care Reformtag:www.huffingtonpost.com,2009:/theblog//3.2749162009-09-02T09:10:08-04:002009-10-18T05:12:01-04:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/
Advocates on every side should consider these market-based lessons, as they are relevant to the current health care debate.
1. Competition produces better products and lower prices. Consumer electronics is an intensely competitive, low-margin business. Companies that succeed do so on innovation, quality, reputation and/or efficiency. Consumers research carefully before buying as their money is on the line.
Lesson for Congress: Competition requires consumer choice and information. Consumer insurance choice is limited as companies are artificially restricted from competing across state lines. Consumers have little incentive to be smart purchasers as someone else is often paying -- many doctors see patients flood their offices once their deductibles are met. Consumers should always pay a portion of their health care costs.
2. Innovation is rewarded. The first to market takes big risks but also gains in sales, reputation and in market share. Failure is considered a learning experience.
Lesson for Congress: The proposals being debated ignore the risks and costs imposed on health care providers (malpractice litigation, for example) without addressing incentives for health care providers. My wife, a retinal surgeon, has developed a promising treatment that could help thousands of macular degeneration patients avoid a lifetime of uncomfortable and costly injections and save Medicare millions of dollars. Yet there is little financial incentive for her to pursue further development of this treatment, and it will certainly be opposed by drug companies.
3. Government-set standards discourage innovation. The marketplace provides it. For several years various policymakers have tried to impose design standards on technology -- which fortunately our industry has defeated, to the benefit of everyone. We beat back efforts to restrict recording capability, add government-mandated buttons to the remote control, equalize volume, make every product include features that few would want but all would pay for, and create products which reject every type of interference. Instead, the industry let the consumer choose what they wanted and this has produced a robustly competitive market that did not foreclose introduction of products like the iPod, the personal video recorder and HDTV.
Lesson for Congress: Some current reform proposals presume health care savings as doctors are forced to follow certain treatment regimens. This will dramatically discourage the type of innovation, which has made our nation the health care destination for the world's wealthiest people.
4. Never go large scale without testing and proving the concept or model first. No company starts without a prototype. The prototype is tested, researched and given to carefully chosen users for feedback. Nothing is perfect from the start so production is raised as market demand builds and feedback comes back.
Lesson for Congress: Without a national consensus, radically changing an industry that consumes 17 percent of our GDP is a risk that no rational or strategic business would undertake as it has a high certainty of failure. Congress should try some pilot projects and evaluate their success.
5. When things are not going well, define the real problem. Companies with declining sales undertake rigorous analysis of what they are doing wrong -- it's a matter of survival and necessity. When Best Buy was on its deathbed a dozen years ago it brought in teams that honestly assessed the cause of the problems, and the company changed to correct them, succeeding. Companies like Apple, Intel, Motorola, HP and TI have redefined themselves repeatedly by confronting their problems and acting to shift the direction of the company.
Lesson for Congress: Our nation's health care costs and large uninsured population are the problems Congress must address. The costs stem from a lack of information and competition, a population that engages in unhealthy behavior (obesity reportedly adds $147 billion annually to health care costs), unnecessary testing to avoid litigation, and end-of-life costs consuming much of all health care spending. A cardiologist I know performed invasive cardio procedures this year on two terminal Alzheimer patients, one over 90 years old, as both lacked living wills and their family members asked they be kept alive at any cost. Simply encouraging living wills when getting a drivers license could cut health care costs.
The health care debate is important and sadly divisive. But like a nation going to war, a consensus is needed and we lack that consensus. Congress should borrow a prescription from the most innovative industry and follow these market-driven principles. It should also remember the physician adage: first do no harm.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
]]>Trucks, Drugs and NAFTA: Time for Congress to do the Right Thingtag:www.huffingtonpost.com,2009:/theblog//3.2468692009-07-29T09:55:13-04:002009-08-29T05:12:01-04:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/
Further south, police and demonstrators face off in the streets of Honduras. Avowed U.S. enemy Hugo Chavez uses his oil wealth to prop up sympathetic regimes in Bolivia and Nicaragua, while supporting an insurgency against a pro-American government in Colombia. As the leader of the global economy, the United States thrives in a stable world -- and Latin America becomes more chaotic by the day.
One effective way we can help restore stability to Latin America is through economic engagement. But instead of extending a stabilizing hand, we have largely turned away, as evidenced by stalled trade agreements with Colombia and Panama.
In fact, trade between the United States and Mexico totaled $368 billion in 2008, making Mexico our third-largest U.S. trading partner. One would think that in difficult economic times our legislators would be doing everything in their power to open new markets to American goods, not close them.
Of course, Mexico did not take lightly to the U.S. closing our border to their trucks -- that's why they're called "trade wars." Citing United States' failure to its NAFTA commitments, the Mexican government instituted retaliatory tariffs on $2.4 billion worth of U.S. manufactured and agricultural exports on March 19th. The tariffs, which are allowed under the rules of international trade, range from 10 to 45 percent.
This protectionist tit-for-tat has impacted a range of U.S. companies trying to compete in the Mexican market. A June 8th letter from 24 U.S. legislators to President Obama noted that "many companies are being forced to shift production abroad or simply stop shipments."
"Over $1.5 billion in U.S. manufactured products and $900 million in U.S. agriculture products are impacted by the retaliatory tariffs," the letter continued.
What's worse is that companies are preparing to close lines in the U.S. and shift production to Canada, where duty-free treatment continues. The shift in production will cost local communities jobs with a ripple effect all the way along the supply chain.
Mexico has said it will not remove the tariffs until the U.S. government reinstates the cross-border program or otherwise adheres to the NAFTA accord, under which Mexican trucks are permitted to enter the U.S. (and U.S. trucks may likewise enter Mexico.)
Thankfully, Congress now has an opportunity to hit the "reset" button on this needless and economically harmful dispute. Today, Senate Transportation-HUD Appropriations Subcommittee will mark up its draft fiscal 2010 spending bill. As part of this process, they have the opportunity to reauthorize Mexican trucks to come across the U.S. border.
I urge the lawmakers to make the reauthorization, and hope they choose the economy, our consumers and our national security over narrow protectionist interests.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
]]>Why China's Green Dam Proposal Endangers American Technology and Human Rightstag:www.huffingtonpost.com,2009:/theblog//3.2194922009-06-23T10:25:44-04:002009-07-24T05:12:01-04:00Gary Shapirohttp://www.huffingtonpost.com/gary-shapiro/This so-called "Green Dam" software ostensibly is aimed at blocking child pornography and other vile sites. In Chinese, "green" and "clean" are interchangeable -- here, the idea being that software is supposed to keep computers clean.
Why should we care what China does as it is a sovereign, Communist, non-democratic country? It shares no version of our First Amendment rights, and does not claim to have a free marketplace of ideas. We can even agree with the Chinese that child pornography is heinous, immoral and should be stopped in any possible way.
But the fear inside and outside of China is that this government mandate endangers human rights and technology in general. Requiring a specific software program on every computer is an invitation for both disaster and for unprecedented control. If this mandate stands, there are three possible outcomes: the software works as promised, it doesn't work, or whether or not it works it will create havoc.
As to whether the Green Dam program works, we are doubtful. For one thing, the government paid two tiny unknown Chinese software companies over $30 million to develop this software. Chinese procurement policy is not as transparent as ours, so competitive bidding and competence may have been sacrificed for kickbacks or favoritism. And one software company is already claiming that its filtering technology was illegally appropriated by the Chinese government and used in Green Dam.
But even if it works on some level, Americans would have to view Green Dam as ethically flawed. Our view of basic human rights is that every individual should have the right to explore the world, through freedom of digital travel. This is not just about child pornography, but more about controlling access to information. We know the Chinese government will use Green Dam to block discussions of Tibet, Taiwan, and freedom. And while we can understand a country's right to not adopt our laws, we struggle with how far any country should be allowed to censor and block its citizens from access to information. Plus, it doesn't seem right to require every computer maker to package and pay for any specific type of software.
But let's assume we can accept a country's sovereign right to require that censorware be packaged with a computer, this type of software will certainly be hacked. Smart programmers can get around almost any block, and the largest country in the world mandating the same software program on every computer is an invitation for hackers.
And whether it is hackers or the Chinese government, the risk is not only censorship, but control or even massive destruction. Imagine if you could control the software put on one billion computers in a country. You could destroy the computers by creating a virus. You could shut them off all at once. You could turn them on and send them to the same landing page. You could turn them into bots whose mission is to connect to the Internet and destroy other computers or even the Internet itself. They could be turned into hacking devices aimed at disrupting the world's financial system, electrical grid, water systems, websites, or other sources of connectivity, finance and commerce. As almost everything is run by computer, with control of millions of computers, it just takes imagination, power and desire to mess up the world on a grand scale.
Computers are powerful tools. When any government demands control of its citizens' computers, the world must take note. I urge the technology community to resist publicly any further such efforts and explain to Beijing that control through mandatory software is unacceptable.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.
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