All that Economic Jazz

A quintessential American art is the secret to future success.

Jazz, that distinctly American art form, has been called "the sound of surprise" -- and America's successes in competitiveness over the past century have similarly resulted from the distinctly American appetite for surprise and for bold experimentation.

That should inform our feverish efforts to inject life into our economy. From Southern California to the Silicon Valley to Detroit to New York to Boston's Route 128, the long-term challenge involves enriching America's culture of new ideas and experimentation.

By our very cultural DNA, Americans are pioneers; perfectionism is left for others. America continually is moving from an Old World to a new one, a young person forever going West in search of surprises, forever spawning whole new sectors and industries.

President Barack Obama recently warned that Japan, Spain and Germany all "surging ahead of us, poised to take the lead" in renewable energy solutions. This indeed represents a challenge. Yet we should have confidence in how Americans enjoy innovating, while other societies are more comfortable imitating; that can allow the United States to make up ground quickly because of its talent at finding entire new pathways.

The electronics and digital revolutions, personal computing and the Internet have served as testimony over the past half-century to American culture's ability to use imagination to stay ahead of those who use mere industriousness. And this is why, whereas rivals such as Germany and Japan roughly met economists' predictions for economic growth over the past 25 years, the United States tripled most economists' projections.

Still, even a genetic thirst for risk can diminish under certain pressures. The Wall Street Journal has reported a 30 percent drop in venture capital funding for start-up companies, and BusinessWeek has noted that Silicon Valley has become risk averse. Of the 10 largest worldwide IPO offerings in 2008, only one American firm (Visa) was represented. This reflects a steady slide this decade from the IPO boom era of the previous decades.

Some of the previous decade's IPO activity reflected a tech bubble, as many of those fledglings performed poorly over the long haul. What is important is that aggressive risk-taking generated new sectors of the global economy and boosted our overall long-term prospects, whereas this decade's real estate and credit boom produced nothing of new value.

We should see by now that the "real American dream" is the pioneering ambition, not a four-bedroom house. And our government should establish tax incentives accordingly. In the wake of the housing bubble-burst, we are adding to our debt by reviving institutions and sectors that added less value to our economy than they were given credit for.

The pieces are in place for a renaissance of America's inventive spirit. Wall Street is no longer the envy of the world, nor are our elementary and public school systems -- but our top 50 research universities most certainly are, as they continue to draw the top domestic and foreign minds who end up driving our economy forward.

These research universities have been innovation engines, thanks to tens of billions of dollars annually in federal funding (recently seen as an exorbitant sum, until the ongoing rescue of Wall Street put that into better perspective). They offer a manner of collaboration across disciplines that sparks new perspectives and, yes, "the sound of surprise" -- something that cannot be replicated in the national or corporate laboratories that drives research in most nations.

The next step involves creating more incentives for venture capitalists and corporations to fund new ideas that come from American research, especially those that arise along the three key frontiers of the new century: communications and digital media, biology and medicine and renewable energy.

Venture capitalists, universities and private industry can aspire to be better partners in advancing our society's larger interests. Researchers often yield abstract insights that collect dust for years before someone finds a practical, societally beneficial application. A shrewder, better risk-taking approach can translate new ideas more quickly into true economic and social value. In such a way, we can wipe out any innovation edge that may exist in Europe, the Pacific Rim or other regions.

Indeed, most nations bring a linear, symphony-like approach to invention. Without diminishing the grandeur of the classics, it should be noted that America has performed much like a jazz musician, who finds that the universe bends in accordance with him when he is open to improvisation within a moment pregnant with possibilities. That is the remarkable American spirit that, once renewed, will keep us in good stead in coming years.

Comments

[sposton]

Here is a link to on-line "The National System of Political Economy" by Friedrich List:

http://books.google.com/books?id=4uuc7tdk0Z8C

Perhaps a few of you might find it interesting.

[sposton]

Some basics about Friedrich List:

http://en.wikipedia.org/wiki/Friedrich_List

[sposton]

Our country has invested enormous amounts of money into research and development but without a structure that assures these innovations will be properly used for our economic development through manufacturing of products coming out of this research we only subsidize those who develop products but manufacture them abroad.

We think we are the smartest people on earth but we act like morons when it comes to our economy. Just like leaving the financial sector "market" to decide whatever is best for them, we have allowed our multinational corporations to act in their own interest and to the detriment of the "commons". Invent, design, manufacture and market must exist in this country. If we invent and design and then manufacture elsewhere where are our own people going to find good employment? Are they all going to be inventors, engineers and longshoremen?

We've taken our economic development for granted. Our economy did not develop on its own even if developed over a long time. Japan and China are not following our developmental design and they'd be crazy to follow the national suicide that we have been committing for the last thirty years or so.

Countries with emerging economies do not follow Anglo-Saxon free market philosophy for their national development. They follow Friedrich List's ideas for national development. Our country would much better if we we more familiar with List.

[KillTheMessenger]

"...but our top 50 research universities most certainly are, as they continue to draw the top domestic and foreign minds who end up driving our economy forward."

Even that is changing as we speak. Friends of ours who are tenure seeking academics are more and more drawn to Asia. The prestige of Asian universities and laboratories is lower than those in the US, however, they are better equipped to supply ample man-power for research. An academic who is not among the select few who can actually ask for anything they want at Harvard or Stanford but still wants to move his or her field ahead will find that Asia offers a good trade-off between prestige and scientific opportunity. The US will have to invest heavily to counteract the resulting brain-drain.