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Pittsburgh Model Dramatizes Lessons for G-20 Summit

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If world leaders gathering for this week's G20 summit need evidence of the economic importance of trade and global engagement, they need look no further than their host city.

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.

Constituents need not stand on the sidelines and wring their hands in anticipation of change. If you care about the state of U.S. innovation and entrepreneurship, I encourage you to join the Innovation Movement, a national grassroots campaign with 30,000 members who support public policies that advance innovation, global competitiveness and the future of U.S. jobs.

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.