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Let's Make America the Creation Nation Again

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You can't make a silk purse out of a sow's ear. The management consulting firm Arthur D. Little disproved this old adage in 1921 when its chemists created silk from pork byproducts.

Those were the good old days of United State's innovation and, as economist Tyler Cowen points out, in the period from 1947 to 1973 because of American creativity and productivity, the inflation adjusted median income here almost doubled. From 1973 to 2004, it rose only 22 percent and has actually declined over the past 10 years.

This has happened for a multiplicity of reasons including: inventing it here and making it there; outsourcing pieces of the supply chain as part of the value-added assembly process; automating and/or eliminating what were once more labor intensive processes; reducing public and private sector expenditures on research and development; growing the service sector and shrinking the manufacturing sector of the economy; diminishing union influence over wages and benefits; and hitting a technological plateau with no breakthrough technology to replace items such as the automobile and airplane.

Whatever the reason, it appears that when it comes to innovation that translates into economic benefits for the average citizen, the United States is now specializing in turning silk purses into sows' ears. It's time to reverse that trend and to make America the Creation Nation again.

We define "Creation Nation" as follows: a country in which the private and public sector collaborate to develop and commercialize innovative new products and services that create new businesses or business opportunities that grow the economy and generate good-paying, value-added jobs within its boundaries.

This definition emphasizes that innovation should be a means and not an end. The end should be increased GDP and enhanced Individual Economic Well-Being.

Ensuring that the benefits of innovation flow through to employees is essential to the future of the American economy and our system of capitalism. That's because as Nobel Prize-winning economist Joseph Stiglitz puts it, "No single measure can capture what is going on in a modern society, but the GDP measure fails in critical ways. We need measures that focus on how the typical individual is doing..." If the pot of discretionary income available to each individual American producer and consumer becomes increasingly smaller and smaller, we can never achieve a recovery that grows the economy in a meaningful way.

The Obama administration has always gone full throttle in its support of innovation. It released a white paper titled "A Strategy for Innovation" in September 2009. The Department of Commerce has established an Office of Innovation and Entrepreneurship. In his FY 2013 budget, President Obama proposed the creation of a National Network for Manufacturing Innovation consisting of up to 15 institutes of Manufacturing Innovation nationwide funded with a one-time infusion of $1 billion.

In a similar vein, Bruce Katz and Mark Muro of the Brookings Institution issued an important white paper, just after the November national election, subtitled, "Resetting Federal Policy to Recharge the Economy, Stabilize the Budget, and Unleash State and Metropolitan Innovation." Recommendations in that white paper as elaborated upon later include: create and build a network of 25 regional advanced industry innovation hubs to perform highly collaborative applied and process research in key areas for manufacturing innovation; launch a "Race to the Shop" competition for the most transformative "bottom-up" initiatives for manufacturing renewal; and, conduct a competition to identify multiple metropolitan initiatives each year worthy of scaling up.

Brookings will convene a major event titled "Fostering Growth through Innovation" on January 15. That event will include panels on addressing fiscal challenges, U.S. manufacturing and government performance. New papers will be issued at that meeting and as the meeting announcement states "Brookings is committed to developing a set of high-impact policy recommendations to present to the Obama administration in January in order to reinvigorate the American economy, create jobs and strengthen competitiveness."

It's not just government and the think tanks. The private sector and higher education are involved as well. General Electric has opened a custom-built facility in upstate New York close to its research campus to build state of the art new era batteries employing a technology their scientists developed. Doctor Robert Langer in his Langer Lab at the Massachusetts Institute of Technology (MIT) has "spun out companies whose products treat cancer, diabetes, heart disease, and schizophrenia, among other diseases and even thicker hair." MIT is also deeply involved in the development and dissemination of digital fabrication tools that individuals can use to custom design and construct everything from home furniture to living organs out of cells.

So, America is getting back into innovation game in a big way and working to reclaim its brand as the Creation Nation. This is one of the paths that we recommend to restore the country's competitive advantage in our book, Renewing the American Dream.

As we follow this path, however, we need to keep our eye on the prize. We must remember the ultimate goal here is not to make a silk purse out of a sow's ear but to bring home the bacon!

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