10/22/2012 03:31 pm ET Updated Dec 22, 2012

The Presidential Debate We Really Need

As the Presidential campaign intensifies, we are hearing a lot of charges and counter-charges about what caused the Great Recession, what the federal government should or should not have done, and whether we need more stimulus or spending cuts. That's absolutely the wrong debate. What we need is a debate about which candidate will be best at restoring U.S. leadership in the race for global innovation advantage. For it is innovation: whether it's the development of the newest smart phone, the installation of smart robots by a factory making appliances, or the development of new business models that must lay at the heart of economic success for high labor-cost nations like the United States. The United States cannot compete on low costs; it can only compete on innovation (including high productivity). Unfortunately, it is America's failure to keep up with the current global race for innovation, in both new and traditional industries, that is at the heart of the anemic economic recovery.

How can that be? There are now a billion people on Facebook and we "Google" the world through our smart phones, the latest being the iPhone 5, whenever and wherever we want. While it's true that these are American innovations, the American economy is much more than IT companies, no matter how innovative their products are. For Americans to enjoy a steadily increasing standard of living and ample good jobs, America needs to lead in many more industries than just IT and have a significant share of the good jobs in those industries be in the United States.

Take manufacturing. Over the last decade, America lost a staggering one-third of its manufacturing jobs, a rate of loss worse than during the Great Depression. That's an average of 17 factories and 1,276 jobs disappearing every day for 10 years. And notwithstanding the conventional wisdom, this loss is new (America lost just 2 percent of its manufacturing jobs in the 1990s) and is mostly due to a decline in manufacturing output, not superior productivity. In fact, when measured properly, U.S. manufacturing output fell 11 percent in the last decade. Compare that to its growth by at least 35 percent per decade in the 1970s, 1980s and 1990s.

America is increasingly are falling behind on innovation. When we benchmarked 44 nations, including nations in Europe and Asia, on key indicators of the rate of innovation progress over the last decade--such as growth in scientists and engineers, corporate research and development spending, venture capital investment, and number of new businesses created--the United States ranks next to last (ahead of only Italy).

The current economic debate - more stimulus or more austerity - misses the point. Even if reducing the budget deficit lowered interest rates even lower than their current rock bottom levels, low interest rates cannot spur spending and investment when wages are stagnant and investment opportunities are more abundant outside the United States. This is why corporate investment in machinery and equipment has been stagnant over the last five years. Likewise, more stimulus would be like an adrenaline shot to a heart plagued with chronic disease. It might resuscitate the heart pumping stronger for short time, but without focusing on building a healthier, more competitive heart, economic health can't be restored.

The only real answer to the economic debate is to rebuild the American economic engine--which is the one-third of the U.S. economy that competes in global markets and that shrinks if it loses that competition. If Boeing loses to Airbus, America loses jobs. If Safeway loses to Walmart, we don't.

So with two weeks left in the Presidential campaign, it's essential for the two candidates to be engaged in a robust debate around who is going to do a better of restoring American innovation and competitiveness leadership.

So what should the public be asking them? To start, we need them to explain who has the better plan to revamp the corporate tax code. The U.S. statutory corporate tax rate is the highest in the world and the effective rate is among the highest. And our research and development tax credit, once the most generous in the world, now ranks just 27th--behind even that of Brazil, China, or India.

They should be having a robust debate about how America will approach globalization and trade. With nations like China increasingly competing through cheating - manipulating their currency, stealing U.S. intellectual property, and requiring U.S. companies to turn over valuable technology as a condition of market access - what the next President does on these issues may well determine the course of the U.S. economy for a generation or more.

Finally, we need a real debate about the proper role of the government as a partner to help the private sector in winning the race for global innovation advantage. Stale debates about "makers and takers" and "who made this or that" miss the key issue: how would each candidate propose to structure federal policy so it helps our businesses win in intensely competitive global markets? This means helping businesses field a workforce with skills second to none and supporting science and technology so firms have access to the flow of innovation to help them to get to market with globally competitive products.

While America has fallen behind and lost our game, it's still possible we can get back in the race and create the millions of well-paying jobs that come with winning. But only if Washington takes these challenges seriously and examines the global race closely. And that begins with an honest and on point debate about how to win the innovation race.

Robert D. Atkinson is President of the Information Technology and Innovation Foundation, and author of the new book "Innovation Economics: The Race for Global Advantage" (Yale University Press, 2012).