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Buy the Book
Innovate or Languish
A full-throated defense of innovation and creative destruction from someone who knows.
The Comeback: How Innovation Will Restore the American
Dream.
By Gary
Shapiro
(Beaufort Books, 204 pages,
$24.95)
“We are the first American generation that has failed to sacrifice for the next generation.”
A nation that is transitioning from thriftiness, ingenuity, and resourcefulness to bureaucratization, rent-seeking, and stagnation — that is the America that Gary Shapiro, the head of the Consumer Electronics Association, sees today. The Comeback: How Innovation Will Restore the American Dream, is his response to this crisis: a full-throated defense of innovation and creative destruction, from someone who knows.
Creative destruction is the phrase popularized by the great early 20th-century economist Joseph Schumpeter, who argued that economic growth depended on innovation even though it often is disruptive at first. Shapiro uses the examples of cell phones and Internet travel sites to illustrate the principle: no one now would argue that those weren’t great inventions, although they probably didn’t seem so to phone booth installers and travel agents when they debuted.
No industry has seen as much innovation, or as much constant turmoil, over the past decade as Shapiro’s — namely, technology and consumer electronics. In many ways, consumer technology is one of the few sectors of the economy that has “worked” over the Bush and Obama years, improving the quality of life for Americans of all socioeconomic backgrounds. That fact is not an accident, in Shapiro’s estimation. As a product of this industry, Shapiro is well positioned to proclaim some obvious, hard truths about the state of the U.S. economy.
Shapiro’s main theme is that, in key areas, the U.S. has ceased endeavoring, and become lethargic. For instance, he points out that our inefficient health care system is about to become even less innovative, thanks to Obamacare. Shapiro notes that Obamacare was never intended to reform the system: “The bill’s focus was obtaining coverage for working poor Americans who do not presently have health-care coverage. Most of the bill prescribed a method of defining the coverage and then imagining creative ways of paying for it.”
Government overreach is a problem in every sector. Shapiro uses the growth of Washington, D.C., as a proxy measure for the encroachment of government: “Our tale of two cities is the story of how Washington, D.C., like Cicero’s Rome, has grown out of control at the direct expense of our once-thriving private sector, with Detroit as one very painful example.”
The lesson of Detroit, according to Shapiro, is that a city will fail if creative destruction is not allowed to take place, and instead resources are shifted to incumbent industries (in Detroit’s case, the automakers) and away from potential entrepreneurs.
D.C., meanwhile, exemplifies rent-seeking. Shapiro reports that one of every 12 D.C. residents is a lawyer — 10 times the rate of any other city. The greater D.C. area is now home to six of the 10 wealthiest counties in the country, and is adding residents constantly. Meanwhile, Detroit has lost half its population over the past 50 years. And looming over everything, representing the aggregation of all the instances of Washington’s over-expansion, is the enormous federal debt.
Shapiro’s fear is that the U.S. could easily become one large Detroit, at the same time that China and other emerging economies embrace many of the institutions that made the U.S. innovative and exceptional in the first place. He identifies a number of areas in which the clear solution is to remove the obstacles created by government regulation and usher in private sector discipline.
These include trade (free it up), education (rein in teachers’ unions), immigration (let the smart ones stay), and so forth in a number of different sectors.
Shapiro’s proposed solutions probably aren’t anything new to readers familiar with Washington’s ways. Some of his recommendations, furthermore, are surprisingly at odds with the overall free-market attitude of the book. For example, he advocates a gasoline tax that “should be increased five cents every six months for the foreseeable future.” There’s an argument to be made that such a tax would encourage rapid innovation in alternative fuels, but this argument (and others in the book) makes it seem as though Shapiro favors pro-innovation government intervention, without regard for the underlying problem. That problem is, throughout his narrative, activist and bureaucratic government.
That being said, the biggest problem with Shapiro’s call for increased competitiveness and decreased bureaucracy is that it is too convincing. If The Comeback were the first book one read on the topic of, for instance, the unsustainable federal deficits, the reader would probably think that Shapiro had set up a straw man — the reality of U.S. law would seem too absurd otherwise. In some ways, this story needs a more probing diagnosis of the problem. How did the U.S. get so far along this road to stagnation, when every honest broker acknowledges it’s the wrong direction? That’s the deeper question facing whoever would try to lead the country out of its current predicament.
By the way, Shapiro has a thought as to who that leader may be. “Fortunately, we have some politicians who are also demonstrating common sense and backbone in response to our crises,” he writes. “Case in point is Minnesota governor Tim Pawlenty, a Republican who inherited a financially troubled state but turned the state’s finances around simply through priority setting and discipline…. Governor Pawlenty is demonstrating what must be done and can be done to reverse our economic fortunes.”
Pawlenty, of course, is now running for president. And being dubbed the pro-innovation candidate might be exactly what he needs.
About the Author
Joseph Lawler, former managing editor of The American Spectator, is editor of Real Clear Policy. Follow him on twitter: @josephlawler.
Letter to the Editor View all comments (21) | Leave a comment
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Gary| 6.20.11 @ 7:26AM
"How did the U.S. get so far along this road to stagnation, when every honest broker acknowledges it's the wrong direction?"
That's easy. It was - and is - the siren song of something-for-nothing government pandering to made-up victim classes. Such a tempting offer knocks the slats out from under the discipline of personal responsibility, that prerequesite for personal freedom.
Alan Brooks| 6.20.11 @ 4:41PM
"creative destruction"
But the pain has to spread around: to YOUR families. And it will, I absolutely guarantee it.
Stuart Koehl| 6.20.11 @ 8:36PM
Life's a b--tch. Then you die. In the interim, stop whining and try to remember that our ancestors transcended pain the likes of which this wimpy generation can't even begin to imagine. Being poor in America today means having a standard of living far beyond that open to all but the absolute richest of individuals just a century ago.
Alan Brooks| 6.20.11 @ 9:18PM
Stu,
YOUR family has to sacrifice, too. They have to feel the intense pain others do-- and they will.
Michael L. Hauschild| 6.20.11 @ 8:21AM
This is a must read for anyone wishing to grasp the significance of what is occuring.
http://www.americanthinker.com.....cared.html
Mike Rogers| 6.20.11 @ 8:42AM
Using the power of the state to force innovation in a direction that the author prescribes?
Ever read Newt's books?
Scratch both Newt and T-Paw as qualified candidates, and look for someone honest who simply says we should hew closely to the constitution and shrink government.
Darrell Judd| 6.20.11 @ 8:59AM
Innovation is nothing more than a buzzword, as is education. The reality is that whatever product that would be innovated in America would be shipped to China in terms of product management, design, engineering and manufacturing in the blink of an eye.
Stuart Koehl| 6.20.11 @ 8:37PM
I have yet to see China produce any indigenous product that was worth crap.
PolishKnight| 6.20.11 @ 10:01AM
One of the chief problems with such economic libertarians is that they fail to consider the impact of so-called free trade. Why not allow the importation of drugs and bombs? America is the one of the most open countries in the world at this time with billions of cheap Chinese goods coming in and it's not helping much, is it? How much freer could he want it?
Regarding immigration and only letting "smart" ones stay. We've already seen the effects of that with H1B's which is basically to import redundant tech workers at bargain basement wages. On the other end, the farm and hotel workers that the free traders say industry needs wind up going on welfare along with their children the moment they qualify for citizenship. Why not just have the children of the last amnesty pick the crops and change hotel beds, hmmm?
In addition, as much as these seemingly conservative and libertarian advocates preach about innovation, they are stodgy feminist apologists. Let's have a REAL free market and eliminate preferential "equal" treatment for women in the workplace and open up educational opportunities entirely on merit.
TrueBlue| 6.20.11 @ 5:58PM
So-called Equal Opportunity is definitely one of those things that bugs me. Companies having to keep up the ruse of being ethnically diverse are forced to employ people of various races and genders or they get slapped down. Yet nobody says anything against having to hire a woman over a white man (since he's not a member of a designated minority group) even if he's more qualified for a job, simply because all she has to do is yell discrimination and the company is screwed.
Occam's Tool| 6.20.11 @ 12:32PM
The Baby Boomer generation is the most self-centered and selfish generation in American history (I was born in 1962, tail end). It is no wonder, as they are also the generation that chose, to a great degree, to vilify the men who fought for their country in a way that has never been done before, or since.
But they will pass, and we will renew.
Gary| 6.20.11 @ 3:21PM
I was born in '46 right at the very beginning of this crowd. I agree. This is the group that went nuts in the 60s and infiltrated our so-called education system. Now, they run the place and have turned it into a primate house. What a mess...
Michael L. Hauschild| 6.20.11 @ 7:33PM
1947 for me. I worked as a heavy machinery operator in 1971 upon my return from VN, I made the astronomical wage of $6.50/hour and received overtime over 8/over forty (150%). The ground freezes in November/December so we were laid off. I went to the unemployment office, signed up, and on the way home stopped at a tavern we owned to have a beer. It was 10:00am and the bar was full of WWII card players, one asked, "You off work?" I said that I had signed up for unemployment. "Lazy," "kids nowadays," "We never had that in 36," etc. I never even finished the beer, walked up the street to the local Lumberyard and went to work that afternoon for $1.95 an hour, less than I would have made with the unemployment check. Do not give me any crap about hippies, war protesters, or "my" generation. Quite frankly, most of my friends from that era are exactly the same as me, and they would be just as pissed to be lumped in with whatever this cited minority is you bash all the time. Don't confuse mid America with some Ivory Tower corrupted politician, in my entire life the only time I have had only one job was from 1969-1971.
Quartermaster| 6.20.11 @ 6:03PM
Free trade is not a good thing when you have a regulatory scheme as we have now. It is not a good thing when regulatory costs raises the price of business until shipping costs comes down to the point that you have Chinese laborers who are paid less in a year than what it takes to simply live here a month in direct competition with our people. Closed trade is not good when you have rampant Unionism, a branch of Marxism, with the power to close down an entire industry until management coughs up what they are demanding.
What we have now is crony capitalism. Those that do not cough up the political price of special favors will not thrive. The country will not thrive under such a regime either.
Libertarians, alas, are just another camp of idealists that will hang onto their beliefs no matter what stares them in the face. Free trade is deadly to a country under the conditions that hold in the world today. Idealists, in general, are deadly to a country, and the progressive ideal is especially deadly.
shipley130| 6.20.11 @ 8:20PM
The world doesn't want to address the issue of why things have gotten so rotten. All I know is that Glenn Beck was right when he said the mask will be coming off. They certainly have been coming off, and the liberal skin is not pretty.
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I was born in '46 right at the very beginning of this crowd. I agree. This is the group that went nuts in the 60s and infiltrated our so-called education system. Now, they run the place and have turned it into a primate house. What a mess...
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D Roamer | 7.24.11 @ 3:25PM
Some of us are the direct product of the "Greatest Generation", they wanted it better for their kids and their kids rebelled and it got out of hand. They went against what their parents fought for.
60's generation are retiring now, and perhaps many of them feel that their movement was destructive.
Innovation: During that period we have had it, computer science, medical advances, manufacturing, etc.
We need a movement that will bring the liberal/progressive movement down and never come back again.
Cain or Pawlenty would be my choice at this time.