Samuelson is wrong . . . and right

Robert Samuelson’s column today in the Washington Post (Sputnik Scare, Updated) pooh-poohs the latest alarms over the decline in US economic competitiveness. Unfortunately, he is just dead wrong (see my earlier postings Innovation summit announced and Falling behind in S&T). He cites the fact that the competitiveness challenge of the 1980’s didn’t result in an economic decline.

Let’s see. In 2004, Americans’ per capita incomes averaged $38,324, reports the Conference Board. The figures for Germany and Japan were $26,937 and $29,193.

Well, the reason why both the Sputnik alarm ended with an American on the moon and the Japanese challenge ended with a higher US income is that we stepped up to the challenges — not dismissed them.
Is the case overstated? Maybe. Samuelson gives some reasonable argument for that point of view. However, after all his years as a reporter he should have enough of an understanding of both the political process and human nature to know that unless someone screams “fire” the house will burn down before anything happens.
At least Samuelson is consistent. In the 1980’s he regularly wrote about how the competitiveness challenge was overstated. Had we followed his “don’t worry” advice back then, I hate to think about where we would be today.
Having said that, there are two points I agree with Samuelson on — one point he makes explicitly and one that is implied in his comments, even though I don’t think he meant to say it.
The first point I agree with is his comment:

On being overtaken, history teaches another lesson. America’s economic strengths lie in qualities that are hard to distill into simple statistics or trends. We’ve maintained beliefs and practices that compensate for our weaknesses, including ambitiousness; openness to change (even unpleasant change); competition; hard work; and a willingness to take and reward risks. If we lose this magic combination, it won’t be China’s fault.

We have a Pogo Problem (“we have met the enemy and they are us”). It is not China’s fault that we have let our R&D budgets decline and our national technology policy wither away to almost oblivion. It is not China’s fault that we are closing the door to people and ideas from other nations. It is not China’s fault that we are pursuing a foreign policy that seems calculated to diminish the value of the US brand. It is not China’s fault that we let corporate malfeasance and the fleecing of investors flourish and are now trying to roll-back the reforms. It is not China’s fault that we continue to make excuses for a broken health care system that is driving companies (and the country) to bankruptcy while failing to provide adequate care to all. It is not China’s fault that we continue to rack up huge budget deficits so that those with the highest incomes can pay lower taxes.
No, these are not China’s fault. As Shakespeare has Caesar saying “the fault, dear Brutus, is not in our stars, but in ourselves.”
The other point that Samuelson makes in his argument — unwittingly, I believe — is that a Sputnik-like reaction is not the right answer. Unlike with Sputnik, the answer is not to simply throw engineers at the problem. Our response need to be more general and needs to understand the new nature of economic prosperity and growth. Samuelson outlines some of the elements need in our response: openness, competition, entrepreneurship. Why, for example, are we pressing for more funds to train scientists and engineers – but not for entrepreneurship and design courses? Why are we calling for more money for elementary and secondary school math and science courses but not for information literacy and creativity?
As I have said over and over, we are treating this as a technology problem, when it is an innovation problem. Like a failed General, we need to stop fighting the last war. Unfortunately, Samuelson’s column simply contributes to our viewing of today’s problems through the lens of the last war.

One thought on “Samuelson is wrong . . . and right”

  1. Getting the innovation mix right – again

    Clay Christensen makes a very important point in his essay in Sunday’s New York Times “A Capitalist’s Dilemma, Whoever Wins the Election.” Unfortunately, it is a point that has been made before in a slightly different form over 30 years…


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