A new debate on competitiveness policymaking

As the economy has soured, interest in the notion of competitiveness, economic strategy, and industrial policy has grown. Over the past couple years, numerous reports and studies have been issued. This morning, the Center for American Progress (CAP) released a new paper (A Focus on Competitiveness: Restructuring Policymaking for Results) that takes a different tack. The report is not about what our competitiveness strategy should be. It is focused on how to create such a strategy.
In this regard, the report takes the national security planning process as its model. Applying the national security to economic policy has a long tradition. Many years ago, I drafted legislation to create an economic policy equivalent of the National Security Council — something that was later done by Executive Order in the Clinton Administration actually following a precedent dating back to the Eisenhower Administration.
The CAP proposals take this is step further and adopt some newer models from the national security area, specifically review process. They propose the following:
• A Quadrennial Competitiveness Assessment by an independent panel of the National Academies whose objectives are to collect input and information from many sources and perform a horizon scan that identifies long-term competitiveness challenges and opportunities
• A Biannual Presidential Competitiveness Strategy that lays out the president’s competitiveness agenda and policy priorities, and captures the attention and buy-in of cabinet principals
• An Interagency Competitiveness Task Force led by a new deputy at the National Economic Council that develops the biannual strategy, oversees White House coordination of competitiveness initiatives, and monitors their implementation by agencies
• A Presidential Competitiveness Advisory Panel of business and labor leaders, academics, and other experts who assist the administration in developing policy details.
All of these are good suggestions. I especially like the idea of a review process — which was at the heart of our proposal from a number of years ago to create a Commission on the Future of the US Economy.
The CAP proposals also echo a similar approach incorporated in to the America COMPETES Act. That law mandated a review process, created a Cabinet-level council (Chaired by the Secretary of Commerce) and set up an advisory panel. These were not perfect mechanisms. As we pointed out in our policy brief, Crafting an Obama Innovation Policy, this function really needs to be driven by the White House – not the Commerce Department. But unfortunately, even these provisions were ignored by both the Bush and Obama Administrations.
The CAP proposal also re-surfaces the idea of transforming the Department of Commerce into a Department of Business, Trade, and Technology and consolidating statistical agencies (ideas we grappled with back in the 1980s). They do take it a step further by suggesting that the competitiveness review process specifically look at even broader agency consolidations by incorporating programs from other departments on worker training, education and science.
My sense is that such consolidations aren’t necessarily that helpful. I would support a re-look at the structure of the Commerce Department and the statistical agencies. But there will always be programs and policies that are important to economic competitiveness that will be part of other policy arena’s (such as defense or housing). Thus, I don’t believe a single overarching competitiveness agency is possible. Coordination – rather than consolidation – seems to be the better course of action.
I would suggest one other organizational idea: the creation of “competitiveness” agency outside the government. Specifically, we should establishment of National Foundation for Science, Technology, and Creativity patterned after the United Kingdom’s National Endowment for Science, Technology and the Arts (NESTA). As I’ve noted before, NESTA takes a broad view of innovation unlike many other technology and innovation programs. Its portfolio of programs covers a variety of areas, including science awareness, early stage investments in technology companies, open innovation projects, design, and arts and cultural fellowships. NESTA is an independent organization; it complements but does not replace government funding of science, technology, and innovation. A United States version of the endowment could be seeded as a public-private partnership, with initial funding from both sources. It would then use income from the endowment and returns from strategic investments to support most of its activities. Creating a US version of NESTA would complement the policymaking process outlined in the CAP proposal.
I applaud the folks at CAP for putting these proposals forward. It is unclear how they will be received. They should be given careful consideration. I fear, however, just at the ideas in the COMPETES Act were ignored (and then watered down in the now-stalled re-authorization), these proposals will be meet with inaction. That would be too bad.

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