“In a dynamic world, there is no single way to approach an issue, and we must learn from one another in the process of trying to move the debate forward.” – Margaret Spellings, President, U.S. Chamber of Commerce Foundation
The Business Horizon Quarterly (BHQ) is the Forum for Innovation's signature publication. Its purpose is to share informed insights on emerging issues facing the American business community. By asking questions like “what is growth?” and “what is innovation?”, the Forum aims to inform and to spur debate.
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The United States is on an unsustainable fiscal course. This year marks the fourth in a row that the U.S. federal deficit will exceed $1.1 trillion. Since the end of 2007, the federal debt, now $11 trillion, has doubled as a share of annual GDP—from 36% to 73%. The long-term outlook is even worse.
The deficit is likely to improve in the next few years, but it will then turn upward again due to the projected rise in federal spending on Medicare and Social Security. According to the Congressional Budget Office (CBO), spending on those two programs will rise from 8.7% to 12.2% of GDP by 2037.
The good news is that U.S. lawmakers and policy experts from across the political spectrum have begun in earnest to outline possible strategies for tackling this looming debt crisis. Unsurprisingly, many suggestions—from the Left and the Right—are misguided or not particularly constructive. For example, a number of left-leaning think tanks have recently supported a “financial transactions” tax that would cause huge distortions, raise far less revenue than projected, and push more of the industry offshore. Similarly unhelpful, some conservative groups have advocated abolishing various small spending programs on the grounds that such cuts will improve the fiscal outlook, even though their elimination would have only a trivial impact on the overall federal budget.
The notion of abundance is very American. As a people, we generally like to consider the glass as half-full. We believe cheerfully that there is a future, and that not only we benefit in planning for the future, our actions should lead to a better tomorrow. When historian Alexis de Tocqueville visited the United States in 1831, he observed then that optimism defines our country. Our positive thinking continues to be a powerful inherent advantage, which most other nations do not possess, and so it is fitting that we consider a long-term strategy for national abundance.
The United States is currently in a favorable position. In the Spring 2012 issue of Business Horizon Quarterly, Joel Kotkin writes that the United States may be poised for its greatest era of opportunity due to the confluence of multiple economic, demographic, and political trends. He points to the vast available raw materials, growing foreign investment, and open immigration policies, among other factors, that fall to our nation’s advantage.
Smart leaders will ask: how can this power position be sustained? The optimist angle extends that question further: how can we grow this position?
Talent, capital, and markets are three basic levers required to influence our nation’s abundance, and with the right actions, the United States can boom in all three areas over the next 30 years. Let’s consider each area in turn.
Over the past few years new oil and natural gas discoveries have been made in places like Ohio, Pennsylvania, and North Dakota. In just a few years, North Dakota has become the second largest oil producing state in the United States, behind only Texas. Pennsylvania is becoming a leading natural gas producing state. What does this mean for U.S. energy policy?
For nearly 40 years, U.S. energy policy has been contemplated in an atmosphere of scarcity. Fear of rising energy costs. Fear of relying on imported oil. Fear of running out of energy. Policy created in an air of fear, shortage, and scarcity is an atmosphere that limits options. We have created a lottery energy policy mentality seeking the next big payoff, the silver bullet.
That is not the history of our country. We are a country of abundance. Natural abundance endowed by our creator and abundance enabled through innovation, such as the current shale oil and gas revolution. Perhaps the greatest opportunity offered by recent shale oil and gas production is that we can envision our future from the prism of wealth, plenty, and abundance. Energy policy developed in an atmosphere of abundance is developed on optimism, growth, and a bountiful future.
When editors of Life magazine ranked Thomas Edison first on the list of “the most important people of the last 1000 years,” they were recognizing the importance of innovation to improving the material condition of mankind.
Make no mistake, innovation is what drives productivity. It is what makes us wealthier and healthier (if not wiser). It is impossible to conceive of modern America today without appreciating the waves of innovation that made the United States the most powerful and dynamic large nation in history.
Innovation matters so much it’s worth pausing to ask how we get it and to wonder how we might get more of it. In this essay, I’ll propose a strategy to ensure robust American innovation over the next thirty years.
1) Getting Our Priorities Right
There are many reasons the nation must confront its large and accumulating debt. Yet, one reason that doesn’t get enough attention is that it’s harmful to American innovation. Here’s why:
Innovation is powered by many factors, one of which is the total stock of knowledge in society. The federal government helps build the stock of knowledge through its support of basic research and development.
I like to think that 30 years isn’t a particularly long time. Maybe that’s because I was born exactly that many years ago, as were millions of my cohorts in the first class of Generation Y, otherwise known as “Millennials.” In its first 30 years, my generation has experienced firsthand the advent and evolution of the Internet.
Over the next 30 years, our generation will have an ever-increasing impact on the economy, the workplace, and the way we conduct business. We don’t know much about how the world will look in 2042, but we have plenty of ideas about how we, as a Generation, want to shape it.
Just six years ago, I launched my own Internet-based company just as Facebook took off. What my company and Facebook have in common is that they were both founded by Millennials and rely heavily on a workforce that, like us, is digitally native. We tapped our cohort to help us think differently and build a different kind of company. We aren’t alone in taking such actions as more of us are building a similar future.