October 5, 2008 --
financial markets in disarray, the timely publication of "The
Venturesome Economy" by Columbia University professor Amar Bhidé
reassures us that we can survive even this latest crisis.
Bhidé argues that American innovation is insulated from economic
ups and downs. The personal computer revolution was forged in the early
1980s when inflation was nearly in double digits and interest rates
even higher. Because innovation continues in good times and bad,
America's long-term trend in prosperity will continue upward.
Meticulously researched, clearly written and based on interviews
with chief executive officers, the book offers a ground-breaking and
counter-intuitive view of innovation and globalization.
Bhidé demonstrates that Americans should not be concerned about
continued expansion of innovation abroad. "As long as the United States
maintains its capacity to harness the high-level know-how to improve
the performance of its mid- and ground-level industries, the expansion
of the global supply of cutting-edge research, regardless of where it
originates, is a good thing for the United States," Bhidé says.
American companies, he explains, frequently use high-quality managerial
and marketing skills to develop new products from foreign technology.
Global innovation is hard to keep secret, and many American products,
such as iPods, are based on foreign technology.
American consumers help, too, because they buy millions of new
products, giving American firms a healthy return on successful products
and financial opportunities to develop new ones. "At the dawn of the
automobile era, only a few very rich buffs served as guinea pigs. Now,
the not-so-well off use their credit cards - or what they 'save' by
buying paper napkins in bulk at Walmart - to take their chances on
laser surgery and flat panel TVs without much foreknowledge of the
utility of their purchase," Bhidé writes.
So what are Bhidé's recommendations, and how do our presidential
candidates stack up? He says increased government funding of science
and technology is not the answer, because funding is not necessarily
directed to the most productive investments. Investments in mid- and
ground-level research could have more payoff than in cutting-edge
research, because this might result in a greater diffusion of existing
technology. Senator Obama wants to encourage scientific research
through funding, and Senator McCain wants to do it through tax credits.
Second, he says government shouldn't put money into persuading
Americans to pursue advanced degrees in science when they really want
to be managers and marketers. Managers and marketers are as important
to American technological advancement as scientists and engineers, as
the phenomenal success of the iPod shows. But both candidates want to
encourage students to major in science.
Third, Bhidé favors increased immigration not only by giving visas
to highly skilled foreign scientists, whose education has already been
paid for by our competitors, but also to immigrants without advanced
degrees, who can help advance and support technology efforts in labs
and banks. Both candidates have this right.
Although financial markets rise and fall, American innovators can
continue to bring us prosperity if we treat them right. Read the book
to find out how.
Diana Furchtgott-Roth, firstname.lastname@example.org, former chief economist
at the U.S. Department of Labor, is a senior fellow at the Hudson
The Venturesome Economy
How Innovation Sustains Prosperity in a More Connected World
by Amar Bhidé
Princeton University Press