Competitiveness - Part 2

To follow up from yesterday, it's my contention that, despite all the talk about our wonderful capitalist system, and how the cream inevitably rises to the top, and how individual failure comes from a lack of will or ability, the U.S. actually has very little knowledge as to how to compete in the new world.

Part of this comes from a willful blindness, a lack of recognition that a nation with the proper attitude and beliefs could fall from its self-appointed position as leader of the world. Part comes from the confusion between national and individual competitiveness (no, having the most billionaires does not serve as a proxy for having a strong country). And part comes from the confusion between the appearance of competitiveness versus actually being effective in competition.

If you were to ask the average American where the U.S. stands, the answer would almost certainly be that we are #1 in every category that matters. To believe that requires one to ignore our backsliding in areas relative to the rest of the world: health care, infant mortality, education, etc. Yet the concern about our slippage only seems to arise when our basketball team loses in the Olympics. We have replaced actual accomplishment with useless sloganeering.

Many people think that the financial success of a few somehow proves something about the country as a whole. We trumpet the wealth of the 400 richest Americans, we marvel at the salaries of our professional athletes and our actors, we live vicariously through the lifestyles of our rich and famous. At the same time, median real income is in decline, the savings rate is negative, and the comfort to which we once aspired seems to be forever farther out of reach. Which represents a strong country, the wealth of our wealthy, or the wealth of our average?

And we believe that our intense interest in competition translates into competitiveness. We compete furiously on the field, the court, the diamond. We lie, cheat, and steal to make the next deal, to get the corner office. But this furor has not extended to effective raising of standards. We're not competing on the same playing fields as the rest of the world; other countries intend to dominate the world economy and garner the wealth, while we shake our fists and claim that we fight hard.

We have seen a remarkable decline in our innovation, as other countries have been able to train engineers and computer scientists, open R&D centers (often with our money), and have at least begun to dominate certain technological areas.

Since I believe that innovation is the key to growth, and only through that growth do overall living standards rise, we need to understand how to foment innovation. That clearly comes through education, and our mistakes there are the subject of my next post.