A Case for Innovation

May 3rd, 2011 // 2:21 pm @ Oliver DeMille

A Review of The Comeback: How Innovation Will Restore the American Dream by Gary Shapiro

There are two great modern visions of how to help our economy grow and flourish. One holds that the government is the center of economic prosperity, the other believes in innovation. The first attempts to tax and spend, the second believes in the power of free enterprise.

The Republican Party sometimes tries to present itself as the promoter of the second view, and at times the Democratic Party attempts to make this same argument a criticism of Republican policies, but in actual policy both major political parties tend to legislate for the first view. In contrast, Gary Shapiro’s important book The Comeback outlines what Washington needs to do truly bring the economy back. This includes:

Stop penalizing investments in start-ups.
Direct any public funding of start-ups by private investors, not by government bureaucrats.
Let any company fail, according to the rule of the free market.
Make economics, business and entrepreneurialism studies part of the public school curriculum.
Ensure that business tax rates are transparent and predictable.
Change tax laws to favor investment over debt.
Reform immigration to encourage entrepreneurial risk-taking.
Pass more free-trade agreements.
Reform education by allowing teachers to teach.
Measure all government spending by how well it is working.
Measure all government spending by how it meets serious national needs.
Link the compensation of our federal legislators to our annual national deficit.

Shapiro includes a number of other specific proposals for an American comeback. Not every reader will agree with every policy proposal. I found myself disagreeing with a number of points. For example, Shapiro’s argument that, “You can’t legislate progress” is clearly too narrow—just consider the legislative successes against racist and religiously-bigoted behavior.

On the whole, however, Shapiro’s voice is an important contribution to the ongoing debate. More citizens and government officials need to read and internalize his book. Shapiro shows a mature appreciation for the important role of the government in the economy, and simultaneously notes that without real economic freedom no significant American comeback is likely.

He ultimately pins the future of America on innovation, not on either major political party or on any government policy. The government can do much to encourage a flourishing economy, but the innovators will primarily determine our economic future. Shapiro writes:

“Innovation is America. It is our special sauce, our destiny, and our best and only hope for escaping the economic malaise…. Our best hope is for government to foster innovation by creating a fertile ground for innovation to flourish.

“Innovation is the natural by-product of the free market….

“Our nation is looking into the abyss. With a blinding focus on the present, our government is neglecting a future that demands thoughtful action. The only valid government action is that which invests in our children. This requires hard choices. We cannot leave the rising generation with a mountain of bad debt. This will require suffering in the present….

“America is in crisis. What is required is a commitment to innovation and growth. We can and must succeed. With popular and political resolve, we can reverse America’s decline…. America must become the world’s innovative engine once again; we cannot fail. Only then can I return to China and tell that Communist Chinese official that America is back.”

Shapiro’s voice is important, and the voice of innovation is vital to America’s future. Unless we find ways to reinvigorate our national penchant for innovation, the future of our economy and nation is bleak. More of us need to join Shapiro in discussing ways to refocus our nation on innovation. Government certainly has a positive role to play in successful society, and only by encouraging widespread innovation can we hope to see sustained growth and an economy that is the envy of the world. Two centuries of American leadership have proven that freedom works. It’s time to remember and more vigorously apply freedom in our modern economy.

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Oliver DeMille is a co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.