The first steps toward a US innovation agenda that can unite the country and save the economy
More than two years into the recovery from the Great Recession, job creation is barely keeping pace with population growth much less putting millions of people back to work. Despite their unanimous declaration that job creation is their top priority, public officials seem to have run out of answers and/or political will to address the matter. The cold reality is that the U.S. economy has been experiencing something akin to cancer for which we need innovation chemotherapy. Yet most economic policy doctors have been prescribing ice packs, bandages and aspirin.
The prevailing, textbook assumption is that depressed demand is the culprit. But when the largest stimulus package in U.S. history -- the $787 billion American Recovery and Reinvestment Act -- couldn't drive recovery, it suggests that more than weak consumer demand was the problem.
According to another school of thought, if the recession was the result of a financial crisis, albeit of historic proportions, as Ken Rogoff and Carmen Reinhart argue in, This Time Is Different: Eight Centuries of Financial Folly, then we need to just suck it up while we wait the long time until balance sheet integrity and fiscal solvency are restored. But why were we so susceptible to a near fatal case of debt flu in the first place? Private market purists, meanwhile, contend private-sector job creators are paralyzed by uncertainty about regulatory and tax policy - as if previous laws were written in stone and past elections never led to policy changes. Still others say we have plenty of jobs, but our workers are too unskilled for them. Tell that to the historically high number of college graduates and even engineers who can't find full-time work.