On American Innovation

Tuesday, March 25, 2008
By Jim Clifton and C. L. Max Nikias

Even the most decent, charismatic or bold politicians tend to adhere to conventional wisdom and conventional prescriptions in addressing America’s economic future. In doing so, they miss the point that it is the unconventional that has driven America’s recent success, and the unconventional that must drive our future success.

A quarter of a century ago, most leading economists—whether liberal or conservative—predicted that American economic growth would fall behind Japan and Germany by 2007. They typically estimated that Japan’s annual gross domestic product would be roughly $5 trillion by now, with Germany at around $4 trillion, and the U.S. lagging behind at roughly $3.5 trillion.

The predictions for Japan and Germany were reasonably accurate. But America grew to $13 trillion.

How did the U.S. nearly quadruple the estimates of the world’s best economists? One key is that these economists had based their guesses on a nation’s quantity of natural resources, not on the quality of its intellectual capital or its ability to put that intellectual capital to use.

America’s surprising economic growth has been traced back to some 1,000 key innovators, entrepreneurs, rainmakers, mentors and creative geniuses—some 60% of whom were foreign-born persons who were educated at American universities.

This meant that the U.S. had a unique edge in terms of the talent and the environment that was necessary for growth. The revolutions of technology—in electronics, in space technology and satellite communications, in personal computing, in the Internet and in information technology—were all American revolutions. The U.S. innovated while others imitated.

America’s outrageous success in the past quarter-century, owing to the 1,000 unconventional superstars and rainmakers and the tens of thousands of stars who surrounded them, was mainly serendipitous. But a repeat of this success will require forward-thinking strategy and investment, in the face of an emerging Asia, a resurgent Europe and stiffer competition around the globe.

We would recommend a few cornerstone strategies, which would preserve and enhance the environment in which America can cultivate its next generation of stars of unconvention.

First, we must set our faces toward the medical and biological science frontiers, as those are the likely settings for the planet’s next technological and humanistic revolutions.

The federal government also must strengthen its support for the American research enterprise—which since World War II has been carried out chiefly at some 50 leading U.S. research universities. Those universities produce some 80% of our Ph.D.s, and these Ph.D.s are the manpower and womanpower for this country’s work in basic science.

Basic science and technology is the creator and destroyer of global industries and eras. Its discoveries can lead to marketplace innovations that create vast new economic sectors, businesses, jobs and products to drive the global economy. The Internet is the most recent example. Nanoscience may be the next one.

Yet given recent actions by Congress to skimp on research funding for university-based research for the Department of Defense, such a level of commitment no longer exists. Industry, given its constraints and pressures, is not in a position to perform science research on its own. America’s best bet is for government, research universities and industry to work together in generating new discoveries and facilitating their way to the marketplace.

Our younger citizens must be prepared for a lifelong process of learning and unlearning. We must not merely train them in conventional skills—we must equip them to develop for themselves the sets of skills that would be appropriate for unexpected professional and technological developments. This requires every citizen to be as fluent in timeless arts and humanities as in timely technologies.

Finally, given that three in five of America’s 1,000 key superstars and rainmakers were born in other nations, we must incentivize the continued migration of the world’s best minds to America. Here we face escalating competition from Australia, England and other countries for “brain gain,” the new Holy Grail of global leadership.

Just as yesterday’s conventional wisdom held that Japan and Germany would pass us by, today’s conventional wisdom holds that other nations soon will exceed us in skills and productivity. Yet by maintaining our edge in the unconventional things—especially in our ability to innovate while others continue to imitate—America will remain the pacesetter in this still-young century.

Jim Clifton is the CEO of the Gallup Organization.