Thursday, November 1, 2012

Supercharging the U.S. Economy: Where Both Parties Agree

According to the 2012-2013 Global Competitiveness Report released in September by the World Economic Forum (WEF), the U.S. fell two positions down to number seven in the global competitiveness ranking. That’s our fourth straight year of decline. With all the pre-election rhetoric, it’s sometimes easy to forget that ultimately, we’re all on Team USA.

Beneath the finger pointing and talking points, both parties agree on some very crucial policy issues that, if addressed, would help secure our nation’s legacy of greatness by enhancing our competitiveness in the global economy. Let’s put aside the assertions that the path to achieving our nation’s goals is split down party lines, and take a look at our commonalities. This is the first and necessary step to supercharge the U.S. economy.

A side by side comparison of the Democratic and Republican platforms reveal shared perspectives in the areas of corporate tax reform; manufacturing; education reform; small businesses; Internet freedom; technology; and infrastructure.

These issues have one thing in common; they all have a direct impact on our country’s ability to remain a competitive player in the 21st century global economy. Let’s start by examining the current U.S. corporate tax code. Not only is our corporate tax rate the highest among developed nations, the U.S. operates under a worldwide tax system while most of our trading partners have adopted a territorial system so that profits earned and taxed abroad may be repatriated for job-creating investment at home without an additional tax penalty.

Both parties agree the playing field for American companies must be leveled by way of corporate tax reform. The Republican platform supports the Administration’s Export Council’s proposal of switching to a territorial system of corporate taxation, and both platforms favor lowering the corporate tax rate for American companies is an action both parties advocate.

Monday, September 17, 2012

Advanced Manufacturing Vital to U.S. Competitiveness

According to Nobel Prize winner, Robert Solow, technological innovation makes up at least 80 percent of a nation’s economic growth and increase in living standards.[i] So why is it, during these trying times, that manufacturing, one of the key forces behind innovation, is suffering at the hands of outdated public policy while other nations forge ahead? The United States is responsible for every major advance in science and engineering since World War II, whether in semiconductors, aerospace, computing, telecommunications, and the Internet.[ii] These feats were made possible by public policy that fostered an ecosystem where inventiveness flourished.

Take for instance the government funded research that led to the creation of the Internet, or an immigration policy that allowed us to bring the best and brightest to our shores to work for American companies. Our manufacturing base was a point of pride and gave rise to a thriving middle class. But somewhere along the line, the trajectory of American progress plateaued, and our rank as a global leader is at risk unless Washington adopts public policies that are pro-growth and pro-innovation.

For the first time in three years, U.S. manufacturing contracted, but advanced manufacturing of products like semiconductors on American soil has been declining for years. I find this trend troubling, because if the United States isn’t making high tech products and reaping the benefits of innovation (job creation, intellectual property, capital formation, national security, etc.), another nation is.

Change, particularly in the way of corporate tax reform, will re-strengthen American advanced manufacturing and reinvigorate the innovative spirit that defines the United States.

The semiconductor industry provides a great case study for understanding the important role of advanced manufacturing. Semiconductors are embedded in the fabric of our everyday lives. They’re in our television sets, computers, printers, cellphones, and countless other devices. The U.S. once made up 100 percent of global chip production capacity, but that number is steadily declining as production moves overseas. In 2009, the percentage of global semiconductor production capacity in the United States was 14 percent, down from 25 percent in 2005 and 17 percent in 2007.

Intel is in the process of building a $5 billion chip factory in the Arizona desert, called Fab 42, but according to a recent Reuter’s article, “Many technology executives worry that Intel's new factory is less a sign of things to come than the last gasp of an advanced manufacturing sector that could readily go the way of its lower-tech predecessors -- to Asia.”