Time for a New Economy Built Around Innovation

Time for a New Economy Built Around Innovation

This is typically the time of year — when Americans have that shop-till-you-drop mentality — that we hear about whether U.S. retailers will see red or black in their Christmas stockings. Such news, we're told, is important for a country whose economy, over the past two decades, has been driven by consumer spending. 

But an interesting column in the WaPo opinion section this past Sunday (two days after Black Friday, one day before Cyber Monday) made the case for ending this bad habit.

Paco Underhill, chief executive of a retail research and consulting firm, makes the case that "The current way we measure the health of our economy, from the markets to consumer confidence ratings, depends on our overspending. But, simply put, we cannot continue to be a country where more than 70 percent of our economy is based on consumer spending, especially when that spending is based on credit."

He's right.  And not simply because it's as foolish for a country to overspend as it is for a family.  As important as the retail sector is, more retail jobs and renewed consumer spending simply won't pull us out of this economic downturn — especially if you consider that overspending and bad debt helped get us into this slump.  America needs to create a new economic paradigm.  You can do that by creating jobs in high-value industries, the kind that pay well, lead to innovation, and can maintain this country's competitiveness.  Mr. Underhill points to several such industries, including solar and wind power, battery technology, and nuclear power — all industries that our members play an important role in. To these, I'd add Smart Grid, energy storage, and medical imaging as industries where the United States has an opportunity to take the lead in developing new products for a new economy.

If the federal government is really interested in reducing joblessness over the long haul, it needs to create incentives that lead to higher investments and fewer barriers for these key industries.

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