With as many as 20 Democratic and Republican candidates now shaping the conversation, the 2016 presidential campaign is sure to be about many things. But my hope, for the good of the country, is that the leading contenders eventually will settle on the theme of enterprise.
The main question on the table should be: How can we make the US economy truly flourish again? And the answer should be to enact a national agenda that spurs the main drivers of dynamic enterprise and overall economic growth in the 21st century – innovation, productivity, and competitiveness – because that will be the best way to produce the results that most people care about: expanding opportunities, rapidly rising wages, lower unemployment, and a broad-based sense of optimism about America’s fortunes.
On its face, an agenda to invigorate innovative enterprise should be uncontroversial. But with the country still shaking off the lingering effects of the Great Recession – and with many people feeling profoundly confused and unsettled by the rapid pace of technological change that is happening all around them – it will take a determined effort for a presidential candidate to focus the country’s attention on the true nature of the opportunities and challenges before us.
The first order of business has to be completely rethinking the conventional economic narratives and agendas of both parties. Many on the left today put their faith in what they call “middle-out” economics. Their big idea is to boost demand for goods and services by putting more money in middle-class pockets, so people can spend more. They decry what they see as meager wage growth for the bottom 90 percent of workers, and they argue for policies that will more equitably distribute the wealth in our $17 trillion economy. They think this is the best way to kickstart growth, because they see middle-class spending as the catalyst for everything else.
Many on the right have long seen things the other way around. They may call it by other names, but they continue to believe in a “supply-side” approach to economics. Their big idea is to take all restraints off capitalism by shrinking government (except for defense) and lowering taxes (especially on wealthy individuals). They decry regulation, because they think it discourages enterprise, and they think the best way to drive growth is to let the investor class of “job creators” keep more of their money so they can do what they do best.
But the substantive cores of the parties’ respective agendas are not related in any serious way to the kinds of things that make innovative enterprise hum in the digital age: research and development; skilled workers; new capital equipment, including computer hardware, software, and other information technologies; and access to global markets on a level playing field.
A truth-telling message that candidates need to convey is that enterprises drive growth, not individuals, regardless of whether they are middle-class spenders or wealthy savers. If enterprises are not healthy, they can’t generate the growth that leads to middle-class spending, and they don’t need capital. If businesses aren’t productive, then they can’t raise wages. If companies are losing out in the face of foreign competition, then US workers lose. And if our enterprises are not constantly innovating, then they won’t be able to create the new products and services we all need to flourish and have the quality of life we want.
Twenty-three years ago, it was enough to say in broad terms, “It’s the economy, stupid!” Today, we need to put a finer point on it: “It’s the enterprise, stupid!” But while the enterprise is the core, government can and must help. So, actually, “It’s private enterprise with a little help from the public sector, stupid!” Today, smart public-private partnerships are the force multiplier for economies around the world. When the private sector leads, but gets the right kinds of support and incentives from the public sector, economies maximize their growth potential. These initiatives can take many forms, such as joint industry-government R&D centers, export financing from the Export-Import Bank, innovative infrastructure projects supported by the Department of Transportation, or smart tax incentives to spur things such as research and development.
Unfortunately, in our tired, doctrinaire political debate, one side insists on demonizing the private sector and the other side refuses to trust the public sector, which makes it hard to meet in the middle. So the next president needs to look straight into the cameras and say firmly to the country, “Repeat after me: Business is not bad. Government is not bad. They can and should work together.” This combination of effort is the central method for driving innovation, productivity, and competitiveness, while also producing greater value for the economy than either the private sector or the public sector possibly could do on its own.
It’s impossible to have strong public private partnership without increased public investment, especially to drive innovation. Innovation is not manna from heaven. It comes from choosing to invest more and consume less. That is what the next president will need to do – push Congress to invest a much bigger share of the federal budget in the future, especially to help our enterprises innovate and compete, even if it raises the budget deficit in the short run. Top priorities should include expanding federal investment in scientific and engineering research by at least $30 billion per year and significantly expanding the research and development tax credit, among others. The Information Technology and Innovation Foundation has outlined a comprehensive program of measures such as these in an open strategy memo to all Democratic and Republican presidential candidates.
But it won’t be enough merely to propose a smart set of policies and programs. The next president also must use the bully pulpit to champion the very cause of innovation and innovators, because one of the strongest counterweights to economic growth is fear and resistance to technological progress and change. The United States did not get to be the greatest nation on Earth through caution or by defending what we already had. Yet innovation today – whether it’s a creative Internet start-up, a pioneer of genetically modified food crops, or a company developing next-generation robots – is often met with disapproval and opposition. The next president needs to make clear that Luddites will not be allowed to carry the day; America must push forward as it always has – looking optimistically to the future, not clinging fearfully to the status quo.
The next election very well could prove to be a watershed in modern American history. If the parties nominate candidates who hew to conventional “middle-out” and “supply side” economic strategies, then it’s unlikely we will be able to build the flourishing economy we want and need. If, on the other hand, the nominees force their parties to embrace a results-oriented doctrine that is centered on bolstering innovative enterprise, then America has a much better chance of meeting our sizable economic challenges.
Robert D. Atkinson is president of the Information Technology and Innovation Foundation (ITIF), a non-partisan think tank.