Posted by: Audrey Erbes | June 6, 2011

Innovation Alone Not Enough to Advance Job Creation Plus Jobs That Crossed My Desk

It’s not surprising to hear that job creation is the #1 political priority going forward, yet I don’t see our Congress taking the necessary steps to reinvigorate the job creation engine nor guarantee a healthy and fair wealth distribution needed to ensure the total society benefits from their actions. But rather the House leadership is trying to take away the building blocks that made America not only the innovation engine but technology scale up powerhouse that distinguished it and supported the American dream for the immigrants (including our ancestors) who flocked to our shores. Unfortunately, the loudest voices are looking to drastic budget and tax cuts for the wealthiest to supposedly create jobs–they insist that the wealthy who benefit by lessened taxes will spend the money on improving our economy and job creation. So far I don’t see that as being true in this or any society.

In the past it was called “trickle down economics” which failed miserably. Those who have more assets invest it to their own benefit, not necessarily to that of the larger society. Corporations now respond to their shareholders’ wishes by sitting on trillions of dollars which they are not investing domestically.  We saw that large banks didn’t have a responsibility to Americans and our economy but rather sacrificed the country’s well being with short-term thinking, focusing on this quarter’s stock return rather than investing in American business for the long term. Enron was a classic example of becoming a company of paper financial transactions rather than the builder of physical assets that created productive jobs.

An example in more recent years that corporations are no longer acting in the long-term interests of what’s best for the U.S. is the pharmaceutical industry repatriation of tens of billions of overseas funds untaxed under the George W. Bush administration. This provision did not lead to job creation in theU.S.as intended but rather steps to improve stock performance and make investments overseas with job creation in BRIC countries. What is doubly a problem is that they are closing facilities here but building new ones overseas.

Paranoia after 911 let to stringent requirements against allowing the world’s brightest who came to our shores to remain. In the flourishing past of just 2003 there were 195,000 H1-B visas leading to a green card issued but now that has dwindled to 65,000. We are training the world’s brightest but when these immigrants start their new companies, they will be overseas due to difficulties in staying in theU.S..

On May 12, 2011 there was a trio of visitors to the Bay Area who met with local Asian American  business people to discuss the initiative of the White House to not only renew innovation but insure that the innovation is utilized to build industrial and business strength here, rather than elsewhere.

From left to right, Dilawar A. Syed, President’s Advisory Committee on Asian Americans, Chair of the Economic Growth Committee; Aaron K. Chatterji, Council of Economic Advisers in the Executive Office of the President and Ginger Lew, Senior Advisor to the White House National Economic Council and the SBA Administrator fielded questions from the Bay Area audience which led to coverage of many of the issues that prevent innovation alone from spurring job growth. Unfortunately, the current Administration cannot correct these concerns without the support of voters to face down an intransient opposition seemingly deaf to long-term impact of their financial quarter-to-quarter strategies.

Innovation is not enough alone when there’s no investment in infrastructure—for example, our innovation in solar is being lost toChinabecause their government is heavily investing in their capability to realize its industrial objectives. The U.K was known for early innovation in the past but it was theU.S.that invested in their economic fulfillment and realized its potential. Now we see the same lack of long-term investment for fulfilling the potential of U.S.innovation. It seems  there is no stomach for taking risks by large corporations. GM sacrificed their early lead in the manufacture of electric cars to acquire the gas-guzzling Humbee line which could give a rapid short-term increase in revenues and earn management large bonuses. They practiced very short-term planning which is all too familiar in international corporations.

In a recent McKinsey May 2011 article entitled Translating innovation into US growth: An advanced-industries perspective, the authors James Manyika, Daniel Pacthod and Michael Park make a case that unless the private and public sectors collaborate to reverse current trends, the United States faces a future in which economic leadership will move overseas. They note that innovation continues here but the key question is whether the United States has been losing its ability to translate innovation into economic leadership.

“This ability to take basic innovation, deliver it at scale, and refine it with second- and third-order innovations plays a critical role in driving growth and jobs. To do all this, a country must be at the center of cutting-edge technologies, market demand, talent, and entrepreneurial spirit.” The latter is what is disappearing from our economic culture. The authors call for a national commitment and strategy to overcome the current deficiencies that forecast loss of our leadership.

Some key points they include:

1.     Clear the way for the cutting-edge industrial technologies of the future

2.     Rebuild neglected and outdated infrastructure.

3.     Attract and retain talent from overseas and through improved education at home

4.     Reenergize the entrepreneurial spirit in large companies that made them great in the first place.

You can read the full article and consider if you agree with their analysis and whether you think their concerns are also impacting on the life science industry.

fortunately, there are new jobs in our industry but still not at the past rate. You can download the pdf of the full list of Jobs That Crossed My Desk this past week and the previous two weeks. Just right click on the highlighted title and open in a new window.

Audrey

P.S. Discount deadline for Bioscience Business Development: Building Value is June 9th. See registration details at www.UCSC-Extension.edu/biobizdev

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Responses

  1. A new book entitled “Great Again: Restoring America’s Entrepreneurial Leadership” by Henry Nothhaft makes a strong case for the role of start-up companies in creating jobs. An important way to support them would be to reform the US patent process to significantly reduce the amount of time it takes to get a patent issued.

    • Yvonne,
      Thanks for the tip on book. I agree that this would help. Hav e you heard about the proposal of the Congressman to eliminate patents and replace with money prizes, that is not a cure! Such a prize system doesn’t relate to the business environment for innovative products.
      Audrey


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