As the 2012 presidential campaign moves in the final stage, ITIF is presenting general principles and specific recommendation ideas across several policy areas we believe the next President and Congress should adopt to restore U.S. global competiveness and prosperity.

As chronicled in Innovation Economic: The Race for Global Advantage, the United States is losing its once formidable edge as an innovator. Many other nations are putting in place better tax, talent, technology and trade policies, and reaping the rewards in terms of faster growth, more jobs, and faster income growth. It’s not too late for the United States to regain its lead but it will need to act boldly and with resolve.

Week by week until the November election, the Winning the Race series will put forward creative yet pragmatic ideas in policies affecting taxes, trade, education, broadband, the digital economy, clean energy, science and technology and other areas. Taken as a whole, the series represents a new Innovation Consensus to replace the outdated Washington Consensus.

Memo One (September 3, 2012): Boosting Innovation, Competitiveness, and Productivity

Memo Two (September 10, 2012): Trade and Globalization

Memo Three (September 17, 2012): Corporate Tax

Memo Four (September 24, 2012): Digital Communication Networks

Memo Five (October 1, 2012): Traded Sector Industries

Memo Six (October 9, 2012): Digital Economy

Memo Seven (October 15, 2012): STEM Skills

Memo Eight (October 22, 2012): Clean Energy

Memo Nine (October 29, 2012): Science and Technology

Memo Ten (November 5, 2012): Overcoming the Barriers 

Complete List of Policy Recommendations: Top Policy Recommendations for the Obama Administration to Help the United States Win the Race for Global Advantage

Dean Baker critique doesn’t engage the key point of Innovation Economics: that it was the failure of the U.S. innovation economy that was the underlying cause of the economic crisis and now our continuing anemic recovery. Throwing trillions more of stimulus at it won’t solve the problem (though it may kick it to the next generation, as appears to be the wont of policymakers in Washington these days). Rather, we need to get serious about addressing the underlying competitiveness challenges we face through smart policies including what ITIF calls the “4Ts” of tax, trade, technology, and talent.

The current book-values of the Gen-Xers have been hit hard. The first asset most families purchase is a home, and then they slowly build up their portfolio over their careers. Therefore, their current book measure of “wealth” has been disproportionately hit. However, it is still the same house; and, future buyers of it are better off. So the lesson for policy makers is to not confuse prices with value. Sometimes they are the same, sometimes they are not. Economic policy would be on a stronger footing if it kept its eye on the real economy (e.g., the number of houses being produced) and not just the price-based economy.

The “new” model is actually rather simple and comes with it, a simple solution: spurring innovation. Increasing innovation will fundamentally change how we produce goods, relax current constraints, increase standards of living, and is the only sustainable source of growth.