Its summertime and that means one thing: the ITIF summer book reading list (if the New York Times can do it, we can do it). There’s no scientific method here, only a poll of ITIF staff to identify the books they think make an important contribution to the innovation and competitiveness policy debate. So here are 16 that made our list.
These choices generally fall into either the world is bright because we are an innovative culture or the world is dark because America has lost its way. But all the books talk about why it’s important for Washington to play a stronger role in boosting innovation and competitiveness.
Let’s Start with the Books That Are Painting a Pessimistic Picture of Our Economic Future:
1. Time to Start Thinking by Edward Luce
You know any book that a reviewer said should be titled “Time to Start Drinking” can’t be an upbeat sonnet to America’s promise. Indeed, this book is a stark look at America’s economic challenge and how we have lost our way. Financial Times editor Ed Luce turns his attention to a number of different issues that are set to affect America's position in the world order: the changing structure of the U.S. economy, the continued polarization of American politics, the debilitating "permanent election campaign,” the challenges involved in the overhaul of the country's public education system, and the health (or illness) of American innovation in technology and business.
2. Land of Promise: An Economic History of the United States by Michael Lind
New America Foundation co-founder and scholar Michael Lind is nothing if not an original and iconoclastic thinker. Lind provides a groundbreaking account of how a weak collection of former British colonies became an industrial, financial, and military colossus. When the U.S. economy has flourished, Lind argues, government and business, labor and universities, have worked together as partners in a never-ending project of economic nation building. As the United States struggles to emerge from the Great Recession, Land of Promise demonstrates that Americans since the earliest days of the Republic have reinvented the American economy—and have the power to do so again, rejecting the outworn ideologies and economic theories in place now.
Economic Strategy Institute President Clyde Prestowitz sometimes gets a bad rap for having warned in his book Trading Places, How We Are Giving Our Future to Japan and How to Reclaim It, that Japan was going to overtake the United States. But this is an unfair criticism that ignores two points: the United States put in place policies that helped us compete and Japan’s competitiveness is a lot stronger than most Washington pundits acknowledge. Perhaps, the title of his new book should be “Trading Places: How We Are Giving Our Future to China, Korea, Brazil, India and others and How to Reclaim It,” for in this book, Prestowitz reveals the astonishing extent of the erosion of the fundamental pillars of American economic might—beginning well before the 2008 financial crisis—and the great challenge we face for the future in competing with the economic juggernaut of China and the other fast-rising economies. While he’s a bit too pessimistic in ITIF’s view of the ability of the United States, in conjunction with Europe and other essentially free trading regions, to help shape this new order more along open market, free trade lines, Clyde’s attack on the conventional economic orthodoxy is well worth the read.
4. Make It In America: The Case for Re-Inventing the Economy by Andrew Liveris
It’s heartening to see more U.S. CEOs step into the debate in favor of better innovation and competitiveness policies. Without their leadership, it’s not likely that we will muster the political will to take the tough actions we need to regain our competitiveness. And one of the best examples comes from Australian-born, Dow Chemical CEO Andrew Liveris.
As Liveris makes clear, America used to design and produce the world's most important innovations and in doing so we created a vibrant manufacturing sector that established the middle class. We manufactured our way to the top and became the undisputed economic leader of the world. But over the last several decades, and especially in the last ten years, manufacturing has eroded, costing millions of jobs and putting our long-term prosperity at risk. He’s a bit more optimistic in terms of our ability to turn it around and how Washington can help, but only if it adopts some new ideas to get manufacturing competitive again, like a stronger R&D tax credit. While he lists some good ideas, they tend to be the standard ones in the playbook, like improving K-12 education, investing in infrastructure, and reducing energy costs. Did we mention the book cites ITIF’s work on innovation and competitiveness?
When one examines the underlying causes of America’s competitiveness challenges, certainly a central culprit is the short-term orientation many U.S. companies have taken when investing. Too many people look at this and say that companies should change their goals from profits to something else (e.g., stakeholder value). But Alfred Rappaport, Leonard Spacek Professor Emeritus at Northwestern University’s J. L. Kellogg Graduate School of Management, who coined the term "shareholder value,” rightly rejects this framing. Rappaport shows how sacrificing future growth to meet quarterly earnings benchmarks is the road to corporate and investment ruin. In fact, Rappaport blames executives who chased higher stock prices and money managers who chased quarterly performance numbers for contributing to the recent financial crisis. A bit dense to read at times (unless you like the excitement of accounting), the book is still worth the read because it shows how one can be pro-capitalism and still argue that the system is not working the way it should. As he writes, “The trade-off is clear: We can continue to pursue short-term profit at the expense of economic vitality, individual financial security, and perhaps even the dominance of the free-market system itself. Or we can take the responsible path outlined in this book and generate innovation, quality, growth, and value over the long term. If all U.S. corporations (and financial markets) followed his advice, the future would be much brighter.”
Now We Come to the Books That Are Hitting a More Optimistic Note:
6. Great Again: Revitalizing America’s Entrepreneurial Leadership by Henry Nothhaft and David Kline
With a book that starts off with, “The innovation engine that powered the U.S. economy to unmatched prosperity over the last century is now failing, threatening the way we work and live,” it’s not immediately clear why this is a more optimistic book. And it’s not that Nothhaft and Kline think things are great. They don’t. They see the nation spinning its wheels — reeling from the job losses of the recession and seemingly unable to generate the breakthroughs needed to propel alternative energy, medicine, and other critical fields — Europe and especially Asia have begun to capture the leadership of crucial new technology sectors. Still, they say America can revitalize its innovation leadership and kick-start the economy again with an array of tax, regulatory and other policies to revive the heart if innovations.
7. The Comeback: How Innovation Will Restore the American Dream by Gary Shapiro
Ditto for The Comeback by Gary Shapiro, president of the Council of Economic Advisors. Gary too sees America on a downward slide, reciting many of the same challenges and problems other books listed here do. But Gary is more optimistic about U.S. entrepreneurs and companies solving the problem. As the book description states, “Throughout its history, America’s great innovators have been the drivers of our unsurpassed economic success…. In short, innovation is the American Dream.” For Shapiro the problem is largely government – too much of it. And while it’s clear there are plenty of places where government is holding back the innovation economy to assert that we can rely on the private sector alone to get us to “comeback” is wishful thinking. If we can, how did we get into the fix we are today?
Surely, it is not completely by bad government policies hampering risk-taking entrepreneurs. Still, it’s worth the read for some good analysis and some great policy ideas.
8. The Coming Prosperity: How Entrepreneurs Are Transforming the Global Economy by Philip Auerswald
With a title like this, it’s clear that this book is in the optimistic camp. But George Mason University economist Phil Auerswald is not idealistic. While acknowledging the gravity of today’s greatest global challenges — like climate change, water scarcity, and rapid urbanization — Auerswald emphasizes that we have solved problems like this in past and will in the future, especially if we enable entrepreneurship. The book can afford to be so optimistic because Phil looks at how entrepreneurship is making a difference around the world, especially where the problems and hence the opportunities are so great. The book is enlivened by stories of entrepreneurs making an outsize difference in their communities and the world—people like Karim Khoja, who led the creation of the first mobile phone company in Afghanistan. Clearly spurring more entrepreneurship, particularly real entrepreneurship (e.g., high growth companies) as opposed to “mom-and-pop shops” is important to America’s economic future (and that might have important policy implications, like the Startup Act 2.0).
9. Rebound: Why America Will Emerge Stronger From the Financial Crisis by Stephen Rose
Perhaps there is no economist in Washington, or perhaps the nation, with a drive to follow where the data lead him, even when it leads him into a lonely corner where few reside, than Steve Rose. Steve did this when he wrote for ITIF a report on Does Productivity Growth Still Benefits Working Americans? And he did it again with Rebound. Steve amasses data on the economic performance of America over the last 30 years to debunk myths about declining middle class incomes, burger-flipping jobs and global competition. He also describes the evolution of the financial crisis and mortgage lending implosion under the rubric of “brilliant idiocy” to show how the investors, financial firms, and regulators all made devastating mistakes in pursuit of quick gains. What we like about Rebound is it reminds us the U.S. economy is not only made up of traded sector industries like manufacturing. Rather, much of the U.S. economy is made up of non-traded sectors like health care, utilities, education, and retail trade. And Steve rightly points out that the United States is good in innovation and productivity in these sectors. But we disagree with Steve is that he gives short shrift to the real serious structural problems, as the above books pointed out, facing our traded sector. So this is a glass half full book, but still worth reading.
A Few Other Books That Might Be of Interest:
China: Threat or Not?
If you want to really get up to speed this summer on economic challenges facing the United States, it’s hard to do that without better understanding China. And on this front, there are two books, with very different views.
10. Advantage: How American Innovation Can Overcome the Asian Challenge by Adam Segal
Council on Foreign Relations scholar Adam Segal sees the China threat largely as a “paper tiger.” Advantage sorts out the challenges the United States faces and focuses on what drives innovation, what constrains it, and what strengths we have to leverage. Entirely recasting the stakes of the debate, Adam Segal makes the compelling case for the crucial role of the “software” of innovation. By bolstering its politics, social relations, and institutions that move ideas from the lab to the marketplace, the United States can preserve its position as a global power. Anyone who watched our ITIF debate with Adam Segal knows this is not the ITIF view. While America has strengths in the “software” of innovation, China does pose a real threat to us, in part through their innovation mercantilist policies. But still, Advantage is worth the read, if only to better understand the debate over China.
Our Georgia Tech colleague Danny Breznitz has written a very detailed and in-depth review of what is really happening in the Chinese economy. This meticulously researched book closely examines the strengths and weaknesses of the Chinese economic system to discover where the nation may be headed and what the Chinese experience reveals about emerging market economies. Contrary to popular belief, cutting edge innovation is not a prerequisite for sustained economic vitality and China is a perfect case in point. In other words, Danny rightly points out, in contrast to Segal’s view that China does not have to master cutting-edge innovation to damage the U.S. economy.
Innovation in IT, Energy, Life Sciences and More
Here are some other books that we just think are interesting, although some we would recommend for real innovation wonks .
12. The Idea Factory: Bell Labs and the Great Age of American Innovation by Jon Gertner
Why did so many transformative ideas come from Bell Labs? In The Idea Factory, Jon Gertner traces the origins of some of the twentieth century’s most important inventions and delivers a riveting and heretofore untold chapter of American history. At its heart this is a story about the life and work of a small group of brilliant and eccentric men who spent their careers at Bell Labs. Their job was to research and develop the future of communications. The book is a fascinating look at a critical and iconic institution with important questions raised about how America can recreate at least the functions that Bell-labs like organization served in the past.
13. Unlocking Energy Innovation by Richard Lester and David Hart
ITIF has argued long and hard that innovation needs to be at the center of our nation’s energy policy. Two leading academic scholars of innovation make the same point. They argue that energy innovation offers us our best chance to solve the three urgent and interrelated problems of climate change, worldwide insecurity over energy supplies, and rapidly growing energy demand. But if we are to achieve a timely transition to reliable, low-cost, low-carbon energy, the U.S. energy innovation system must be radically overhauled. The authors map three waves of energy innovation to show how we can speed up the introduction of new technologies and business models and accelerate their deployment on a massive scale. "Business as usual" will not fill the energy innovation gap. Only the kind of systemic, transformative changes to our energy innovation system described in this provocative book will help us avert the direst scenarios and achieve a sustainable and secure energy future.
14. Cyber War: The Next Threat to National Security and What to Do About It by Richard A. Clark
Richard A. Clarke warned America once before about the havoc terrorism would wreak on our national security—and he was right. Now he war