Posts Tagged ‘Harvard Business School professor Michael Porter’

Must Read: Why America Needs an Economic Strategy

November 3, 2008

In this week’s issue of BusinessWeek, I highly recommend you read the cover story by competitiveness guru and Harvard Business School professor Michael Porter. It’s a really smart and authoritative prescription for continuing America’s long-term prosperity.

Porter’s argument, which I basically agree with, is that the U.S.–thanks largely to a political system that emphasizes solving the crisis du jour or “discrete policy areas”–has no long-term economic strategy.

Porter says we should devise policies that support what he calls our seven “competitive strengths”:
1. an unparalleled environment for entrepreneurship and starting new companies.
2. U.S. entrepreneurship has been fed by a science, technology, and innovation machine that remains by far the best in the world
3. the U.S. has the world’s best institutions for higher learning, and they are getting stronger.
4. America has been the country with the strongest commitment to competition and free markets.
5. the task of forming economic policy and putting it into practice is highly decentralized across states and regions.
6. the U.S. has benefited historically from the deepest and most efficient capital markets of any nation, especially for risk capital.
7. the U.S. continues to enjoy remarkable dynamism and resilience.

Here are his prescriptions:
* An inadequate rate of reinvestment in science and technology is hampering America’s feeder system for entrepreneurship. Research and development as a share of GDP has actually declined, while it has risen in many other countries.
* America’s belief in competition is waning. A creeping relaxation of antitrust enforcement has allowed mergers to dominate markets.
* U.S. colleges and universities are precious assets, but we have no serious plan to improve access to them by our citizens. America now ranks 12th in tertiary (college or higher) educational attainment for 25- to 34-year-olds.
* the U.S. also has abdicated its responsibility to provide a credible transitional safety net for Americans.
* Federal polices have hobbled America’s entrepreneurial strength by needlessly driving up the cost and complexity of doing business, especially for smaller companies.
* Unless we significantly improve the performance of our public schools, there is no scenario in which many Americans will escape continued pressure on their standard of living.