William Jeffrey Good afternoon. I'm very pleased
to be here today and to take part in what is a very important discussion. I'm an astrophysicist
by training and the director of a federal research agency, so I'm not
going to pretend to know much about Montana business law. Instead, I'd like
to place this morning's discussion in a much broader context - the economic
security of our nation, and how we can maintain and increase our competitiveness
in world markets. This morning's underlying
theme is that a state's laws and regulations help create a particular
environment for business, favorable or unfavorable, depending on the particulars.
But the legal environment
for business is just one factor -in the economic ecosystem that determines
the ability of a company to compete. Like any ecosystem,
it's important to get all the factors right. To date, we've done
a pretty good job, as Paul Polzin and others have pointed out. The U.S.
economy is the envy of the world. Unemployment continues
to fall. GDP growth was 3.5
percent for last year - growing faster than other major industrialized
countries.. U.S. productivity
continues to rise. And as the President
noted in Tuesday's State of the Union, "In the last two and a half
years, America has created 4.6 million new jobs - more than Japan and
the European Union combined." In fact, the performance
of the U.S. economy has been so good that it's confounded some of our
gloomier critics. But there is a good reason why we have done so well.
The United States is a very good competitor. The best, in fact,
according to Michael Porter and his colleagues at Harvard, who have developed
a Business Competitiveness Index that ranks the U.S. as the most competitive
country out of 116 evaluated last year1. If you are not familiar
with it, the index aggregates a host of economic factors related to the
performance of both the public and private sectors to arrive at a nation's
overall "competitiveness." Lest you think the
index is prejudiced by large economies, number two is Finland. Our goal is to stay
number one. But the economic
ecosystem is changing, and like any other ecosystem the rule is simple.
Adapt or go under. Change is the one
thing we can count on. What was good enough yesterday won't be good enough
tomorrow. Countries have two basic options. They can try to resist
change. They can select particular domestic industries that they see as
vital and defend their market share through protectionist measures such
as trade barriers or government subsidies. But as the President stated,
"All these are forms of economic retreat, and they lead in the same
direction - toward a stagnant and second-rate economy." You can look around
the globe and see some of the results of pursuing this approach, and it's
not pretty. Or a country can
embrace change. They can strive for
competitiveness by working to open up and level the global playing field,
by strengthening their business environment, and by increasing their capacity
to innovate. "With a level playing field, no one can out-produce
or out-compete the American worker." Commerce Secretary
Carlos Gutierrez put this very well last week at the World Economic Forum:
"We often talk about how, with world markets opening up, we've gained
three billion new consumers - but we've also gained three billion new
competitors. "We believe
that the way to deal with that is to open our markets and compete, and
that competition is a tremendous spark for innovation. When companies
have to compete, they get better. They become more productive, they innovate
faster. We have not seen
a country that has increased its level
of innovation by becoming more protectionist." Both government and
industry have roles to play in ensuring our future competitiveness. But
government can only play a supporting role - governments don't compete,
businesses do. The President stated
this clearly when he said, "The role of government is not to create
wealth. The role of our government is to create an environment in which
the entrepreneur can flourish, in which minds can expand, in which technologies
can reach new frontiers." In his State of the
Union address Tuesday, President Bush proposed the American Competitiveness
Initiative that directly addresses some of the most important ways that
government can help to ensure that the U.S. environment for business remains
the best in the world - including support for research, education and
our workforce. These programs are forward-looking and designed to ensure
we lead the world in opportunity and innovation for decades to come. The President's initiative
will:
The President called
for doubling the budgets of the National Science Foundation, the Department
of Energy's Office of Science, and the National Institute of Standards
and Technology over the next ten years - and I'd just like to say that
we at NIST appreciate the vote of confidence. That's a broad and
ambitious program. But it's only part of the answer, the part that's appropriate
for government. Because as I said before, the government only helps create
the environment. Companies and entrepreneurs create wealth. And increasing wealth,
more and more, is tied to increasing productivity. So where do productivity
increases come from? They come through continuing improvement in the efficiency
and distinction of its products, its services, and its processes - that
is, through innovation. Innovation is our
ace in the hole. Innovation has long
been a hallmark of our nation. "Yankee ingenuity" has been a
by-word since the beginning of the Industrial Revolution - and with good
reason. Today, the United
States has only five percent of the world's population, but it employs
a third of the world's scientists and engineers. Technological innovation,
in fact, has accounted for most of our productivity growth, and thus our
competitiveness. It's important to
recognize that a firm can innovate as much in the application of technology
- improving its processes or organization - as in developing a new technology. WalMart did not invent
computers, but its innovations in inventory control and distribution are
revolutionizing the U.S. retail sector. Indeed, much of the
acceleration in productivity can be traced to managerial and technological
innovations that improved the basic operations of companies2. Innovation is key.
Radical innovation - the kind sparked by scientific and technological
research and development - buys you more than incremental changes. Bottom line, as the
President has said, "
we live in a competitive world ... We
shouldn't take our preeminence as the world's greatest economy for granted.
We've constantly got to make sure the economic environment here is strong.
We've got to make sure that we're innovative."3 Technological innovation
is a particularly important theme for me, because it's essentially the
core mission of my home - the National Institute of Standards and Technology,
an agency of the U.S. Department of Commerce. We are the nation's
oldest federal physical science lab, and if you're not familiar with us,
you should be. Our mission is to
promote U.S. innovation and industrial competitiveness by advancing measurement
science, standards, and technology in ways that enhance economic security
and improve our quality of life. We're proud of the
role we play in supporting U.S. innovation, but we know our limits. Our
field is the technological infrastructure - but as a nation we need to
innovate at all levels. The President has
laid out a bold competitiveness agenda for the federal government that
supports research, education and the workforce. He laid out a vision that
can influence the direction of our country for many years to come. The American Competitiveness
Initiative will keep us on top of our game. A British journalist wrote
just last week: "For the U.S., the lesson of the past decade is that
it should avoid complacency: no one predicted its surge in productivity
and it has taken almost a decade to believe in, and then to explain it.
If Europe were to rediscover its competitive spirit and close the gap,
it could disappear as quickly as it came." Well, maybe yes and
maybe no. We're pretty good at this game of competition. And with the President's
initiative - we as a nation are definitely open for business and will
be ready to compete for decades. Thank you. 1. Porter, Michael E., "Building the Microeconomic Foundations of Prosperity: Findings from the Business Comparative Index" 2. McKinsey, cited in "A Competitiveness Agenda for the 21st Century", Office of Policy and Strategic Planning, U.S. Department of Commerce, IN DRAFT. 3. George W. Bush, Speech at Central Piedmon Community College, Chartlotte, North Carolina, April 5, 2004.
Page created: 2/6/06
|