by Gary Shapiro
In July 2010, a former General Motors (GM) employee and her husband were arrested for selling GM trade secrets relating to hybrid-vehicle technology to Chery Automobile, a Chinese automotive manufacturer and a competitor of GM. GM estimated the value of the trade secrets to be more than $40 million.
Protecting our innovators’ intellectual property, along with protecting American-style fair use rights, should be part of our free-trade policies. It doesn’t help Apple to sell iPods to Colombia if some enterprising Colombian counterfeiter is going to take that iPod and produce it on the black market.
Here are some specific policy prescriptions:
Pass free-trade agreements with Panama, Colombia, and South Korea. These FTAs have been stalled in Congress for four years. Former Colombian President Alvaro Uribe said his one goal before leaving office in the summer of 2010 was to see the FTA with the United States ratified. It did not happen. In addition to the economic benefits, FTA agreements bring nations closer together. Colombia and Panama are honorable U.S. allies in an increasingly volatile region of the world. To keep their populations from embracing Hugo Chavez–style thuggery, we should be doing all we can to help grow their economy. Our message to them should be: there are benefits to allying yourself with the United States.
Encourage and enter worldwide trade negotiations and agreements. We should be seeking other free-trade opportunities worldwide. The United States should make reopening the Doha Round a priority. Additionally, we need to keep the pressure on emerging nations like China, India, and Brazil to embrace international trade and to open their markets. Doha’s success depends largely on these nations’ willingness to play ball. As U.S. Trade Representative Ron Kirk said last year, “In order for the Doha Round to move forward, the world’s big emerging economies must make their just contributions.”50
Eliminate “Buy America” provisions from proposals and laws. Despite their patriotic intent, “Buy American” provisions end up hurting the American workforce. Forcing companies to do business with only American companies drives up costs on everyone. Moreover, foreign nations tend to retaliate with their own “buy local” provisions, leading to a vicious cycle of protectionist policies. Although we should always support and promote American industries, “Buy American” is a counterproductive way to do it.
Encourage foreign investors and businesses to do business here. Much like “Buy American” provisions, politicians are adept at criticizing foreign investment in the United States on patriotic grounds. For instance, in 2006, controversy swirled around a United Arab Emirates company’s attempt to run six U.S. ports, because of national security fears. The critics’ logic amounted to nothing more than that the UAE was in the Middle East and that there are terrorists in the Middle East, ergo, handing over management of U.S. ports was akin to inviting terrorists inside the country. It was pure demagoguery. The six ports were already owned by a British company. In any case, following the uproar, the deal eventually fell through.
The United States needs foreign investment because it lowers the cost of capital for U.S. corporations. Moreover, we need foreign buyers to be able to come to the United States to purchase our goods. As the producer of the nation’s largest trade show, the International CES, we see how our own government policies make it so difficult to host important buyers and officials from around the world. Every discouraged foreign buyer means a lost sale to a competitive country, or it means that American businesses have to travel overseas to try to make a sale.
Encourage and enforce clear and strong intellectual property policies. Our innovation and creativity in the United States and worldwide must be protected by strong intellectual property laws. However, these should focus on commercial piracy and be clear enough to allow innocent infringement and not dissuade innovation. Copyright laws can go too far. Innovation in America faces increasing hurdles from copyright laws that impose huge fines based on unclear definitions of when the law is violated. This chills innovation.
Trade with other nations is an emotional subject. Those who want us to close our borders and create new factories producing what we consume are well-meaning, but such protectionism would result in a Cuba-style economy.
There is no going back. Americans will prosper by being the most innovative country, and innovation requires access to all the world has to offer. America’s innovators need free trade to innovate. If American politicians shut our doors while the world embraces free trade, we are on a path toward poverty.
8
Innovation Requires Good Schools
“Our nation is at risk. The educational foundations of our society are presently being eroded by a rising tide of mediocrity. If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war. We have, in effect, been committing an act of unthinking, unilateral educational disarmament. History is not kind to idlers.”
—1983 report from the National Commission on Excellence in Education
LAGGING BEHIND
During President Reagan’s first term, a blue-ribbon panel of prominent American government and private-sector appointees delivered a scathing evaluation of the nation’s education system. The panel’s final report, A Nation at Risk: The Imperative for Educational Reform, documented the declining performance of America’s schools and proposed thirty-eight specific recommendations to meet the challenges.
The report dominated news cycles (back when those lasted longer than twenty minutes) for days, but the net result was . . . not much. On the report’s twenty-fifth anniversary, an education advocacy group reported that “stunningly few” of the report’s recommendations were ever enacted.51
We should have gotten a national wake-up call. Instead we hit the snooze button.
Since 1983, study after study has found U.S. students lagging behind their foreign counterparts across a broad range of subjects. Among the best-known studies is PISA, the Program for International Student Assessment, which measures the reading, math, and science literacy skills of fifteen-year-olds in OECD countries every three years.
In 2003, PISA found U.S. students were ahead of only five developed countries in terms of math skills. Students in thirty-one countries had higher average math literacy scores, including eight of the developing countries who also participated in the test. The 2006 PISA test found very similar results in science, with U.S. students in the bottom third of developed countries.52 Six developing nations reported higher average scores than in the United States.
The same or similar results have been replicated across a wide variety of studies. And we can’t explain away the findings by saying our best students are still fine. In math and science, “even the highest U.S. achievers . . . were outperformed on average by their OECD counterparts.”
On the science test, twelve countries had students at the 90th percentile with higher scores than the United States. Math performance was even worse. U.S. students at the 90th percentile scored well below the OECD average on math literacy. Fully twenty-nine countries had higher scores at that level.
We are doing better in reading. The PISA 2000 test found that the performance of U.S. students was average overall but that the United States had a greater percentage of students performing at the highest level in reading.
The problem we now face is that innovation isn’t something you can bottle and hand over to the next generation. We can’t hoard it or ration it to keep progress going at a steady rate. It’s a renewable resource, but it can only be cultivated indirectly.
An innovation economy can be damaged any number of ways, with bad government policies being right at the top of the list, but ground-breaking inventions have come from places ruled by even the most backward and benighted despots.
The one thing innovation truly needs to survive is an education system that adequately prepares the next generation of innovators. That’s the raw material. That’s why so many high-tech companies want to loosen visa limits
to bring more highly educated scientists and engineers into the United States. They can’t find enough here. This is why the decline of the American education system is a national tragedy. Reversing that decline must be a top national priority.
REALISM, NOT IDEOLOGY
When it comes to education reform, I’m a pragmatist. You don’t have to have studied the education system for years to know we need good teachers working in superior educational environments backed by administrators with knowledge of local conditions and the power to manage according to results. This isn’t that complicated.
Too many education debates get bogged down in large, systemic questions. Consider charter schools, which purport to offer a superior educational experience in exchange for more flexibility in how they run their operations. Millions of research dollars have been spent trying to answer the question of whether charter schools, as a concept, work. As the popular 2010 movie Waiting for Superman shows, some charter schools work much better than many urban schools.
The results have been contradictory so far, which isn’t surprising. There are thousands of charter schools operating in the United States. Some of those schools are going to be great. Others won’t be. What we should be spending our time on is figuring out why the good schools are so good, no matter how they are structured.
Unfortunately, the biggest problem with our education system is that it is dominated by entrenched interest groups that measure success less by student achievement and more by the economic welfare of their members. I’m talking, of course, about the teachers unions.
Understand that I’m not remotely anti-teacher. My father was a sixth-grade teacher, and my mother taught languages on the side. I can remember all the teachers I had in school who opened my eyes to the greater world and made learning the enjoyable activity it should be. Good teachers are one of the most precious resources we have.
The unions that represent them, however, are another story. And I say that despite the fact that my father was an active teachers union organizer and representative until he died in 2007.
For years, the National Education Association—which has an annual budget in excess of $300 million and more than 550 people on staff—has resisted every attempt to focus on teacher quality. The American Federation of Teachers has marched in lock-step behind them. As a result of their efforts, it can be practically impossible to fire an underperforming teacher without endless delays or crippling legal challenges.
For a look at how bad teachers can linger forever, you can’t do better than the award-winning New Yorker article by Steven Brill, “The Rubber Room,” detailing the way New York City spent hundreds of millions of dollars annually to warehouse hundreds of alcoholic, abusive, inept, lazy, incompetent, or misaligned teachers.53
The problem is the state’s tenure system, which guarantees nearly every teacher a job for life once they complete three years in the classroom. It takes years of long, drawn-out hearings and appeals to force out even the most incompetent teachers; at the time of the New Yorker story, warehoused teachers had been out of the classroom an average of three years, with full pay and benefits during that entire time—and many still weren’t close to a resolution of their cases .
As one principal explained the situation, the union “would protect a dead body in the classroom.” And even a 2009 partial New York City compromise with the union allowing rubber room teachers to be assigned work was challenged in 2010 because teachers complained the work might be outside the area of the rubber room.
Getting bad teachers out of the classroom—and good teachers in— is a critically important component of any reform effort. A 2007 study funded by the non-partisan Brookings Institute found that a student with a first-rate teacher could expect a ten-point jump in standardized test performance after just one year. The study’s authors note:
[T]he black-white achievement gap nationally is roughly 34 percentage points. Therefore, if the effects were to accumulate, having a top-quartile teacher rather than a bottom-quartile teacher four years in a row would be enough to close the black–white test score gap.54
These results are astounding, and they support what everyone knows—good teachers matter.
Even in the face of such evidence, the teachers unions reject completely the idea of pay for performance. They seem to think education is the one industry in America where we aren’t allowed to acknowledge that there are higher and lower performers, and pay people accordingly.
In Washington, D.C., where forward-thinking school superintendent Michelle Rhee actually fired several hundred teachers in 2009 and 2010, the union retaliated. It contributed over $1 million to defeat the mayor—so that Michelle Rhee would go away. The union succeeded.
There is hope. The Los Angeles Times (under the leadership of its president, Eddie Hartenstein) actually published the results of each Los Angeles teacher’s performance in raising average test scores. Brilliant! Why teachers unions defend the worst teachers is unclear. It hurts good teachers, and it hurts students.
Teachers want to teach. That’s why they became teachers. But we would do a better job retaining the very best teachers if we could reward them for their dedication—and results—in the classroom.
Of course, pay for performance already happens. Because education is funded primarily by local property taxes, schools in more affluent areas can afford to pay higher salaries. The best teachers in adjoining districts are often recruited into the higher-paying system.
But rather than support plans that might keep more of those qualified teachers working in underprivileged systems, the unions have fought to keep their guaranteed, across-the-board salary increases based almost solely on seniority. It’s time for Americans to say “enough” and insist that differential pay for teachers be instituted based on teacher competence, subject matter, and skills.
SUBJECT MATTERS
Subject matter, well, matters because, as discussed above, we need to focus on math and science education as a nation. Lack of emphasis on science and math was the biggest issue with the No Child Left Behind Act. This legislation had any number of benefits, but it also had the unintended consequence of putting an intense focus on basic English and math at the cost of de-emphasizing science education.
We do need to teach the basics—good old reading, writing, and arithmetic—but those are mere stepping stones to greater knowledge. We need intense science education not just to train the next generation of scientists and engineers but also because so many of the global problems we face require elementary science knowledge to understand. Think how much more informed important debates like climate change (and frivolous debates like evolution) would be if all Americans were truly comfortable with the scientific method.
We also must teach history, civics, and economics. The founders understood that an informed citizenry was a requirement for democracy to flourish. Our students must understand the true nature of America, its past, and the greatness it has inspired throughout history.
9
Innovation Requires Competitive Broadband
“I arrived at the web because the ‘Enquire’ (E not I) program—short for Enquire Within Upon Everything, named after a Victorian book of that name full of all sorts of useful advice about anything—was something I found really useful for keeping track of all the random associations one comes across in Real Life and brains are supposed to be so good at remembering but sometimes mine wouldn’t. It was very simple but could track those associations which would sometimes develop into structure as ideas became connected, and different projects become involved with each other.”
—TIM BERNERS-LEE, 199555
WHY WE NEED BROADBAND
You just read how one man created the World Wide Web. He, along with Dr. Robert Kahn and Vint Cerf, are the undisputed fathers of the Internet. (Former Congressman Rick Boucher actually helped birth the Internet by pushing policies allowing its commercial life.) But Berners–Lee’s description of the idea isn’t very interesting, is it?
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sp; In fact, were I a venture capitalist and a potential investment walked in my office spouting that jargon, I’d quickly show him the door. Little would I know that I’d just kicked out a guy whose idea helped generate $3.7 trillion in sales in the United States in 2009 alone. I guess that’s why I still have a day job.
Two things happened in 1989 that would forever change the way we live, work, play, and learn. The first was English computer scientist Tim Berners-Lee’s proposal of “hypertext” as a way to share information among researchers worldwide. The idea led directly to the creation of the World Wide Web. The second was the official launch of America Online, which at its peak would be the online gateway for more than 30 million U.S. subscribers.
These two ideas did more than anything to change the Internet from an academic and research tool into the single biggest driver of innovation in the past two decades. In the twenty-first century, broadband Internet has become the indispensable utility. It connects, educates, equalizes, and uplifts all who receive it.
Which is why it’s so disappointing that the United States continues to fall behind other countries on virtually every important measure of broadband availability and quality. It didn’t have to be that way. Fortunately, we have a new opportunity to leap back to the front, if only we can muster the political will to overcome entrenched interests and make it happen.
Let’s go back to another important year in the history of the Internet. In 1996, Congress recognized the tectonic changes taking place in the telecommunications industry and passed a law intended to break up the old local phone monopolies and finally promote real competition and innovation.