Innovation is critical to humanity. Developments large and small—from the toothbrush to the Kindle to artificial heart valves—have made our lives healthier, happier, and longer. And America has long been the world’s innovation leader. But that should not be taken for granted. We didn’t reach the top by accident.
Capitalism fuels American innovation. And as the European Union proves, American innovation is our second greatest gift to the world (after global security). Yet the central benefit of innovation is that its benefits are never final. Consider Uber. The ride-sharing business has shaken up the entrepreneurial economy and provided better services that make more money for more people. And now Uber is facing challenges from other competitors taking advantage of free market opportunities. This constantly improves the industry.
Unfortunately, such examples of innovation — and there are many — are on less certain ground today, for three reasons.
First, anti-free trade sentiment is on the rise. With many Americans smashed by society’s failure to replace lost manufacturing jobs with well-paying alternatives, Donald Trump and Bernie Sanders have generated political momentum by blaming free trade for economic despair. Travel across the Northeast and Midwest and you’ll understand this dynamic (rural Pennsylvania offers one example).
Fact is, free trade provides manifest benefits to Americans, but those benefits are now easily obstructed from public view. To address this knowledge deficit, our politicians should aggressively pursue an international marketplace that excludes cheating rather than excusing it and engage in bringing new jobs and investment to stricken communities. To sell innovation in the 21st century, its benefits must be felt everywhere.
To sell innovation in the 21st century, its benefits must be felt everywhere
Second, there’s the Left’s increasingly anti-business agenda. As Opportunity Lives has reported, the minimum wage is a prime example of liberal good intentions gone sideways. By taxing businesses excessively, imposing artificial wage levels and imposing new regulations, liberals hope to raise the earning potential of the poorest in our society and boost equality. In reality, new regulations have undercut small businesses, higher corporate taxes push jobs overseas, and the push for a $15 minimum wage is destroying jobs.
Third and most importantly, we’ve lost touch with the economic basics that give rise to confidence in innovation. In today’s political discourse, declining labor participation and productivity statistics are less important than populism. That’s dangerous. To understand why, look at China. Producing cheap goods in high quantities without regard to rising living standards, China has been undercut by more productive (when costs and outcomes are considered) nations like Vietnam. China’s economic difficulties prove what happens when a nation attempts to manage economies of scale in the low-value goods market. As I noted on a recent McLaughlin Group episode, Americans have two choices in response to this lesson. Either we embrace innovation and produce and sell high-value products to an increasingly wealthy world. Or we chose to ignore declining productivity and sell cheap goods at high prices to ourselves.
Innovation has been and always will be the defining source of America’s economic strength. It is why we live longer today than we did 50 years ago. It is why our ability to do what we wish within the budget we wish is far greater today than it was 50 years ago. It is why the world still looks with envy to America. It is why capitalism works and socialism fails.
Put simply, this time of economic doubt requires our renewed confidence in innovation.
Tom Rogan is a Senior Contributor for Opportunity Lives and writes for National Review. He is a panelist on The McLaughlin Group and a senior fellow at the Steamboat Institute. Follow him on Twitter @TomRtweets.