President Obama deserves some credit for declaring the improvement of the United States' global competitiveness the focal point of the last half of his term in office. Competitiveness underpins everything else -- jobs, rising standards of living, budget surpluses in place of deficits, and the ability to project power globally. Without being economically competitive, the United States cannot be the United States. So a big nod to the president for finally focusing the American  attention on the main game.

But that is as far as my praise can go. The substance of the State of the Union speech was a list of knee jerk conventional wisdom proposals that not only won't make us more competitive but that are at odds with the budget austerity the president also proposed. Let's start with the knee jerk proposals.

Right up front was innovation. The U.S., said Obama, must out-innovate other countries if it is to stay in the lead and create the new jobs needed to replace the old factory jobs the president suggested are gone forever. Okay, innovation for sure is a good thing. Nobody's against it and it plays so well to the American self-image of being smarter, more entrepreneurial, more flexible, and more dynamic than anybody else. But has anyone noticed that we've been leading in innovation for the past thirty years and that has not prevented us from suffering an erosion of our industrial and technological leadership or from running up enormous trade deficits while suffering loss of jobs and stagnation of wages and living standards. This despite the fact that we have innovated with the deployment of the Internet, the evolution of start-ups like Google and Facebook, and the development of smash-hit new products like the iPad.

Of course, innovation is to be desired and promoted. But one of this century's great innovators, former Intel CEO Andy Grove, pointed out in a recent article in Bloomberg Businessweek  that innovation is not enough. I actually gave a copy of Grove's ideas to the president, but it didn't sound last night as if he had read them. In any case, Grove has a set of graphs showing that the United States continues to innovate pretty much at the pace it always has. What has changed, notes Grove, is the pace of moving to mass production and commercialization. We don't do that much in the U.S. anymore because our companies take the innovation and move the production and commercialization offshore. Indeed, increasingly they are moving the innovation offshore as well -- in part because once you stop producing and commercializing it becomes increasingly difficult to innovate.

Next was education. Good stuff that education. Just like innovation we need more of it and we need it to be better. No arguments about that here or anywhere else I guess. But just as with innovation, for most of the past thirty years we've had, on average, the world's best educated work force. Certainly, companies aren't moving their factories to China because its workers are on the whole better educated than American workers. The movement of U.S. production to offshore locations has taken place despite the generally superior educational level of the United States. And, even if we fix education, which we definitely should do, we won't feel the effect for twenty years, by which time our competitive fate will have long ago been determined.

Infrastructure was next on the list and its renewal and modernization actually is a good, immediate idea.  But that gets us to the big internal contradiction in the speech. Innovation, education, and especially infrastructure all cost money. But in the second half of the speech, the president said he was going to freeze government spending for five years on all non-entitlement expenditures. So he seemed to be offering with one hand while taking away with the other.

Completely unaddressed were the questions ironically raised just last week by announcements surrounding the visit of China's President Hu Jintao to Washington. First, General Electric announced that it was forming a joint venture with China's state owned Avic corporation to produce avionics products in China for China's new commercial jet liner that will compete with Boeing jet liners. The avionics technology will be transferred to the joint venture from GE. Unsaid, but obvious was the fact that GE believed it had to transfer the technology to have a real shot at selling any avionics to China in the form of exports from the United States even though the United States has a comparative advantage in such exports. Then a few days later, the White House announced the GE Chairman Jeff Immelt had been appointed as President Obama's chief outside economic adviser.

So I'm left wondering how we are supposed to be innovative when our top companies transfer important technologies to would-be foreign competitors and how we are supposed to deal with those foreign competitors when the president's chief outside economic adviser is among the chief transferers.

After Larry Summers announced last fall that he would be stepping down as President Obama's chief economic adviser, I publicly called on the president to appoint GE Chairman Jeff Immelt as Larry's successor. So you might think I would be thrilled by the recent appointment of Immelt to replace Paul Volcker as Chairman of the President's outside economic advisers. But I'm afraid that I'm ambivalent at best. (If you read my last post on GE's deal to do an avionics joint venture with China's state owned Avic, you are not at all surprised).

On the one hand, I like Immelt because on several occasions he has said publicly something that I believe to be profoundly true: Namely, that America cannot prosper without a strong manufacturing base. It is not only that he says this, but that as the head of a global company with more foreign than U.S. sales and employees and very significant foreign shareholders, it takes some courage for him to call for stronger American manufacturing.

On the other hand, there are two linked problems. When I urged Obama to replace Summers with Immelt, I knew that, if he took the job, Immelt would have to resign from GE (which is probably why the job wasn't offered and/or wasn't accepted) and thus operate solely with U.S. interests in mind. As head of the White House's external economic advisers, however, Immelt will remain Chairman of GE. In that role, he cannot, indeed, he must not, think only of what is best for America. Rather he must focus on what he thinks is best for GE.

Thus, if China demands (as it does) that GE produce in and transfer technology to China as a condition of doing business there, Immelt may conclude that, in view of the potential future importance of China's market, he has no choice as the chairman of GE but to comply. This is especially true in view of the fact that China is not a democracy in which, as it does in the United States, GE has big political influence. Nor is it a society with a rule of law under which GE can protest unfair treatment.

But however sensible acceptance of Chinese conditions may be from a GE perspective, it makes no sense from an American perspective, especially because the Chinese conditions are significantly in violation of Chinese commitments to the World Trade Organization and to the United States.

So the question is whether Immelt can serve two masters -- GE and the United States -- equally well? And that leads to the second problem which is the likely evolution of a least common denominator attempt at serving both masters which ultimately leaves the United States sucking air. In fact, you can already see that happening. Just look at Immelt's article -- How to Keep America Competitive -- in the Jan. 21 Washington Post.

There Immelt calls for more Free Trade Agreements like the one just negotiated with South Korea and for more innovation. These suggestions are just motherhood and the flag bromides with the exception that, unlike motherhood and the flag, they are demonstrably insufficient. Sure, just about everyone is for free trade in the abstract, but in reality we have done free trade agreement after free trade agreement over the past sixty years and our trade deficit and the erosion of American manufacturing have only gotten worse. By the same token, we have been by far the leading source of innovation over the past sixty years, but that has not stopped the erosion of our position even in high tech industries.

So there must be a lot more that we need to do or to stop doing. But, for as long as he is chairman of GE, Immelt is unlikely to address that question, especially, for example, if it suggests something like not doing more free trade agreements.

So here's my big idea. Immelt should just step down from the chairmanship of
GE and devote himself to revitalizing America. Look, the guy is already rich by the standards of all but a few billionaires like Warrant Buffet and Bill Gates and he's never going to be as rich as them anyhow. Moreover, fifty or a hundred years from now no one is going to care what happened to GE and no one is going to know Immelt's name if he serves out his time at GE. But fifty or a hundred years from now people are going to care what happened to America. And if Immelt can really do something to turn the country around and get it back on track, he'll be on Mount Rushmore -- at least figuratively if not physically.

So how about it Jeff?  For the good of the country?