Prestowitz: Will Obama make America competitive?

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.

TIM SLOAN/AFP/Getty Images


Obama: "America's leadership has been renewed"

Here's the main foreign-policy section of President Obama's State of the Union address. Head over to our Facebook page to post your questions for deputy National Security Advisor Dennis McDonough: 

Just as jobs and businesses can now race across borders, so can new threats and new challenges. No single wall separates East and West; no one rival superpower is aligned against us.

And so we must defeat determined enemies wherever they are, and build coalitions that cut across lines of region and race and religion. America's moral example must always shine for all who yearn for freedom, justice, and dignity. And because we have begun this work, tonight we can say that American leadership has been renewed and America's standing has been restored.

Look to Iraq, where nearly 100,000 of our brave men and women have left with their heads held high; where American combat patrols have ended; violence has come down; and a new government has been formed. This year, our civilians will forge a lasting partnership with the Iraqi people, while we finish the job of bringing our troops out of Iraq. America's commitment has been kept; the Iraq War is coming to an end.

Of course, as we speak, al Qaeda and their affiliates continue to plan attacks against us. Thanks to our intelligence and law enforcement professionals, we are disrupting plots and securing our cities and skies. And as extremists try to inspire acts of violence within our borders, we are responding with the strength of our communities, with respect for the rule of law, and with the conviction that American Muslims are a part of our American family.

We have also taken the fight to al Qaeda and their allies abroad. In Afghanistan, our troops have taken Taliban strongholds and trained Afghan Security Forces. Our purpose is clear – by preventing the Taliban from reestablishing a stranglehold over the Afghan people, we will deny al Qaeda the safe-haven that served as a launching pad for 9/11.

Thanks to our heroic troops and civilians, fewer Afghans are under the control of the insurgency. There will be tough fighting ahead, and the Afghan government will need to deliver better governance. But we are strengthening the capacity of the Afghan people and building an enduring partnership with them. This year, we will work with nearly 50 countries to begin a transition to an Afghan lead. And this July, we will begin to bring our troops home.

In Pakistan, al Qaeda's leadership is under more pressure than at any point since 2001. Their leaders and operatives are being removed from the battlefield. Their safe-havens are shrinking. And we have sent a message from the Afghan border to the Arabian Peninsula to all parts of the globe: we will not relent, we will not waver, and we will defeat you.

American leadership can also be seen in the effort to secure the worst weapons of war. Because Republicans and Democrats approved the New START Treaty, far fewer nuclear weapons and launchers will be deployed. Because we rallied the world, nuclear materials are being locked down on every continent so they never fall into the hands of terrorists.

Because of a diplomatic effort to insist that Iran meet its obligations, the Iranian government now faces tougher and tighter sanctions than ever before. And on the Korean peninsula, we stand with our ally South Korea, and insist that North Korea keeps its commitment to abandon nuclear weapons.

This is just a part of how we are shaping a world that favors peace and prosperity. With our European allies, we revitalized NATO, and increased our cooperation on everything from counter-terrorism to missile defense. We have reset our relationship with Russia, strengthened Asian alliances, and built new partnerships with nations like India. This March, I will travel to Brazil, Chile, and El Salvador to forge new alliances for progress in the Americas. Around the globe, we are standing with those who take responsibility – helping farmers grow more food; supporting doctors who care for the sick; and combating the corruption that can rot a society and rob people of opportunity.

Recent events have shown us that what sets us apart must not just be our power – it must be the purpose behind it. In South Sudan – with our assistance – the people were finally able to vote for independence after years of war. Thousands lined up before dawn. People danced in the streets. One man who lost four of his brothers at war summed up the scene around him: "This was a battlefield for most of my life. Now we want to be free."

We saw that same desire to be free in Tunisia, where the will of the people proved more powerful than the writ of a dictator. And tonight, let us be clear: the United States of America stands with the people of Tunisia, and supports the democratic aspirations of all people.

We must never forget that the things we've struggled for, and fought for, live in the hearts of people everywhere. And we must always remember that the Americans who have borne the greatest burden in this struggle are the men and women who serve our country.