What is the new economy? Innovation. But what is innovation? Innovation is "Brand-new or just a bit different, it doesn't matter. Innovations are often thought of in terms of technical achievement, but can also be a design. The type, industry and style of innovation are irrelevant; an innovation's impact determines its qualification." Innovation can be disruptive but now we understand innovation is a process and this has led to a disruption of the US economy. How? As the old economy fell under the growing complexity of the global financial markets, the American Recovery and Reinvestment Act (ARRA or stimulus money) was made into law to stimulate the economy and create jobs. When the stimulus bill was enacted, national unemployment was at 8 % now national unemployment is at 10%. The northjersey.com article states "A report the state filed with the Recovery Accountability and Transparency Board showed 27 jobs (in New Jersey) created with the first $2.7 million spent through September. That works out to about 10 jobs per $1 million — and actually makes the Lodi project a high-performer in the state. On average, the transportation committee's data showed New Jersey reported just three jobs per $1 million in spending under way, compared with six jobs in New York and nearly eight in Pennsylvania." This means that we are spending tax dollars inefficiently by sustaining the old economy and not funding INNOVATIVE projects that will fuel the new economy.
For example, let's look at real estate. Real estate contributes 10% of the total U.S. economy's output. One of the projects is funded by ARRA is weatherization for low-income households. From BusinessWeek, about 6.2 billion of the 787 billion in the bill is dedicated to this activity. Weatherization is caulking and sealing homes to promote home energy efficiency. Instead of paying the state to create an agency that hire contractors who hike up the price to caulk a window, we must find a more efficient way to bring solar panels, green roofs and remove inefficient hot water tanks from American homes. The use of tax credits and market driven INNOVATIVE solutions will increase the energy efficiency of the American home exponentially and bring the US into the 21st century, instead of the same weatherization program that has been used inefficiently since the 70's. Currently, there is little economic incentive for the middle class (who expect the prices to drop) to utilize new technology and there is also little incentive for the home builders who are still creating the traditional inefficient homes. For example, we can use the government to create driving forces to move the homeowners from traditional water heaters to tankless water heaters that have been used in Europe for years.
Now let's take a look at healthcare reform and it's role in the 21st century economy. This is a quote from "If Health Care Reform Fails, America’s Innovation Gap Will Grow " by David Wilcox - "In the cradle of American innovation, workers are making career choices based on co-payments, pre-existing conditions and other minutiae of health insurance. They are not necessarily making decisions based on what would be best for their careers and, in turn, for the American economy" A chart shows from 1990's to 2007 - companies rate of creating new jobs fell 14% and the rate of start up companies creating jobs fell 24%. Health insurance is an important decision to the growth of small companies who are more than likely creating an INNOVATIVE solution to today's problem.
Luckily, the Wall Street Journal among others, is not just talking how the stimulus bill does not drive the economy but also talking about solutions. a quote from Put that shovel down - " We're in a knowledge economy now; we use high-tech tools (i.e.INNOVATION) to efficiently and effectively design, make, market and sell. Building roads and bridges willy-nilly won't make us more productive; and without increases in productivity and the associated corporate profits, there can be no sustainable job creation, no increase in standards of living, and no real economic recovery. Given that real tax cuts are off the table and a new stimulus (even if it isn't called that) is inevitable, the best we can hope for is to use the power of the government to clear a path that private enterprise can't, via one-off projects that end and disband." It is time to acknowledge the old economy of big business (who over time stopped INNOVATING) a thing of the past, create transferable health insurance for the American worker (which allows them to join small businesses that create INNOVATIVE solutions) and use the government to bring these INNOVATIVE solutions to the marketplace. This will bring the United States out of the recession and be closely aligned to the new economy of the 21st century!
Read more technology ideas for the 21st century from the Wall Street Journal by clicking here.
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