A gathering storm?

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: Listen to the growing cries of despair coming from some leading business people, and you might imagine that corporate America’s competitiveness could be the next victim of the global financial crisis. But Jeffrey Immelt, the boss of GE, the world’s largest industrial firm, sees opportunity amid the woe. “Companies and countries that really play offence vis-à-vis technology and innovation are going to come out ahead,” he said last week at an event in New York to present GE’s coming innovations in health-care technology.

With those words, he touched on a debate that has been heating up for many months. Even before the financial crunch began, many businessmen were worried that America was losing its lead in innovation to India and China. They were particularly upset that Asian rivals had been investing with more gusto in teaching young people mathematics and science, and in advanced scientific research. America’s National Academy of Engineering even issued a report last year, “Rising Above the Gathering Storm”, arguing that America’s “economic and strategic security” was in question because of lack of investment.

The cries are growing louder. The Council on Competitiveness, an influential group of American company bosses, university presidents and labour leaders, issued a terse report on the matter on November 11th and demanded that Barack Obama “take bold action to recapture America’s competitiveness” in his first 100 days in office. Craig Barrett, the chairman of Intel, the world’s biggest chipmaker, has also made similar complaints of late.

And in a speech in Washington, DC, on November 18th Eric Schmidt, chief executive of Google, an internet giant, claimed that government-funded research done in university laboratories was “the core aspect of America’s competitiveness”. Without a dramatic increase in investment in such research, and in maths and science education, Americans risked becoming mere “captive consumers” at the mercy of rising Asian powers, he argued.

Venturesome America

So does the relative decline of America as a technology powerhouse really amount to a threat to its prosperity? Nonsense, insists Amar Bhidé of Columbia Business School. In “The Venturesome Economy”, a provocative new book, he explains why he thinks this gloomy thesis misunderstands innovation in several fundamental ways.