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Commerce Department Delivers COMPETES Report

Devin Roundtree
January 10, 2012, 12:30pm

America's growing trade deficits and dwindling manufacturing base led Congress to inquire into what the nation should do to remain competitive in the future global economy. The Commerce Department was given with the challenge and, last week, Secretary John Bryson delivered the “COMPETES” report at the Center for American Progress. According to the report, in order for the U.S. to reclaim its economic dominance, public policies must focus on basic research, education, and infrastructure.

During the last decade, the U.S. placed second to last in research and development (R&D) funding among advanced nations. With private sector investment spending limited in recent years, the Commerce Department believes that it is pertinent for the government to increase financing for basic research via grants given to universities and tax credits to businesses.

With regards to America's growing education issues, the Commerce Department wants to use Science, Technology, Engineering, and Math (STEM) programs at college campuses to provide solutions. The Secretary firmly believes that future economic progress lies in green technology, and an increase in STEM spending will help provide an adequate workforce to meet future employer demands.

Lastly, infrastructure spending should not just encompass roads and bridges, but broad band internet access, according to the Commerce Department. Internet innovations over the last two decades have done wonders in disseminating information and allowing businesses to become more efficient. Therefore, if the government wants to bolster America's competitiveness, broad band must become a focal point. Secretary Bryson argued that the government was responsible for much of the wealth created during the 19th and 20th centuries, and reminded the audience that countries who lack in investments and innovation, inevitably fall behind.

There's no doubt that investments and innovation play a vital role in increasing living standards. Though the Commerce Department fails to understand that who does the investment spending and innovating is a significant distinction in the analysis. In contrast to the Secretary's historical implications, the massive wealth generated during the industrial revolution was orchestrated by private savings and private investments.

When it came to Thomas Edison's marvelous industrial research lab in Menlo Park and Henry Ford's massive auto plant in River Rounge, it was private, not public dollars that financed these unprecedented facilities. Consequently, investments like these paid off in creating thousands of valuable inventions and innovations that we take for granted today. When private money is at stake, it's more likely that value will be created for society, because few would risk their own money without a chance to profit. In light of Occupy Wall Street, the word profit has acquired a bad reputation. In absence of all the government subsidies and bailouts that now exist, profit making would simply mean that entrepreneurs were able to combine scarce resources in such a way that the value of what's created outweighs the ingredients. Whereas government investments are likely to be politicized, unprofitable, and wasteful, i.e., Solyndra.

The Secretary stands correct in that private investment spending is lagging, but current policies are the cause and increasing government's role will only worsen the situation. For some reason, when politicians speak of handing out money to finance pet projects, they neglect to mention that they have no money. In order for the government to give, it must first take away. With government spending at $3.6 trillion, the government consumes a great deal of money and resources that would have been saved and invested on profitable ventures. Before the existence of expensive entitlement programs like Social Security and the taxes that finance them, Americans had more money to save. Consequently, investment spending flourished and the middle class boomed.

Secretary Bryson concluded his speech by stating, “This administration does not have all the answers, but it has a role to play.” Unfortunately, the Secretary doesn't realize that his first point negates the second. Two centuries ago, nobody could have imagined that wood and whale oil would be replaced by coal and petroleum. Conversely, it's impossible to predict what will replace coal and petroleum and when. There has never been an era without scarcity and energy problems, but the solutions have and will always rest with the free market. In a sense, the government does have a role to play and it's not to intervene in the free market, but to protect the life, liberty, and property of each individual.


Devin Roundtree is Research Assistant


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