U.S. is seen struggling in the innovation race
By Mike Freeman
UNION-TRIBUNE STAFF WRITER
May 25, 2005
Much of the high-tech industry is trying to get traction in a spotty economy, but you'd never know it this week in San Diego County.
Two technology conferences featuring some of the industry's top luminaries have landed here, each focused on the opportunities in the tech world.
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At Carlsbad's Four Seasons Aviara resort, The Wall Street Journal's "D: All Things Digital" event began Sunday.
And in Coronado, the Future In Review gathering kicked off Monday night at the Hotel del Coronado with a speech by economist Robert Hormats, vice chairman of Goldman Sachs International and former undersecretary of state for economic and business affairs.
In a free-flowing presentation to about 120 people, Hormats focused on four "global imbalances" that could drive economic decisions during the next five years. In the United States, Hormats said, perhaps the most unrecognized problem is an "innovation imbalance."
"The pool of skilled innovation workers is growing at a far slower rate than it was," he said.
In a global economy, in which the United States can't match low wages of emerging countries, the ability to come up with new, innovative technologies and businesses will be the key to U.S prosperity, he said.
"We tend to take it for granted that we're going to be on top on the innovation race," Hormats said. "We thought Japan was a challenge 20 years ago. Now we have China, India, Israel, Eastern Europe . . . ."
Hormats said that innovation from other countries is good. But he said the United States needs to recognize that producing highly skilled workers is vital to its economic future. If America finds itself falling behind because of lack of innovation, then it might result in a political backlash, isolationism and slower global growth.
"The most severe threat, other than terrorism, to the strength and growth of a American economy is a dysfunctional education system," Hormats said.
Future In Review, in its third year in Coronado, focuses on technology but also delves into other topics, ranging from China's growing role in the world to the future of oil, space travel, military strategy and nuclear proliferation.
The conference is put on by Mark Anderson, publisher of Strategic News Service, a technology industry newsletter based in the San Juan Islands of Washington state.
Organized in a string of 30-minute panel discussions, the conference features executives from China Mobile Communications, Hewlett-Packard, Cisco, Nortel and Advanced Micro Devices.
Hormats, who served in four U.S. administrations, said the ballooning federal budget deficit is another looming problem, particularly with the coming retirement of Baby Boomers.
He criticized cutting taxes while increasing domestic spending and funding a war. "We can't do everything," he said. "We haven't had a debate on priorities."
Global energy supply is another area of vulnerability, Hormats said, because new supply and conservation measures trail demand.
Finally, a current account imbalance, in which Asian countries are financing the U.S. borrowing spree by buying government bonds, is an "enormous distortion," Hormats said.
"This is a situation that can be sustained for a period of time, but it can't be sustained indefinitely," he said.
The Future in Review conference concludes after Thursday's morning sessions.
The All Things Digital event in Carlsbad, hosted by technology columnist Walt Mossberg and technology reporter Kara Swisher, featured a Who's Who list of speakers in digital technology field, including Steve Jobs of Apple Computer and Pixar, Microsoft's Bill Gates and Intel's Paul Ottelini.
All Things Digital, which was sold out, wrapped up yesterday.
Mike Freeman: (760) 476-8209; mike.freeman@uniontrib.com
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