The US Bureau of Labor Statistics reported an unemployment rate of 9.2 percent in June 2011. That number remains frustratingly constant each month as millions of Americans struggle to find work.
It is clear that many of the jobs lost during the last decades and during the Great Recession of 2008 are extinct. The definition of insanity is said to be repeatedly doing the same thing, but expecting different results.
Government stimulus packages and extended unemployment benefits are band-aids for what William Holstein, author of the new book, “The Next American Economy: A Blueprint for a Real Recovery,” identifies as structural challenges in the American economy. Holstein has traveled the United States writing on globalization and economics for leading business publications.
How will our country reinvent its workforce for the 21st century and in what industries? Holstein believes that our economic renaissance lies in technology clusters and ecosystems.
Here is a cross-sectional synopsis of the United States and how it is being revitalized with technology clusters and ecosystems. Lessons for all Americans that Holstein addresses regarding the country’s current economic challenges are also discussed.
Technology clusters
Clusters promote knowledge sharing and product innovation. They also uphold technical and business processes by providing extensive networks of formal and informal relationships between organizations. Clusters tend to happen by accident and are difficult to create.
The Orlando Technology Group relies on simulation and computer modeling; and it stems in part from the decision of America’s top defense and military contractors in the 1950s to locate operations in the Orlando area. Disney’s influence on computer games and entertainment is also influential. Every group needs an idea factory, and Orlando has approximately 140 research and development companies located near universities. The “cross pollination” of ideas is easily promoted. Simulation and modeling are used in multiple industries. Medical care is included as it uses virtual reality to help rehabilitate stroke victims.
Pittsburgh is reinventing itself from a city of steel (factories don’t exist today) to one of advanced robotic dominance. Making advanced robotic systems is complex and challenging. They outperform repetitive tasks in a car factory, which is simple closed-loop automation. The nascent industry lacks a presence for Google or Apple in the city. However, universities, engineers and the government of the area are among its collaborating group, committed to the industry prospering and creating new jobs.
San Diego is home to more than 600 life science companies and 700 wireless communications companies. In the 1970s, science and medicine rarely collaborated. Today, the combination of biotechnology expertise and enormous computing power helps San Diego dominate medical research and development, including genomics. The opportunity is excellent for “creative collisions” between students and university professors, business leaders and area government. San Diego has a high percentage of risk-takers and venture capital funds, which are continually sought to generate more technological advancements.
Ecosystems
Technological ecosystems are factories of ideas that embody different scientific and academic disciplines located in close proximity. They include the presence of large, established companies that often invest in startups, license their technology, and / or serve on their board of directors. CEOs coach less experienced small business leaders. Government agencies are partners, but companies do not depend solely on them. Angel investors and private sector investors are also key players. There are no guarantees in any ecosystem.
North Carolina has shed its furniture, textiles, and tobacco industries. Today it is a state whose small and medium-sized companies are committed to exporting, which is key to generating economic growth, wealth and employment. Companies that export typically pay higher wages and stay in business longer. Holstein says exporting is huge untapped economic potential. The US export financing and promotion system is fragmented and ineffective. North Carolina succeeds as agencies at the local, state and federal levels are working together to promote exports. They provide information to small business CEOs about trade shows in foreign capitals. They also play matchmaker with potential distributors and customers, and help companies translate their sales materials into local languages, among other things.
Atlanta, like many American cities that rely on manufacturing for economic viability, in recent decades relied heavily on offshoring and outsourcing to cut costs. Today, the city exemplifies companies that are returning their operations to US soil, a trend known as “backshoring.” It’s especially true for high-tech, telecommunications, and healthcare organizations. Traveling around the world to adjust production and design changes is costly and time consuming. Shipping costs, complicated logistics, political unrest and the threat of intellectual property theft are also motivators. Atlanta’s ecosystem of regional governments, universities, suppliers and logistics experts is among those committed to revitalizing the area’s job market.
Cleveland is at the forefront of America’s 1,200 community colleges for workforce retraining. Cleveland’s strength is retraining displaced workers in their forties and fifties, a demographic hard hit by global employment trends. Current and future workers need a greater set of knowledge-based skills to be competitive; and Cleveland complies. The city’s community colleges treat education less like a business and more like an education, allowing the unemployed to quickly transition to viable new careers. Cleveland’s educational ecosystem includes local business leaders and government officials. Community colleges can often be more flexible than the four-year academy. Funding flows from the federal, state, and local government, as well as from private foundations.
Lessons for all Americans
Holstein concludes that the United States is the center of a global economy and competitive pressure is permanent. Believe that we are a culture of creativity, innovation and freedom. Our comparative advantage is our ability to outperform existing technologies by being disruptive. To maximize that advantage, future generations will need to master math and science skills. It is the only way to prosper in a knowledge-based economy. “This is a watershed moment for America, similar to the Great Depression, when we had to convene a new vision of our future,” he says. “I really believe that we can regain the optimism that many seem to have lost.”
To stay on top of the upcoming US economy, visit http://www.williamholstein.com.
