The National and Economic Security Imperative of Helping More Americans Adapt and Thrive

By Penny Pritzker, chairman and founder of PSP Partners; and Edward Alden, Bernard L. Schwartz senior fellow at the Council on Foreign Relations.

(Note the following excerpt is from a chapter written for a new Aspen Strategy Group book called Technology and National Security: Maintaining America’s Edge. You can find the full chapter and the book here.)

The United States today faces twin challenges — building its global leadership in the next generation of transformative technologies and rebuilding economic opportunities for more of its citizens. The first cannot be done successfully without also doing the second. Innovation and competition are the great drivers of prosperity, but they have also created a growing gap between the economic winners and those struggling to get by. Unemployment in the United States has fallen below 4 percent, and the well-being of Americans has been improving as the economy continues to grow at a strong pace. Yet four in ten US households still report that they are unable to cover an unexpected $400 expense without borrowing money or selling something they own. More than a decade after the last recession, economic insecurity remains widespread.

This continued economic insecurity poses a growing and fundamental threat to America’s economic competitiveness and national security. While technology and global competition have helped raise incomes and living standards around the world, they have also created huge new challenges in the labor markets of many of the advanced economies, from the disappearance of once well-paying manufacturing jobs to the growth of the gig economy and other contingent work that comes without traditional employment benefits. Americans need far better access to the education and retraining opportunities required to prosper in this rapidly changing economy, and government support systems must be updated so that working Americans can again have greater confidence about their futures. The reality is that for more than thirty years we have failed as a nation in this regard.

In the United States, where the social safety net is especially porous and support for job retraining is weaker than in any other wealthy country, labor market disruption has already contributed to social and political upheaval. Donald Trump was elected president in 2016 on a platform that promised greater restrictions on both international trade and immigration to the United States, blaming both for the economic challenges facing many Americans. Since taking office, the president has approved the largest increase in tariffs on imports since the 1930s, has slashed refugee admissions to their lowest levels since the refugee program was created in 1980, and has taken a series of steps to reduce the entry of highly skilled immigrants to the United States.

Such restrictions on trade and immigration will erode America’s technological and economic leadership. Immigrants today — many of them initially attracted by the high quality of American universities — are more than twice as likely to start a business as native-born citizens; from 1996 to 2011, the business start-up rate for immigrants increased by more than half, while the native-born start-up rate fell by 10 percent, to a three-decade low. Of the eighty-seven start-up companies that had reached a value of more than $1 billion by 2016, immigrants founded more than half, and over 70 percent had immigrants as part of the top management and product development teams. On trade, internationally engaged American companies — those that both export and invest abroad — are America’s most innovative companies, accounting for nearly three-quarters of private sector research and development. The success of these firms depends on markets that are open to both trade and investment. And while the United States has imposed few restrictions on the deployment of new technologies, some 75 percent of Americans today are worried about a world in which computers and robots do more of the work, fearing for their job prospects, their family’s future, and that inequality will worsen.

Polls indicate that the public does not favor tariffs on imports, sharp restrictions on immigration, or regulations that curb technological innovation. But the public is wary about what technology and global competition mean for their jobs and their future. Public support for economic openness can no longer be assumed; it must be rebuilt. That requires rebuilding the connection between economic openness, innovation, and better work and life opportunities for Americans. The US education system must do a better job of preparing Americans for the world of work by expanding career-related offerings; better support is needed to allow mid-career workers, or those displaced by technology or trade competition, to return to school and retrain for new careers; and the benefits that are now available to most full-time workers — health care, sick leave, vacation pay — need to be available to everyone with a job. Improving and rebuilding the links among education and workforce training, good jobs, and greater economic security is vital to our future security and economic competitiveness. As technological change is accelerating, the United States needs to show the same level of public and private commitment to meeting this challenge as it showed when the country transitioned from an agrarian to an industrial economy just over 100 years ago.

Meeting the twin challenges of technological leadership and rebuilding opportunity must be the primary goals for US economic policy. Given the seismic forces of innovation, automation, and globalization, the nature of work is fundamentally changing; we must help more Americans adapt, adjust, and thrive. America needs a more forward-looking, comprehensive economic competitiveness strategy that includes an innovation leadership agenda, modernization of our workforce training and education systems, immigration reform, and expanded multilateral trade. If the United States fails to meet these challenges, it will have neither the resources nor the political support needed to play a large global role.

The United States won the twentieth century because it finally got the big challenges right — education, scientific excellence, innovation, immigration, and trade. Yet, in recent decades we have not done all that we can as a nation to adapt government policies and approaches to the rapid pace of economic and technological change. Too many Americans have been left behind by the rapid changes in the economy, without the necessary tools and resources to prosper. The reality is we can do better.

With diminishing opportunities, it is not surprising that Americans have been susceptible to populist promises. The United States has been here before and risen to such challenges in the past. We must do so again as our national and economic security depend on it.

(For the full paper, go to https://www.asgbooks.org/technology-national-security/)