Shapiro Book Poses Blueprint to Lift U.S. From Its ‘Economic Doldrums’

Gary Shapiro’s “defining moment” came more than two years ago at a banquet for the SINOCES show in Qingdao, China, when he wanted to deck the “repugnant idiot” of a Chinese provincial government chief for insulting the U.S. over its mishandling of the sub-prime mortgage crisis, the CEA president says in his new book, The Comeback: How Innovation Will Restore the American Dream. At first, “I felt my blood boiling” at the Chinese dignitary’s derogatory words and gestures about the U.S. economy and America’s declining stature compared with China, Shapiro recalls. But in time, the words and deeds of the “grumpy” government official “changed me,” planting a “seed” that “grew into a tree of resolve,” he says. The book is due to be released on Jan. 6, the opening day of CES.

His resolve, Shapiro says in The Comeback, is to promote U.S. economic recovery through innovation, which he calls “the fuel of economic growth.” Innovation doesn’t just mean seeking “the next great gadget,” he says. For the U.S. to “lead the global economy, we need to pursue national policies that encourage innovation, creativity and new ideas,” he says. For the U.S. “to rise out of its current economic doldrums, we need to invest in technological innovation and create an environment where entrepreneurs can challenge, improve and strengthen our society. This book presents a plan to do just that.” Though much of the book reads like a political candidate’s policy manifesto on broad issues like free trade, deficit reduction, competitive broadband, alternative energy, health care and immigration, Shapiro has insisted to us that he has no plans to run for public office (CED Dec 10 p2).

Historically, “the facts responsible for American exceptionalism are the reason that the U.S. has been the world leader in innovation,” Shapiro says. “It follows that our national policies should seek to preserve and strengthen those factors, and many specific policies would necessarily follow from such a strategy.” Among other measures, Shapiro wants the U.S. government to “stop penalizing investments in startups,” he said. Twenty years ago, virtually all private equity funding flowed to U.S.-based companies, but now half goes to foreign startups, he says. He wants to “modify” the Sarbanes-Oxley law because it “imposes relatively large costs on small public companies,” he says. He also wants to “restore integrity and rationality in our legal system and lower corporate tax rates,” he says.

Shapiro was no fan of the government’s Chrysler and General Motors bailouts, he says. “Let any company fail, whether large, small, or entrepreneurial,” he says. The auto bailouts “not only wasted billions in taxpayer funds, but were primarily motivated by an unprecedented gift to the pro-administration unions which suddenly were lifted ahead of the line of private creditors,” he says. Debt-ridden Ford “is further burdened against Chrysler and GM, especially since the government wiped out their massive debts,” he says. This means Ford unfairly must pay millions of dollars of annual interest on its debt, while Chrysler and GM “have little reason to invest,” he says. Yet Ford “stands as one of the most innovational and transformational companies of our era” because it has “shifted from a car company to a technology company,” he says. “Many Americans disgusted at the car bailouts but wanting to buy an American company car have turned to Ford and are thrilled by what they see.” That’s why CEA has “eagerly invited” Ford CEO Alan Mullaly to keynote CES three times, Shapiro says.

In the book, Shapiro also proposes broad based “procedural suggestions” for cutting the national deficit. He proposes to: (1) Identify all government spending “by whether it invests in and promotes the future of our children.” (2) Include “triggers” to discontinue any government spending program “not meeting the goals assumed when it passed Congress.” (3) Cut overseas spending “unless it promotes a clear strategic priority.” He thinks U.S. spending in Afghanistan, Iraq and South Korea is “vastly disproportionate to our spending elsewhere,” he said. (4) Link congressional salaries to the annual deficit. (5) Require Congress “to vote up or down on a bipartisan commission to address our national debt and unfunded liabilities.”