Catching Up, Getting Ahead

More free-trade agreements, lower corporate taxes, less government spending and more open immigration.

By ALAN MURRAY

When President Barack Obama talks about the competition to win the future, he avoids naming the opposing team. Not so Gary Shapiro, who begins “The Comeback” with a description of “my defining moment.” It’s July 2008; he is at a dinner in Qingdao, China, and a provincial Chinese official turns to him, points his thumb up in the air, and says: “China going up.” Then he turns his thumb down, moves his hand toward the floor and says: “U.S. going down.”

Another man might have observed that his dinner companion had downed one too many Maotais and left it at that. For Mr. Sharpiro, however, the exchange became an occasion for soul searching and led to the searing conclusion that the boorish official was right. “The truth hurts,” he says.

Mr. Shapiro is best known for his role as ringmaster at one of the globe’s largest gathering of geeks, gadget freaks and gear heads—the International Consumer Electronics Show, hosted in Las Vegas by the Consumer Electronics Association, which Mr. Shapiro heads. But in “The Comeback” he takes on another role. Like a losing coach on “Friday Night Lights,” he sets out to create a playbook for restoring the U.S. to economic pre-eminence, so that he might return to China a decade hence, find his Chinese nemesis, mention America’s economy and, as he puts it, “extend my thumb, pointing upward.”

Mr. Shapiro focuses on innovation, which he argues is the nation’s great competitive advantage, the source of American exceptionalism. It is easy to think of innovation as something that just happens, but it is in fact embedded in a social and political matrix. Innovation, Mr. Shapiro writes, “is the fortunate result of our nation’s rich and unique stew of individual liberty, constitutional democracy, limited government, free enterprise, social mobility, ethnic diversity, immigrant assimilation, intellectual freedom, property rights and the rule of law. I can’t deconstruct how each factor makes its individual contribution, but I believe each is vitally important.”

But policies need to make the most of such exceptional assets, Mr. Shapiro observes, and too often they don’t. In “The Comeback” he details the policies that, he believes, will allow innovation to flourish. His recipe is a familiar one but not yet familiar enough to engage the preoccupied minds of warring political parties in Washington.

Among other things, Mr. Shapiro champions immigration. What policy could possibly be more self-defeating, he asks, than to allow the world’s best and brightest to study at our world-class universities and then (as we do now) deny them work visas and force them to go home? A university degree should represent a path to American citizenship, Mr. Shapiro argues. He also argues for giving special immigration status to promising entrepreneurs.

As for free trade, a source of notable bipartisan agreement in the Clinton era, it seems to have lost some of its political clout, Mr. Shapiro notes. The U.S. has been a huge beneficiary of trade pacts—including the much-maligned North American Free Trade Agreement. But the free-trade agreement with Colombia, signed in 2006, keeps getting stalled in Congress, in part because of pressure from labor unions. Get over it, Mr. Shapiro says. Congress should pass the Colombia free-trade agreement and others with Panama and South Korea. He also calls for eliminating “Buy America” provisions from U.S. law, which shut out foreign certain goods and services especially when federal money is being spent.

Mr. Shapiro notes that the U.S. corporate tax rate, one of the highest in the world, stifles entrepreneurship and innovation. And rather than encouraging innovative global companies to make their home here, America’s high tax rate pushes them away.

Plenty of other aspects of American politics and policy annoy Mr. Shapiro. He thinks that it’s an outrage that the U.S. ranks near the bottom among developed nations in math and science education. He doesn’t say quite what we are supposed to do about such a failure. He is ambivalent about charter schools. But he does blame many of the problems in American education on “entrenched interest groups,” especially teachers unions. (And “I say that,” he adds, “despite the fact that my father was an active teachers union organizer and representative.”) Unions generally, Mr. Shapiro believes, discourage innovation. Keep them in check, he urges—and don’t pass the proposed card-check law that would take away secret ballots for union organizing.

Parts of the Shapiro recipe are debatable. It’s not clear to me that high schools are a suitable place for teaching more “business and entrepreneurialism,” as he advocates. His argument for easing U.S. patent protection is one-sided. And his suggestions for cutting government spending can be more vague than helpful: “Our government needs to triage its spending to those programs most important to our future, especially the future of our children.”

Mr. Shapiro also fails to grapple with the paradox that underlies his analysis of the U.S.-China dynamic: Why is it that less government is the right answer in the U.S. while government is a critical driver of China’s economic success? Perhaps he should make that the subject of his next book.

Mr. Murray is deputy managing editor of The Wall Street Journal and the author of “The Wall Street Journal Essential Guide to Management.”

This article was originally published by The Wall Street Journal.