Before watching a video on CNN.com this morning of a shark leaping from the water to snag the fish an amateur angler was about to reel in, I had to view a 30-second ad for Germany. “There are many reasons to invest in Germany – all of them smart,” the ad asserted. As each of the smart reasons popped up I thought about whether the United States could make a comparable claim:
- “World-beating infrastructure.” Maybe not the adjective I would have used if giving p.r. advice to Germany but I conceded the U.S. can no longer make that claim. My Rorschach response to “U.S. infrastructure” is “America’s crumbling roads and bridges.” The one part of my vacation I am dreading this summer is JKF International. We can’t even define shovel-ready.
- “Europe’s most dynamic economy”: At first I thought Germany was setting a pretty low bar on that one. Surely, the U.S. could make a similar claim if it was in Europe. But then I thought about Finland, Sweden, Denmark, and the Netherlands. In many metrics of innovation-based economic dynamism in ITIF’s Atlantic Century II, these countries ranked higher than the United States.
- “Europe’s #1 R&D nation”: Again, according to Atlantic Century, Finland and Sweden outranked Germany in terms of business R&D and Austria, Finland, France, Sweden and Denmark bested Germany in terms of government R&D. In fact, the U.S. was slightly ahead of Germany in both categories. But that doesn’t tell the full story. In 2012, the generosity of the U.S. R&D ranked 27th among countries that offer a comparable incentive. Also, while combined U.S. public and private R&D levels are comparable, Germany’s focus on applied research in key sectors is of paramount importance. What’s more, Germany is helping its manufacturers and tech companies compete through the Fraunhofer system, made up of 60 research institutes and 18,000 employees working with universities, private companies and government agencies throughout Germany in fields as diverse as life sciences, microelectronics and materials and components. And while the U.S. federal government has been cutting investments in research, Germany has been expanding these investments and declared its intention to be the most research-friendly nation in the world by 2020. When looking at R&D another way, R&D intensity (R&D as a share of GDP), it is true that U.S. R&D intensity increased 10.4 percent from 1995 to 2008. Germany’s increase in research intensity during that period was double that. Of course, looking at Korea (42.2 percent), Taiwan (61 percent), Finland (65 percent), Singapore (135.1 percent), and China (170.2 percent), Germany can’t rest on its laurels.
- “A global leader in sustainable energy solutions”: The U.S. should be able to make that claim. After all, from 2009 through 2014, the federal government will invest a total of $150 billion. However, according to the report by analysts at the Brookings Institution, Breakthrough Institute, and World Resources Institute, without any additional Congressional action 75 percent of federal clean tech policies are set to expire by 2014. Visionary investments in new energy sources are threatened by sideshow brawls over Solyndra and the Keystone pipeline.
- “Europe’s leading innovation export nation:” To be fair, I don’t know exactly what the phrase measures. However, my first thought was the United States also exports its innovation – albeit inadvertently. Along with 5.5 million manufacturing jobs and 54,000 factories in the 2000s, we are ceding engineering and design know how and innovation capacity. Carnegie Mellon’s Erica Fuchs has done some great work showing how we’ve been off-shoring innovation. Another way the United States inadvertently exports innovation is by allowing China to extort trade secrets in exchange for access to that market, as ITIF explained in Enough is Enough: Confronting Chinese Innovation Mercantilism. However, assuming that the phrase refers to the nature of the goods exported, then consider the fact that research-intensive exports account for 20 percent of Germany’s GDP, compared to just three percent of U.S. GDP. This means that, as a share of GDP, Germany’s export of research-intensive products is almost seven times greater than the United States’.
- “The first investment choice for U.S. companies in Europe:” Hard to challenge Germany’s claim there. Of course, Germany might not fare as well when compared with countries in Asia. U.S. companies love Asian countries. Leading up to the Great Recession, U.S. companies were on something of an overseas investment binge. In 2000, U.S. multinational manufacturers invested 33 cents overseas for every dollar invested domestically. By the end the decade, they invested 71 cents overseas for every dollar invested domestically. What’s more, as a share of GNP, U.S. multinational’s overseas capital expenditure increased by 9 percent between 2000 and 2009, while their domestic expenditure decreased by nearly 50 percent. Before you go blaming disloyal U.S. companies, you have to acknowledge that other nations are providing more generous tax incentives for investment and lower effective corporate rates. Multinational companies often make rational decisions based on U.S. tax policies.
When the ad ended I watched the fish become lunch for a hungry predator. There was a ruthless sense of purpose to the shark. I thought the United States doesn’t need to be a shark itself to avoid being devoured by competing countries. But we should be able to run an ad like Germany’s.
Image credit: Wikimedia Commons user _basquiat_