High-tech will help spur recovery

Dean C. Garfield photo

When the networking giant Cisco recently experienced a 23 percent jump in quarterly profit and 8 percent gain in revenue, John Chambers, the chairman and CEO, announced plans to hire as many as 3,000 workers — despite an economy struggling to recover from the worst fiscal crisis since the Great Depression.

Last week, Intel announced a $3.5 billion initiative for investment in U.S.-based technology companies, as well as a commitment, with 10 other tech firms, to increase hiring of college graduates. AT&T and Verizon project capital expenditures in 2010 of nearly $35 billion combined.

Fortunately for our nation’s economy, the high-tech playbook is a growth catalyst. After the early-1980s recession, the boom in personal computer and individual content creation — fueled by industry bellwethers like Intel, Apple, Dell, IBM and Microsoft — ushered in a new industry, thousands of jobs and the birth of the digital age.

The same was true in the mid-1990s, as the Internet revolutionized how businesses and consumers access information, perform research and engage in commercial transactions worldwide.

During the past decade, new platforms and technologies — such as virtualization, WiFi, cloud computing, mobility and social networks — have spurred new levels of efficiency, collaboration and cost savings. They created the likes of Google, My Space, Facebook and Twitter.

A recent Democratic Leadership Council study found that investment and recovery go hand in hand. In the past two decades, job creation has closely tracked business investment in equipment, software and computers. Innovation is especially vital for small businesses, which create most new jobs.

The research firm Gartner estimates that global spending on technology products and services will rise by 4.6 percent to $3.4 trillion this year, after initially predicting 3.3 percent growth. New and emerging markets — including the BRIC countries of Brazil, Russia, India and China — are expected to be responsible for more than half of all industry growth, according to IDC, a research firm.

While the potential of information and communications technology to drive a job-rich economic recovery looks almost certain, three factors will determine the extent of its success:

First, the degree to which Congress and the Obama administration — working with the private sector — outline and implement a plan for the United States to become the global leader in ICT-driven innovation.

Consider the issue for education. While our nation’s higher education system is the world’s most innovative, the latest scorecard, released by the National Center for Education Statistics, shows that the average score of U.S. eighth-graders in math and science is 520, compared with 530 in Russia, 553 in England and 561 in Japan.

We must embrace what works in the private sector, learn from our closest competitors and invest in programs that ensure our K-12 education system doesn’t fall behind.

Another priority must be our complex corporate-tax system. One-fifth of the U.S. private-sector work force (nearly 22 million in 2006) works for U.S.-based multinational companies. Yet the United States is the only large economy with both a worldwide tax system and a corporate tax rate greater than 30 percent — with enough tax loopholes to support the largest fleet of tax lawyers and accountants in the world.

To compete in the global economy, Washington needs a competitive tax structure that enables us to create jobs, promote innovation and raise living standards.

Second, a shift in mind-set from “make-work” to “work-wireless.” Too often, we associate job creation with shovel-ready projects and not information-technology-focused job-training programs that teach skills necessary to help Americans compete with peers in Europe and Asia, including those in intelligent infrastructure projects.
In the United States, there are more than 1,000 community colleges, serving more than 11 million students. With four-year institutions and community-based job-training programs, we can train (and retrain) America’s work force using the tools and techniques that China, India and other global competitors are embracing to become more competitive.

Third, rallying behind a national broadband strategy that helps modernize our nation’s dated IT infrastructure. The U.S. ranks 20th in household broadband penetration, behind South Korea, Canada, the Netherlands and Estonia, according to a Strategy Analytics survey.

If this doesn’t illustrate the need for action, a recent study shows that a tenfold increase in broadband speeds would yield an additional $6 billion a year for existing home broadband users.

The Information Technology and Innovation Foundation estimates that 250,000 jobs are created for every $5 billion invested in broadband deployment — 100,000 direct and indirect jobs from telecom and IT equipment spending, plus an additional 150,000 jobs in “network effects,” spurring new online applications and services.

The Federal Communications Commission is due to unveil its national broadband plan by mid-March. This must be aimed at pushing the United States into the top echelon of countries with widespread next-generation mobile and fixed wireless (and wired) capabilities by 2015.

It’s important to remember that high-tech is a bedrock of American innovation. If we embrace investment in new technologies, businesses and the economy will benefit. And if we combine this investment with the right ideas, public policies and market conditions, the impact on our work force should be vast and far-reaching.

Dean Garfield is president and CEO of the Information Technology Industry Council. Bruce Reed is CEO of the Democratic Leadership Council.

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