Like any State of the Union address, President Barack Obama’s speech Tuesday had to cover every possible political and economic topic. Technology popped up in at least seven of them: the topics of job outsourcing, digital piracy, education, immigration, startups, R&D, and infrastructure.
Obama had new things to say on a few of these topics, but in most cases, programs are already under way. Some may work, others probably won’t.
Here are the promises and the realities:
Promise: Obama began with a popular recession-era topic: U.S. companies moving jobs overseas. He proposed special taxes on outsourcing firms, to fund tax breaks for companies that keep jobs in the country. What he vaguely called a “high-tech manufacturer” would get twice the deduction.
Reality: America still has some high-end tech manufacturing. Intel, for example, is dropping $5 billion on a new chip factory in Arizona. It certainly would enjoy any tax cuts that come along.
But for a lot of products, manufacturing within the United States doesn’t make sense. And wages aren’t the only reason, as the New York Times explained in a landmark article, “How the U.S. Lost Out on iPhone Work,” published three days before Obama's speech. “For technology companies," the authors wrote, "the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.”
Asian facilities have a scale and an at-all-costs ethic that the U.S. can’t and wouldn’t want to copy. With government support, an Asian company will add a wing to a plant based on the hope of getting a big contract. What about waking employees in factory dormitories and sending them on 12-hour shifts with only a cup of tea and a biscuit, as one iPhone supplier did? Every phrase in that sentence is impossible under U.S. law and/or custom.
Promise: “It's not right when another country lets our movies, music, and software be pirated,” Obama said. To go after piracy and many other unfair trade practices, Obama introduced a “Trade Enforcement Unit.”
Reality: The unit is still a vague concept, at least outside the White House. But a massive treaty on piracy is steaming along. For those who have just gotten familiar with (and probably sick of) the acronyms SOPA and PIPA, say hello to ACTA, the Anti-Counterfeiting Trade Agreement. In October, the agreement got signatures from the U.S. and seven other countries: Australia, Canada, Japan, South Korea, Morocco, New Zealand and Singapore. The European Union countries and Mexico and Switzerland are considering it. If ratified, the treaty will allow the countries to coordinate efforts against all kinds of counterfeiting and piracy. The U.S. government says it wouldn’t require any new laws, though there had been talk of requiring Internet service providers to filter out websites and ban offending customers. In any case, opposition is growing. An “End ACTA” petition on the White House’s “We the People” website has more than 25,000 signatures – qualifying it for a formal response from the administration.
Promise: “Growing industries in science and technology have twice as many openings as we have workers who can do the job,” said Obama. He went on to talk about training Americans for those jobs, and gave a nod to a woman who graduated from a joint program of her local community college and a Siemens gas turbine factory.
Reality: Community colleges are underreported success stories, providing good education at reasonable prices to nearly half of all U.S. undergrads. Other countries are copying the model, such as at Riyadh Community College in Saudi Arabia. A U.S. nonprofit called Jobs for the Future is providing grants to community colleges to develop the kind of targeted training that Obama praised.
Promise: Implicit in what Obama said about a lack of trained workers is that some of those jobs may have to be filled by foreigners. He hinted at this when making a case for immigration reform: “Let’s at least agree to stop expelling responsible young people who want to staff our labs, start new businesses and defend this country.” (GOP presidential candidate Mitt Romney has been more explicit, saying in a position paper, “Foreign-born residents with advanced degrees start companies, create jobs and drive innovation at an especially high rate.”)
Reality: Obama was talking about immigrants' children who grew up in the U.S. A shelved piece of legislation, the Dream Act, would provide a way for them to earn citizenship. But holding onto foreign tech workers, especially the ones Romney talks about, might also require expanding the visa program for highly skilled specialty workers, known as H-1B.
Promise: Using the late Steve Jobs as an example, Obama said: “Most new jobs are created in startups and small businesses. So let's pass an agenda that helps them succeed. Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow.”
Reality: Several actions are already under way, including patent reform. In September Obama signed the America Invents Act to overhaul the U.S. Patent Office. Part of that is a new “fast-track” option to get a decision on a patent in 12 months, rather than the typical three years or more. Fast track requires an additional fee, but it is reduced for small companies.
Promise: “Don't let other countries win the race for the future,” said the president. “Support the same kind of research and innovation that led to the computer chip and the Internet, to new American jobs and new American industries.”
Reality: Some new programs are in the 2010 America Competes Reauthorization Act. Among them is a requirement for a Committee on Technology to inventory and coordinate among all the federal agencies any research and development on “advanced manufacturing.” In essence, it’s an effort to get know-how out of the government labs and into factories.
Contests also will drive research. On the strength of programs like the X Prize (to build a private spacecraft or a 100-miles-per-gallon car, for example) the government is doling out grant money in the form of prizes on the site Challenge.gov.
Promise: Obama took examples from the Great Depression, such as Hoover Dam, to make the case for investing even during a slump. And he spoke of “clearing away the red tape that slows down too many construction projects.”
Reality: Internet access is a big part of Obama’s infrastructure plans. And much of the terrain to clear is in the wireless spectrum. His National Wireless Initiative from last February was to free up 500 megahertz of spectrum for new wireless devices and provide a $5 billion subsidy for 4G development in rural areas. So far, there has been little progress on either of those projects.