A paradigm shift in defining “competitiveness”


Some high-profile journalists in the business press and mainstream media are talking about economic competitiveness in a way that suggests a paradigm shift may be underway.

In a Fortune magazine piece headlined “The U.S. Has the World’s Most Competitive Economy. So What?” Christopher Matthews cited academic experts who argue that by pursuing policies aimed only at increasing business profits, “government itself becomes an engine for economic inequality.” Matthews goes on to note that even though the U.S. was ranked the most competitive economy in the world by the IMD World Competitiveness Center this year, “there are some who believe that it is no coincidence the most competitive country is also the most economically unequal…No matter how competitive an economy may be, if it doesn’t lead to better living standards for most of the population, it’s broken.”

Also hitting this theme hard recently was New York Times columnist Nicholas Kristof, who quoted Harvard business professor Michael E. Porter, creator of the “Social Progress Index,” in his column headlined “We’re Not No. 1! We’re Not No. 1!” Arguing that economic competitiveness isn’t created by low tax rates and cheap labor alone, Kristof wrote: “[Porter] said that he became increasingly aware that social factors support economic growth: tax policy and regulations affect economic prospects, but so do schooling, health and a society’s inclusiveness.” As Porter’s “Social Progress Index” suggests, factors like access to quality education and health care, ecosystem sustainability, and access to a cell phone and internet connectivity, all contribute to a country’s economic competitiveness.

In Minnesota, Growth & Justice has led this call for a paradigm shift around competitiveness. Back in March, President Dane Smith wrote in a Star Tribune Op-Ex section cover piece: “A consensus also has emerged that too narrow a focus on cheap labor and lower taxes has increased economic insecurity and inequality…badly damaging the basic economic health of middle-income and working-class families in our own state and nation while not really improving our basic standard of living.’’ Smith went on to say that competitiveness is a sacred American value, worth keeping, but that it’s important “to reclaim the word and give it an improved meaning, emphasizing how equity and foundational public investments are crucial ingredients to business competitiveness.”