We have clung to one truism for the past century and a half. No country comes close to the ability of the U.S. to innovate. 

Certainly that power of innovation fueled the Industrial Revolution and the Gilded Age. By the early part of the 21st Century, the U.S. easily surpassed Great Britain as the world’s largest economy. Its leadership in two world wars and the Cold War cemented its role as a global powerhouse based on its innovation and economic might. 

The root of its economic might has always been its ability to attract the best and the brightest from around the world to fuel its innovation engine. For generations, the U.S. filed more patents and spent more on research and development than any other nation. Even as recently as half a dozen years ago, the U.S. was still clinging to its lead. 

Not anymore. 

The ranking in global research and development has tracked the ranking of countries by GDP. The U.S. is now only narrowly ahead of China in GDP, at $26.85 trillion versus 19.37 trillion for China. However, GDP measures are based on prevailing exchange rates. The U.S. dollar is artificially high compared to the yuan, partly because China’s central bank wants it that way to stimulate China exports. If one actually compares the cost of doing things in each country, called the purchasing power parity approach, China’s economy in buying power actually leads the U.S. economy. 

The same is true for R&D. While the U.S. may have had a slight lead in 2019, that lead has evaporated. In addition, while U.S. innovation growth has been slow but consistent, the pace of Chinese innovation has been growing briskly. That hare is passing the tortoise. 

Of course, the U.S. understands competition, and indeed claims to thrive on it. We only assume that, once the American people understand its eroding or eroded lead in industrial policy, the Horatio Alger is us will pull ourselves up by the bootstraps and regain our competitive advantage. 

Or not. 

There are two ways to compete. One is to have a better game plan and invest in what is necessary to win. In the R&D and global economic supremacy game, that has conventionally meant better schools, more and better labs, a greater number of scientists, and captive markets. 

Conventional thinking does not work anymore, though. AI and online education can extend its reach anywhere in the world. Gone are the days of a Thomas Edison toiling away with a few scientists in a lab and inventing lightbulbs, phonographs, and moving pictures. Now, the scale necessary to move the innovation ball forward is measured in trillions of dollars and millions of scientists. It also depends on industrial policies that will pump investment into strategic sectors to ensure success. Finally, it needs a lot of young people to go into STEM studies to become scientists. 

Captive markets also do not work anymore. When the U.S. was by far and away the most populous industrialized country, it could easily create a captive market for the goods it produced. This created a built-in tailwind for innovation. Now, with globalization, any country with a better mousetrap can sell all around the world. 

The countries on the ascendancy are those with the largest educated populations. The U.S. graduates about 200,000 engineers each year, while China and India each graduate about 1.4 million. China takes great national pride in their engineering prowess while the U.S. fails to generate much interest. 

The other way to compete is in hindering our competitors rather than looking back at them as motivation to run faster. Invariably the energy devoted to lessening competition is energy that could have instead been better employed in staying ahead. Anticompetitive practices merely motivate #2 to overcome these impediments by working harder. The tension is also never forgotten. 

The current semiconductor chip policy war is an unfortunate example of what not to do. There is little sense in trying to deprive China of access to innovation if the goal is to hold them back. Yes, the outrage over a nation that does not respect intellectual property is legitimate. But, the approach should be diplomatic on the one hand, in an appeal to a more industrious planet, and a kick in our own butt on the other. If the U.S. wants to maintain or reattain technological supremacy, it has to work harder at it. 

The U.S. can do so by replicating China’s successes, as crow-eating as that sounds. There is no nation that can outcompete determined entrepreneurship. SpaceX has flown and landed more than 200 rockets when no other nation or company has even does that once. Tesla went from a concept to the world’s most popular model of car in a decade. The nation can innovate, despite roadblocks galore on buildouts of manufacturing that do not exist in China. 

The growing miles-wide gap in technological attainment can be narrowed in just six inches. It is the six inches between our ears that must think about our economy differently. Generations of supremacy has bred complacency. Our students don’t want to study science, technology, engineering, and math because they are hard. Our government would rather argue endlessly about reproductive rights than about productive economic advantages. 

A common response when we can’t get out of our own way is to blame our fate on others. Certainly, there is plenty of global blame to go around these days. But, a nation that simply throws stones in chip wars, or any other war, is one that will be left with a shattered glass home when others have rebuilt their brick houses. 

It is time to respect other nations, focus inward on the creation of resources that produce competitive advantage, and focus outward on relying not on power or the military, but rather on producing that better lightbulb once again.