When I saw this title from the Foreign Policy journal, Production, not innovation, will win the future, I was immediately reminded of the classic Betamax / VHS video format war – Betamax boasted higher quality, VHS lower cost and capacity – VHS won. Unless innovation produces a sea change in technology or is at least 10x better than the existing technology uptake is unlikely – leaving the market to the affordable (aka cheap import).
And there is a very real limit to what any given generation of consumers can absorb. Unless, like China, you increase your consumer base by building a new middle class – and tackle the thorny social issue of wealth distribution in the process.
Where the US really has a competitive advantage is in large scale ‘quality of life’, which isn’t something that can be pirated and resold at a cheaper price on Canal Street. It’s a precious commodity that could easily come under threat if we try to compete blindly. Perhaps we should consider raising the standards on imports as well as wages. -RM