Saving the Middle Class: Technology, Training and Trade

President Obama's State of the Union Address last week could be described as bearding the lion in his den as the President presented a plan to raise taxes to fund social programs to a conservative Congress that is determined to prevent any such thing from happening. There was an air of unreality about it as if he did not expect to be taken seriously -- and did not care.

The President may succeed in making "middle class economics" a major issue in the 2016 campaigns, but he should put it within the context of what is economically viable and politically possible. Raising taxes on the wealthy in order to throw money at political constituencies is pure politics. The basic problem we face is weak economic growth both here and abroad. We should focus on areas that offer promise of raising economic growth: technology and innovation, entrepreneurship, training and trade.

First we must encourage an acceleration of new technologies and their innovative application. Innovation is the key to growth and we are stinting on R&D, endangering our traditional leadership. Corporate leaders are partially responsible, cutting R&D spending to enhance their bottom lines, but government can do a lot more to encourage innovation to enhance efficiency, reduce costs and hike productivity.

Second, we need to revive the entrepreneurial spirit. Each year brings fresh reports of declining start-ups as fewer people step forward to test new concepts and launch new enterprises. There is a lot our political leadership can do to rectify this trend, most obviously with tax incentives and regulatory flexibility to encourage risk-takers. Our economy and our future depend on entrepreneurs willing to take risks.

Third, we need a dramatic reform of our approach to education and training. We are putting entirely too much emphasis on four year college degrees. We have college graduates driving taxis while advanced manufacturing cannot find qualified applicants for excellent jobs that go unfilled. We should be preparing people for jobs in the real world to begin closing our yawning skills gap. More investment in community colleges is a good idea but we also need more apprenticeship programs directing young people toward jobs in industry.

Finally, we need to make a national commitment to exports and manufacturing. (Most of our exports are manufactured goods.) We are one of the world's largest exporters, but as a percentage of our GDP committed to exports, we don't rank in the top 20. The President is clearly a champion of manufacturing and his commitment to new free trade agreements was one of the bright spots of his address. Our government can do a better job of promoting U.S. exports the same way the Chinese, Japanese and Germans do.

In sum, to strengthen the middle class, we must have stronger economic growth through greater support of technology, innovation, entrepreneurship, training and exports.

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements. January 2015