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For most of the 20th century, the United States was at the cutting edge of the global economy.  And it wasn’t just because of its raw materials or its geography, its ports or industries, or even its raw market size or flows of capital.  For decades, U.S. advantage has boiled down to one key factor: our country’s openness to new ideas and new people.  Whether they come from our own people or from those who came here in search of economic opportunity or education, innovation and invention have driven the American growth miracle.

Now, for the first time in decades, the United States is in danger of losing much of its competitive edge.  There are three primary reasons for this.

First, America is losing its ability to attract top foreign talent.  Rightly or wrongly, our country is viewed as increasingly isolationist and close-minded to the rest of the world.  This in part an understandable reaction to the tragedy of 9/11, but I suspect it also has something to do with our insecurity that the world economy is truly opening up, and that we’re seeing real competition in a way that we haven’t in years.  We’ve developed an “America first” mentality.

As a result, not only are less people applying to come to the U.S., but we’re also granting less visas.  It’s hard to see how keeping foreign students and scientists out keeps us any safer from the potential terrorist threats we’re concerned about, but this atmosphere of physical security at all costs is hurting our businesses, our universities, and our science, technology, and arts.

At the same time this is going on, you have the flipside: other cities and countries around the world have caught on to the rules of the creative economy game that the United States has been playing so well for so long.  They’re doing this is different ways, some systematically and some organically or unintentionally.

In the cases of India, China, and other less developed – but massive and important – economies, these places are luring back many of their best and brightest who left for education and opportunity in the U.S. or Europe.  Others, places like Stockholm, Melbourne, Vancouver, and many places you wouldn’t expect, our competing for the cream of the crop across the board.  They have R&D resources, open cultures that are easy to integrate into, and high quality of life to offer to newcomers.

Finally, the U.S.’s competitive edge in the global economy is deteriorating from within.  Our education system is failing our kids, which also leaves our businesses at a loss for young talent (a problem Bill Gates has spoken to recently).  Economic and income inequality are on the rise, which threatens to tear our society down the center as the middle class slowly disappears.  And in general, we’ve sacrificed all other concerns at the altar of physical security – again, an understandable reaction, but one that we need to temper now that we’re feeling its negative effects.

I’m not trying to say that we as a country are in our death throes or our declining days.  It’s more like growing pains, as we confront the economic and political realities of a truly globalized planet.  Actually, I think there’s still hope for the U.S. in the global creative economy.  We still have tremendous resources – not just capital, but people resources.  We’re more diverse as a whole than most places on earth.  And our metropolitan regions are economic powerhouses. 

What we need now is political, business, and thought leadership sharp enough to connect all of the dots, to enact policies and practices that are inclusive rather than discriminatory, and to reinvest in what made America great: its creativity, its openness, its ability to harness the talents and energies of all kinds of people.