[Congressional Record Volume 152, Number 41 (Tuesday, April 4, 2006)]
[House]
[Pages H1426-H1427]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          21ST CENTURY ECONOMY

  Mr. DREIER. Mr. Speaker, I ask unanimous consent to take my special 
order in the place of the gentleman from Minnesota (Mr. Kennedy).
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Dreier) is recognized for 5 minutes.
  Mr. DREIER. Mr. Speaker, every day Americans are living the 21st 
century economy. We use BlackBerries and cell phones to stay in touch 
and stay in business. We order birthday presents online. We buy German 
cars made by American workers in South Carolina. We use Google to find 
restaurant recommendations. We treat previously debilitating illnesses 
with innovative pharmaceutical products, non-invasive surgery 
techniques and cutting-edge medical devices.
  Nearly every aspect of our daily lives is impacted by our high-tech, 
innovation-driven, globally engaged economy. It has so thoroughly 
revolutionized our lives that it almost seems absurd to point out that 
the modern economy is vastly different than the economy of the 1930s 
and 1940s. And yet our methods for measuring this economy remain much 
the same as they did during the Great Depression and the era that 
followed.
  Gross domestic product is still calculated by tallying industrial 
investments like heavy machinery and taking an old-economy view of 
exports and imports. Mr. Speaker, under this system new factory 
equipment counts as a long-term investment, but R&D does not. And an 
iPOD which became a global powerhouse band on the strength of its 
superior design and savvy marketing strategies, developed by Apple in 
my State of California, is simply counted as another good imported from 
China, where the final product is assembled. Clearly, these products do 
not fully account for the essential role that knowledge and innovation 
play in our global economic leadership role.
  Our economic strength here in the United States is no longer based 
solely on the goods we produce but on the ideas that we as innovative, 
creative Americans create. We add value and increase productivity, not 
by manufacturing more widgets, but by improving the widgets' design, by 
making the global distribution of widgets more efficient, by marketing, 
financing and servicing widgets.

                              {time}  2015

  The full value of innovation, knowledge and best practices can be 
difficult to ascertain, but they have replaced mere goods as the 
bedrock of our Nation's economy.
  Michael Mandel at Business Week demonstrates how Wal-Mart is an 
excellent example of this. Few companies have revolutionized their 
industries the way that Wal-Mart has revolutionized the retail world. 
Its operational and managerial innovations have made it a global leader 
that its competitors fail to emulate at their peril: the big-box 
format; the everyday low prices; the electronic data interchange with 
suppliers; the highly sophisticated data analysis, done to such detail 
that inventory managers know to order extra strawberry Pop-tarts when 
the weather gets bad, because the data crunchers have discovered that 
customers stock up on them just before a storm.
  Mr. Speaker, these innovations and best practices, developed by Wal-
Mart and copied by its competitors, have led to enormous productivity 
gains throughout the retail industry and our economy at large.
  A study conducted by the McKinsey Global Institute in 2002 found that 
25 percent of the major jump in productivity that came during the 
second half of the 1990s was due to gains in the retail sector, of 
which Wal-Mart is clearly a major contributor.
  According to the study: ``More than half of the productivity 
acceleration in the retailing of general merchandise can be explained 
by only two syllables: Wal-Mart.'' By innovating its operational 
structure, Mr. Speaker, Wal-Mart became one of the single greatest 
contributors to American productivity at the height of the tech stock 
bubble.
  This is an instructive and remarkable fact, that a single company 
made a major contribution to the productivity of the world's largest 
economy, not by building new factories or buying new equipment, but by 
developing new ideas and applying them so successfully that they 
transformed their company and their entire sector.
  And yet, as Mandel points out, these operational innovations, less 
tangible than a widget but far more valuable, do not get counted in our 
gross domestic product calculation. They are not tallied as an 
investment, nor are they counted as an export when Wal-Mart buys stores 
overseas and applies their innovations and best practices abroad to 
other countries.
  Recent GDP numbers have certainly demonstrated tremendous economic 
strength, with 17 straight quarters of growth, 3.5 percent of GDP 
growth last year, and projections of nearly 5 percent growth for the 
first quarter this year. Mr. Speaker, when knowledge-

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economy intangibles are included, the positive economic outlook becomes 
all the brighter for us as a Nation.

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