Post-pandemic US can revive prosperity through commitment to innovation and reform
- Increasingly dominant companies, especially tech firms, and outdated corporate governance practices are undermining the foundations of prosperity
- Fortunately, there are simple steps that regulators and educators can take to put the economy and society on a sounder footing
As public discontent forces a political reckoning in many developed economies, the social contract binding together markets, states and citizens is being reimagined. Today’s anger and alienation present an opportunity to address cracks in our societies’ economic foundations, starting in the United States.
Meanwhile, there has been little talk of what management teams could do to create long-term value for shareholders and stakeholders alike.
First, the SEC can and should require all publicly traded companies in the US to disclose clearly how much they spend on research and development (R&D).
Under decades-old accounting standards, this category only includes activities aimed specifically at developing new products, services and processes or at major improvements to existing products, services or processes. Incremental “routine or periodic alterations” are prohibited from being qualified as R&D.
Second, the SEC should make the long-overdue switch back to semi-annual reporting. Research suggests there are high costs associated with the quarterly disclosures that every public firm currently undertakes. The formation of a capital market in which management teams must constantly issue profitability guidance has fostered a short-term mentality with far-reaching adverse economic consequences.
Likewise, burdening small, publicly traded firms with repetitive and substantial reporting costs impedes growth-oriented investment by diverting resources.
Because state governments are relying on federal funding to continue to educate the country’s youth, we have a once-in-a-generation chance to bring about fundamental change in the delivery of education at the local level.
US schools have largely failed to nurture creativity and risk-taking in today’s young people. These values play a seminal role in US national development and should be inculcated in students as they return to the classroom.
The return to schools and campuses should occasion a return to education that celebrates the essential American values that helped the country become such an unprecedented success.
As we look to the future, we must focus on strengthening our institutions and reinvigorating our culture. Shoring up the next generation’s intellectual foundation and providing corporations with the flexibility to innovate are just two steps we can take today.
Many more can follow from those. Although America’s social, financial and political challenges remain as stark as ever, we can strive for a rebirth of the values and institutions we need.