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Shapiro Takes His Plan to the Book Circuit

Government should foster change, CE leader believes

WASHINGTON — Gary Shapiro is a first-time author who says the U.S. economy is going in the wrong direction. Asked why he decided to write a book, the long-time president/CEO of the Consumer Electronics Association replied: “We elect politicians to make tough decisions and they’re not making them. I’m pretty distressed about it. It’s going to affect our kids.”

Gary Shapiro’s book went on sale in January. CES convention attendees got first crack. His book “The Comeback: How Innovation Will Restore the American Dream” was released by Beaufort Books in January.

Shapiro believes the U.S. economy has “taken a horrible turn” since 9/11 and that he provides a blueprint to help the economy recover and reestablish the United States as a world leader.

“The U.S. economy has a very challenged future based on government policies. The only way we can get out of it is to change the policies and focus on innovation,” he said in an interview.

He said innovation creates jobs, markets and new industries, but requires attracting the best and brightest students, as well as investment in the free market, free trade and the availability of capital.

The tightening of America’s borders since 2001 is not good for business, he says; denying citizenship to top university students “is an insane policy if the U.S. wants to keep pace with the rest of the developing world. Most countries gladly take the engineers we don’t want,” he writes, though Shapiro adds he is not advocating the nation drop all immigration restrictions.

He would change a policy that treats all foreign nations the same in terms of visa quotas, and he would like to see a special category created for bright and gifted students to obtain visas. He would adopt policies to encourage the best university students to stay in the United States once they get their degrees.

He cites a 1999 University of California Berkeley finding that engineers from China and India ran 24 percent of U.S. technology business launched in the previous 18 years. Also, a Kauffman Foundation study in 2009 found that, in a quarter of U.S. science and tech companies founded from 1995 to 2005, the chief executive or lead technologist was foreign-born; of those, 52 percent came here as university students.

Shapiro said that the same study found there are more skilled workers waiting for a U.S. visa than can be admitted under current law, which, according to the study, allows about 120,000 available visas a year, with no more than 7 percent allocated to immigrants from any one country.

After Sept. 11, 2001, Shapiro writes, “We pulled back the welcome mat and put up real and perceived barriers to the world’s educated people who previously would have studied or created companies in America. Today, other nations welcome these students, entrepreneurs and engineers.”

The next Bill Gates likely will come from India or China, Shapiro predicts.

Cutting ‘until it hurts’

Among his suggestions for turning around the economy are drastically cutting government spending “until it hurts” and restoring “sanity” to the country’s fiscal policy. Lawmakers also must open American products to untapped markets worldwide by passing free trade agreements, according to Shapiro.

He says the country should stop penalizing investment in startups by lowering corporate tax rates so that private venture capital will again flow to U.S.-based companies; he says half of that capital goes to foreign-based firms.

But government should not give any company, large or small, a financial bailout; he writes that efforts to rescue Chrysler and GM “wasted billions in taxpayer funds and since their debt was also wiped out, they have little incentive to invest. Lawmakers should make sure business taxes are transparent and predictable, change the tax laws to favor investment over debt and our country should make economics, business and entrepreneurism studies compulsory.”

Technological innovation isn’t always easy because it “changes other industries, and not always in pleasant ways. In fact, sometimes technological innovation destroys,” Shapiro believes. He mentions typewriter mechanics and travel agents as examples of job categories that have largely fallen by the wayside because of such changes.

Change threatens the status quo and old industries fight back, he writes, using broadcasters as an example.

“Rather than adapting, the broadcasters often meet new competitive threats by lobbying government for more protection.” He describes broadcasters’ drive to mandate an FM chip in cell phones and other devices an “absurdity that penalizes the innovation of the cell phone with the antiquity of the FM radio and antennae.”

In contrast with broadcasters, Shapiro says, the cable industry innovated when satellite came along; he says cable survived because it expanded to embrace the Internet and “quickly became the broadband provider to most of America.”

He cites Ford as an example of innovation because it has chosen to define itself as a car technology company, “a huge shift for them,” with its Sync communications system; he also credits the automaker for choosing not to take government funds like GM and Chrysler.

The author describes himself as a pragmatist who pushes for government to be less involved in business. He believes his plan is common sense but is likely to anger partisans of both the main political parties. “Democrats argue for more government spending and programs. Republicans argue for lower taxes,” he writes. “We are in a crisis, and it won’t be fixed simply by more government spending or by cutting taxes. Our best hope is for government to foster innovation by creating a fertile ground for innovation to flourish.”

Shapiro, left, was presented with a buggy whip by Fred Jacobs at the Jacobs Media Summit in Baltimore. Shapiro had been quoted saying radio was acting like a “buggy whip” industry by pushing for an FM chip requirement in cell phones. Jacobs had responded in a blog headlined “Buggy Whip, My Ass!” Photo by Leslie Stimson The head of CEA has been involved with consumer electronics for more than 30 years, beginning as a law student in 1979; he was part of a group that represented VCR makers and retailers when Hollywood studios sued them, claiming the devices violated copyright laws and that consumers should not be able to record movies and TV programs. The VCR makers prevailed and Shapiro went to work for the association full-time.

Shapiro considers himself an independent. Asked if the book indicates an interest in elected office, he replied that he loves his job and can’t think of a better one in Washington; he said his position involves an alignment of what’s good for the electronics industry, what the CEA board supports and what he believes in.


Shapiro devoted one paragraph to radio in his book, but his few comments were in line with what he’s been saying lately about the industry.

At the Jacobs Media Summit in December, Shapiro said NAB’s push for an FM chip mandate is misguided and predicted it would fail. He said the suggestion makes radio look old, weak and ineffective, hence his comment that radio was acting like a “buggy whip industry.”

The recent Congress was not interested in voting for a mandate, he said; in subsequent remarks to Radio World he predicted a mandate would not pass during the new session of Congress either.

He has disputed broadcasters’ argument that consumers need access to radio stations on their devices in an emergency because they can use their phones. NAB has said cell networks sometimes fail during emergencies.

Shapiro praised NAB President/CEO Gordon Smith as “a savvy senator” who brought up the FM chip issue as a way to divert performance rights legislation. But this strategy, Shapiro said, “makes radio look like it needs a government handout.” An NAB spokesman declined comment on Shapiro’s remarks.

Asked how radio can innovate, Shapiro said HD Radio “looks promising” despite its “chicken-and-egg” challenge. Car makers, he said, are embracing the technology.

Regarding increasing competition for radio in the dash, Shapiro believes radio remains dominant there but warns that wireless capability is coming to cars, built into the dash and in aftermarket products. Thousands of companies will try to get audio content into the automobile, he said; these “clearly” are competitors” for radio.

Asked by Radio World how radio can remain relevant in the car. Shapiro said it’s difficult to conceive of an automobile being sold without local radio in the dash and he’s not heard of any automakers taking that approach. Still, he said radio leaders should spend more with automakers “trying to convince them and show them research about why people listen to radio and how it’s important.”

Shapiro said he listens to radio every day and he’s done a number of radio interviews about “The Comeback.”