Chairman Paulsen: Our Age of Invention 
Relies on Engines of Innovation

WASHINGTON--Chairman Erik Paulsen, R-Minn., opened today's Joint Economic Committee hearing on "How the Innovation Economy Leads to Growth" with an opening statement citing America's long tradition of pioneering cutting edge new solutions to old problems. His statement as prepared for delivery appears below: 

Good afternoon, and welcome to today’s hearing on “How the Innovation Economy Leads to Growth.”

The U.S. economy is not only growing, but it’s also doing so faster.

GDP growth is rising, job creation is strong, average wage growth is improving, and inflation remains low.

These long-awaited positive results stem from the decision to unleash America’s most valuable economic asset: the American people.

Tax and regulatory relief are allowing American families and main street job creators more breathing room and to do more.

Contrary to those who believed we were stuck at low growth, many economists expect as much as 3 percent GDP growth in 2018 and similar strong growth in 2019.

To achieve this, Washington needs to stay out of the way so that individuals are free to figure out new ways to solve old problems.

Such innovation is vital to sustaining our restored economic growth.

America has been a laboratory for invention since its inception, and it is that spirit that has led to our strength.

A report by the McKinsey Global Institute in March 2017 finds that many advanced economies rely on productivity gains far more than increases in the labor supply to drive economic growth.

Folks in the private sector know this when they ask questions like: How can we serve more customers in one day? How can we complete more orders in less time? How can I produce a product with fewer passes of a machine?

Those questions are how innovation becomes the primary driver of productivity gains.

We know we are blessed to live in the United States for a variety of reasons, but among those blessings are our fellow Americans who have generated remarkable technologies to lift our standard of living, to expand our horizons, to support U.S. leadership in the world, and to grow our economy.

Not all economic systems are equally conducive to such path-breaking innovations.

Every technological advancement of major economic consequence since World War II has come from the United States. That is no accident.

As we will hear from our witnesses, strong property rights, the rule of law, light regulation, and competition are critical conditions for visionary entrepreneurs, risk takers, and investors to generate the technological success we have seen.

American inventors, main street job creators, and resourceful factory workers will continue to deliver amazing advances—but that’s contingent on Washington staying out of the way.

A brilliant idea or discovery is only the start. It has to be put into concrete form and developed. From there it has to be commercialized and disseminated throughout the economy before it actually boosts economic growth.

These steps can take a long time depending on how they are taxed and regulated, or how antitrust law is applied.

The highway to innovation is littered with potholes, traffic jams, and overturned vehicles. You can see this up close in my home state of Minnesota where an excise tax threatens the innovative medical device industry and could drive it away to other countries.

While the federal government has temporarily suspended that tax, innovators still face great uncertainty about their future.

Even more obstacles lurk along the path of international trade. Last year, this committee held a hearing on digital trade. The takeaway is that the United States leads in digital products and trade that rely on the Internet.

Yet the freedom of the Internet faces challenges abroad, and the United States must strive to protect it. To remain credible in this mission, the United States must generally promote and defend the long-held American principles of unencumbered international transactions and trade.

Every day has the potential for game-changing technological breakthroughs.

Blockchain, is an example of a technology at an early stage of development. Its potential for very wide application throughout the economy could be stifled by over-regulation.

The United States has the opportunity to continue to champion its Age of Invention, but only if we keep the engines of innovation running. We must protect the ability of our market economy to perform at its full potential at home and in global markets.

I look forward to the testimony from our distinguished panel of witnesses today for clarity and guidance on how innovation can drive economic growth and American prosperity.