Consumer Electronics Association president Gary Shapiro

Consumer Electronics Association president-CEO argues against overtaxing innovators and creating policies that discourage creative businesses from operating in the U.S.

Gary Shapiro heads the Consumer Electronics Association (CEA), a standards and trade organization and owner-producer of the world's largest technology tradeshow. He's received numerous awards, including recognition by the U.S. EPA as a "mastermind" for his initiative in helping to create the Industry Cooperative for Ozone Layer Protection. He also chairs the Home Recording Rights Coalition. Prior to joining the CEA, Shapiro was an associate at a law firm and also worked on Capitol Hill. He received his law degree from Georgetown University Law Center.


Tavis: President Obama, of course, last week during the State of the Union address, talking about the need for American innovation. We begin our look at the state of U.S. technology with Gary Shapiro, president and CEO of the Consumer Electronics Association and the driving force behind the annual consumer technology showcase known as CES.
He is also the author of the new text, “The Comeback: How Innovation Will Restore the American Dream.” He joins us tonight from Washington. Gary, good to have you on this program.
Gary Shapiro: Thank you, Tavis, for having me.
Tavis: Did you and President Obama coordinate this, your book about the comeback, his speech last week – did you guys coordinate this?
Shapiro: I’ll tell you, I was overwhelmed with people noticing the similarities. I’m very fortunate, I guess, in my timing. But the bigger message really is that our nation is in economic trouble and our secret sauce is innovation. That’s what we’re good at.
Tavis: Why do we think innovation is the way forward?
Shapiro: Well, we’re in trouble financially, so we’ve got three choices – raise taxes, cut spending or grow. I like to focus on growth. I know there’s a lot of talk about the other two. But in terms of innovation, think about who we are as a nation and what we do. Most of us are immigrants or descended from immigrants here, people coming here to do things better.
We come from people who always challenged the status quo. We have the First Amendment, which encourages us to do that. As the president noted last week, we’re trained to ask questions, not just for rote memorization. So we are the creative country. We did invent the Internet. Every major Internet company is here, many of the major tech companies are here.
Bio, motion picture, creative community – that’s our secret sauce. It’s innovation.
Tavis: In what areas – you’ve just listed a few now, but what areas are most prime for the kind of innovation that can drive America forward?
Shapiro: Well, entrepreneurially, the Internet allows anyone to start a business, basically, and it allows apps to be created. But we also have a lot of the platforms based here; we have a large market that’s interested in innovation. We also are a country, frankly, where it’s okay to start a business and fail. We’re the only nation in the world like that, where failure in business is actually experience, and that’s a good thing.
So there are a lot of areas that are coming very quickly, whether it’s in electric vehicles or wireless applications or biotech or medical. There’s so many great things coming out there.
The CES in January, we were amazed. We had 2,700 companies introducing about 20,000 new products, but a lot of them are just at the beginning. So we’re at the beginning of this digital revolution still, and it’s a good thing for our nation, and I think the best thing the government can do, which I think President Obama was starting to recognize, is to encourage that, to remove the problems that businesses face when they start up here, maybe to cut down the litigation a little bit, reduce the taxes and encourage investment rather than debt.
Tavis: You’re right about the fact that we are a nation that allows people to fail and in many ways fail their way to the top. You talk to anybody who’s successful in any field of human endeavor; if they’re being honest, they’ll tell you they learned more from their failures than they ever learned from their successes.
But we are also, Gary, I think you’ll admit – maybe you won’t, I don’t know – I think we’re also a nation, though, where when we think of Silicon Valley, when we think of innovators, particularly and especially in the field of technology, we think of a bunch of people who’ve gotten rich themselves.
But I’m not so sure that the American people buy the argument that that innovation, pardon the phrase, trickles down, so that Bill Gates is rich, Zuckerberg is rich, et cetera, et cetera, but what’s the case to be made for the fact that innovation will trickle down and drive the country forward as opposed to making a handful of innovators rich?
Shapiro: Well, first of all, it’s the fact that you can get rich here if you succeed, which drives the best and the brightest from around the world to come here, including some of our smartest, most successful entrepreneurs are people who came here from abroad.
President Obama was great to recognize when they get their Ph.D.s here we should make them citizens rather than kick them out. He said it’s crazy.
Secondly, let’s talk about Bill Gates and Microsoft. First of all, it wasn’t just Bill Gates that got rich; it was literally thousands of Microsoft employees and shareholders. Third, what did they do? They fundamentally changed the world in terms of how we process and deal with information.
So they’ve improved the world’s standard of living, because they made things which allow us to communicate better and the marketplace rewarded that.
That’s what we want in this country. We shouldn’t resent rich people. We shouldn’t say tax them so they don’t innovate. We should want more rich people, and frankly, we’re out there in a very competitive world environment, as the president noticed last week, and that’s really critical that we recognize this rather than put up walls, as we have in the last four years, around the country.
We’ve got to get the immigrants, focus on free trade, focus on entrepreneurialship, cut the corporate taxes and stop this totally crazy spending and trying to just tax, tax, tax and say wealthy is bad. Wealthy is good. It creates more innovation, and that helps everybody.
Tavis: I don’t think – since you went there, let me play along with you here, because you can’t talk about this, obviously – you can’t talk about innovation without talking about politics, particularly given your earlier comment that there are things that government can do. So we brought the politics in; let me follow you along.
Shapiro: Okay.
Tavis: I don’t know anybody, Gary, who thinks that being wealthy is a sin. Everybody wants to be rich in this country. The point is that the gap between the have-gots and the have-nots continues to widen, and at best, when the president is talking about innovation – again, I’m just playing devil’s advocate – at best, when he’s talking about innovation he’s talking to a handful, comparatively speaking, of Americans who have the capacity to innovate in the ways that we see being put on display at CES.
So the question still remains what happens to the everyday people, the weak working class, those who are stuck in poverty, who have nothing, necessarily, to benefit from giving tax breaks and getting rid of loopholes and tearing down hurdles for folk who happen to be innovators to get wealthy? Does that make sense?
Shapiro: Well, I hear you, but it doesn’t make sense to me, Tavis, because first of all, the fact is that the top 5 percent of Americans are paying about 40 to 60 percent of the taxes already. Second, all these people –
Tavis: But they’re controlling 90 percent of the wealth, though, Gary, that’s the point.
Shapiro: That’s a little high number, but second of all, the people like Bill Gates and Warren Buffett and the others, I would trust them to invest their money much more than I would trust the government and give it back, and if you look at some of these very wealthy people, and I’m not one of them, they are giving back in hugely big ways to all of society.
Third, the fact is we want these people to come here, and if we’re just taxing and taxing and taxing, we’re encouraging them to go to other countries. This is a world we’re playing in now. It’s just not the United States. As you raise taxes on people, they’re more likely to say, “You know what? What’s the point? I can move anywhere in the world. I can start my company anywhere.”
Our strategy as a country should be we want those companies to be here, we want them to hire Americans, and it does – trickle down is the wrong world, but when Bill Gates is spending his money or others are spending their money, that’s a good thing.
We don’t want those factories in China. I was so thrilled that President Obama recognize that last week, saying – I’ve been in lots of factories. I worked in a factory. I had about every bad job you could have. Let me tell you something – that encouraged me to go to college.
We want people to focus on that and keep that in mind, and focus on (unintelligible). But when over half of Americans are getting a paycheck from the government, we’ve reached a tilt in our system where you just can’t be an entitlement society. You have to choose.
You have to choose between two wars, all these entitlements – Social Security, Medicare, bailouts, stimulus packages, bailing out the states and all these other things are going on. Our public officials, Republican and Democrat, have to say, “This is what’s important for our future.”
What I like about what President Obama did, he said, “You know what’s important to our future? It’s an innovation strategy. We’re going to educate our youth, we’re going to focus on infrastructure investment, we’re going to have a wireless network, and we are going to be the innovative country in the world. That’s our strategy.” That’s a winning strategy.
Tavis: Here’s why I keep playing devil’s advocate, because when you talk about the government doing more to aid and abet these companies so they can innovate more, it is these same companies – you can demonize entitlements all day long, but it’s these same companies that you reference earlier who keep shipping more American jobs abroad because it’s cheaper to make these products, apparently, around the world.
So yeah, they’re innovating, but they’re taking that innovation and giving those jobs to innovate to people around the globe and not necessarily here in this country, Gary.
Shapiro: Well, that’s not accurate, Tavis.
Tavis: That is accurate.
Shapiro: They manufacture in China. The Chinese complain that they’re adding $4 to the cost of a $300 Apple product by manufacturing it in China, and they complain that the U.S. is getting all the benefit, through the shareholders, through the design and development.
But the fact is, our own government has policies which encourage us to ship product. First of all, they don’t let us hire the best and the brightest people in the world. They restrict visas. They also make it so if we’re selling abroad, and this is what Apple is doing, it counts as a deficit, but they’re selling in Europe, they’re selling in China. They can’t bring that money back here without it being double-taxed.
So our own government has to change its policies so we encourage the money to come back, we encourage the jobs here; we get rid of this litigation society where any businessman that starts a company is threatened with lawsuits all the time. We can’t afford it anymore. We have to prioritize. We have to say, this is a strategy as a nation, just the way businesses have strategy, and we’ve got to focus on what’s important.
Is it the wars? Is it the entitlements? Or is it the future of our kids? We are the first generation of Americans in history to just take, take, take and not sacrifice for our children, and that is immoral and it’s unacceptable, and we’ve got to hold Republicans and Democrats accountable for that.
Instead of everyone saying, “What’s in it for me,” as John Kennedy just said 50 years ago, we have to start asking about what we can give rather than what we can get.
Tavis: I guess the question is how it is or why it is that you remain hopeful that we can do this successfully when the competition that we now face – namely India and China – is like nothing we’ve ever seen before.
Shapiro: Because we are innovative, we create, we have to be sharp and we have to focus ahead. But we can’t just sit down and say we lost, because we didn’t lose. We don’t want those assembly factory jobs where you put a color of paint on the same little toy over and over again.
We want to do essentially what Germany’s doing, which is saying we have great American skilled workers here. We want to put them to work and do high-precision stuff. We want to innovate; we want to create the movies, the music, the science, the math.
Tavis: What about the fact, Gary, that the numbers – and I don’t think numbers tell the whole story, but it’s part of the story, as you well know – the numbers are not in our favor.
If we had every American in this country, all 300 million of us, working on an innovation project, we still can’t compete with the 1.3 billion Chinese who are working on innovation projects, and that’s not including India. So tell me about how we move forward when the numbers appear at least not to be on our side long-term.
Shapiro: Well, China definitely has a lot of people, more than Europe and the U.S. combined, and they do educate them, they’re starting to educate them more.
But we are creative. They are following. We have to make sure they’re doing it fairly, that they’re not stealing our inventions, and that’s why these complex relationships that both President Bush and President Obama are navigating, they’re doing a great job, but we’ve got to keep the pressure on. We have to recognize it’s a competitive world.
How do we do it? We do it better. We don’t necessarily do it cheaper, but we do it better and we’re there first, and I would point to Apple and Microsoft and HP and Qualcomm and literally hundreds of other American companies as doing it better.
When I go around the world, they all want to be like us. There isn’t one of the top 100 brand names in the world that’s a Chinese company. Most of them are in the U.S., and a lot of them are in the tech field, and I think that’s great. We’ve got to keep focusing on what we’re good at.
That’s what businesses do, and that’s what countries have to do. That’s why I’m optimistic, but we’ve got to hold our politicians accountable and force them to make the tough type of decisions that we pay them to make. They’re not doing that now, because right now the politicians and the American public think they can have everything, and you can’t have everything.
You can’t always get a check from the government for not doing anything, and that has to end.
Tavis: He’s the man behind CES in Las Vegas, the hottest show every year for those interested in technology and innovation. His new book is called “The Comeback: How Innovation Will Restore the American Dream.” His name is Gary Shapiro. Gary, good to have you on the program. Thanks for your time, sir.
Shapiro: Thank you, Tavis.
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Last modified: April 26, 2011 at 12:28 pm