The imagination economy: To keep wages rising, American workers need to get creative

[5 July 2006 - FORTUNE Magazine] The U.S. economy faces a historic problem, and how it is resolved will drive major consequences for managers, investors, politicians, and especially workers. The problem is that Americans' pay isn't going up. That's remarkable because the economy is booming - growth is strong, unemployment low, productivity rising smartly. Yet the latest figures show that the broadest index of pay (inflation-adjusted wages, salaries, benefits) is no higher than it was at the end of 2003. This is serious trouble because America's great economic story is that living standards keep rising, especially when times are good. But living standards are not rising right now. That is the kind of deep disruption that over time can lead to economic and political crisis. The conventional response is to urge greater achievement in science and technology, long our economy's foundation. In his most recent State of the Union address, President Bush announced "an American Competitiveness Initiative, to encourage innovation throughout our economy and to give our nation's children a firm grounding in math and science." There is much argument about how to do that. But a contrarian school argues that the whole debate is wrong - that focusing on science and technology is fighting the last war. They hold that the very basis of value creation is shifting from the disciplines of logic and linear thinking to the intuitive, nonlinear processes of creativity and imagination. Tech advances will cease to confer much competitive advantage as they circle the world almost instantly. More