If innovation and inventiveness are the qualities which drive America to become the largest economy in the world, perhaps the same qualities will put the U.S. out of its multiyear decline, one in which both housing and real income have slipped substantially. That is the case Ben Bernanke, chief of the Fed, made recently.

Bernanke’s argument could be that the education of young Americans, particularly in math and the sciences, is not adequate to keep the U.S. in the innovation race. The superior educational attainment of children in Asia and parts of Europe will chip away at the American lead in creating the products which will drive the global economy in the decades ahead.

The strength of Bernanke’s argument is that most new wave of products and services still have their beginnings in the U.S.. The includes software and hardware products from Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG), and more mundane processes like “fracking”

Bernanke’s case, which does not exclude nations outside the U.S. entirely:

Finally, pessimists may be paying too little attention to the strength of the underlying economic and social forces that generate innovation in the modern world. Invention was once the province of the isolated scientist or tinkerer. The transmission of new ideas and the adaptation of the best new insights to commercial uses were slow and erratic. But all of that is changing radically. We live on a planet that is becoming richer and more populous, and in which not only the most advanced economies but also large emerging market nations like China and India increasingly see their economic futures as tied to technological innovation. In that context, the number of trained scientists and engineers is increasing rapidly, as are the resources for research being provided by universities, governments, and the private sector. Moreover, because of the Internet and other advances in communications, collaboration and the exchange of ideas take place at high speed and with little regard for geographic distance. For example, research papers are now disseminated and critiqued almost instantaneously rather than after publication in a journal several years after they are written. And, importantly, as trade and globalization increase the size of the potential market for new products, the possible economic rewards for being first with an innovative product or process are growing rapidly. In short, both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.

The U.S. needs to take it to heart as much as any other country

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