Grass isn't greener across the pond

"That's how they do it in Europe." This is the biggest conceit behind the reform plans President Obama will take to the health care summit with Republicans today.

Democrats assume that even if proposals such as creating a health insurance rate authority are recognized as the price controls they are, their plan is still passable. That's because European health care systems have the equivalent of price controls -- namely, curtailments in supply. Yet Europe's hospitals still appear to be functioning, at least when viewed from the other side of the ocean.

Europe has also been on the minds of federal and state policymakers as they try to prune down commercial banks to a simple deposit-taking function like postal accounts in Germany or Japan.

But emulating Europe isn't a worthy project. Europe is in more trouble than its currency suggests. The region's entitlement and pension burdens exceed those of the United States. Greece's fiscal crisis reminds us that the euro is more vulnerable than our own challenged dollar.

But here's the interesting reason copying Europe won't work: Europe only functions as well as it does because it copies the United States. Their longstanding dance has had only two steps: The United States generates ideas, and Europe implements them.

The person with perhaps the most insight into this is David Audretsch, who studies the quality of economic growth. He directs the Institute for Development Strategies at Indiana University. When it comes to Europe watching America, he says, "It's monkey see, monkey do."

Between 1980 and 2000, the United States consistently spent a larger share of its economy on nondefense research and development than France, Italy, Germany or Britain. Between 2002 and 2008, the annual number of patents granted in Germany was about 11,000. California alone produces twice as many. In 2008, the United States saw 92,000 patents granted, about the same number as the rest of the world.

The quality of European and U.S. universities is harder to quantify. But nothing American -- not an East Side two-bedroom apartment, not a condo by the slope in Utah's Deer Valley, not even U.S. citizenship -- is coveted more by Europe's professional class than getting their children into an Ivy League college. Webometrics, a research group based in Spain, sought to measure universities' influence and quality by analyzing their presence on the Web, looking at both research papers and less formal scholarly communication. In the Webometrics ranking, the top 26 schools are American.

The issue is preserving whatever innovative capacity the United States retains. That means, for example, that the federal government should not tax consumers extra for purchases of brand-name drugs, and should not raise taxes on higher earners, as Obama suggests doing. Higher earners, after all, are generally the same folks who develop patent-worthy products.

It also means abolishing taxes on capital gains and on interest and adopting the lower tax rates proposed by Rep. Paul Ryan, R-Wis. We also need to reaffirm the right to intellectual property.

One related move that powered the U.S. economic engine over time was the little noticed passage of the 1980 Bayh-Dole Act, a law cosponsored by Bob Dole and Birch Bayh that made it easier for academics and universities -- not the government -- to own ideas researchers developed while at publicly funded universities. Scientists cite Bayh-Dole as an event that changed their lives.