Will someone tell me what the heck “competitiveness” means?

The President seems to think it means the level of innovation:

Today I’m going to sign into law a bill that supports many of the key elements of the American Competitiveness Initiative. This legislation supports our efforts to double funding for basic research in physical sciences. This legislation authorizes most of the education programs I called for in the initiative I laid out at the State of the Union.

Stephen Bainbridge accepts this definition and then returns the focus to international competitiveness:

All well and good, but what about the barriers to competitiveness the government has created during Bush’s tenure in office?… the Sarbanes-Oxley Act… as the Paulson Committee and the Schumer-Bloomberg report have documented, “New York financial markets, stifled by stringent regulations, and high litigation risks, are in danger of losing businesses and high-skilled workers to overseas competitors, relegating New York to regional market status and adversely impacting the U.S. economy.”

What’s good for New York is good for America, huh?

Cato’s Dan Mitchell seems to think “competitive” means “prosperous” or “growing”:

[F]ormer Soviet colonies are abandoning [Marx’s] concept of discriminatory taxation and instead adopting simple and fair flat tax regimes. A Czech article discusses the flat tax revolution, which is proceeding in spite of complaints from Western Europe’s uncompetitive welfare states.

Given that I’ve never seen Mitchell criticize a tax cut and he specializes in international tax competition, I have a feeling he thinks that every nation would be better off with lower taxes. But competitions are zero-sum games; that’s why analysts obsess over rankings. To be “more competitive” means that your relative tax rate is lower, not merely that your absolute tax rate is low.

This analytical framework is nonsense. You’ll never see competitiveness in an economics textbook.

Previous installments in this never-ending series:
Competitiveness, again (29 May 2007)
Obsession with “competitiveness” lives on (30 Aug 2006)
Paul Krugman – Pop Internationalism (29 Aug 2006)