Seven Questions For Economist Lee Ohanian--

For generations, the U.S. economy has grown at an annual rate of about 2 percent, but that hasn't happened in wake of the Great Recession. In fact, the economy is still well below that trend, and the gap is getting wider. Many economists think U.S. economic growth, now at less than 1 percent a year, may remain weak for years. UCLA economics professor Lee Ohanian says a decline in entrepreneurship is at the heart of the current weakness. Ohanian underlined some of these less-than stellar stats for attendees of the Channel Company's Best of Breed Conference Tuesday in Orlando, Fla. Ohanian wasn't all doom and gloom, though. He's got a few ideas for how the economy could be improved and for the role tech companies can play in that recovery. He spoke with ITbestofbreed.com following his presentation.

What are the headwinds to productivity growth?

We are not producing enough skilled workers. Our education system is not training our kids to be globally competitive, as well as to have the skills to have today's highest-paying job. Entreprenurs may have the ideas, but you need the skills to take those ideas to the marketplace and make them succeed. Immigration reform. A lot of productivity growth comes from small business, and we've raised the cost of doing business. A rapidly growing 50 person firm can't afford to hire a dozen tax accountants to help figure out this stuff. The very mature, huge businesses exploit it, but the relatively small, young guys are penalized by it.

Which of today's small biz will be tomorrow's leaders?

The areas expanding certainly are information and communication technology. They will be a leader, as well as health care. There's a real opportunity in financial services. The older companies are very mature, and obviously struggled recently.

Why has entrepreneurship declined?

Most economists trace the decline in entrepreneurship to a business climate that is less friendly. It's more costly to do business, there's more risk involved. If it's more expensive to become an entrepreneur, then fewer people will become entrepreneurs. Unfortunately that's what's happened.

What policy solutions could help encourage entrepreneurship?

We should reform immigration restrictions for high skilled workers. High tech companies often note that it's difficult to find high skilled workers. We make it very difficult for high skilled workers to stay in this country. The H1B Visa program is fully subscribed within four days.

How difficult is it to hire workers with the necessary skills?

When one looks at workers with degrees or grad degrees in math or engineering, upon graduation, they're holding several job offers in-hand. Companies are fighting for them. Low-skilled workers have virtually no opportunities. Virtually every tech company I've talked to says, 'I can't find qualified workers.' For people in their 40s and 50s who don't have those skills, it's a matter of retraining. If you want to do web design, there's some stuff you have to do beforehand. It's tough to transform them into the workers we're talking about. It can take several years.

How do you think the next 30 years of innovation will compare with the last 30 years?

It's potentially more exciting in the area of medicine. Orthopedics are talking about ways to grow cartilage that would erase arthritis. Doctors are talking about using real time imaging during operations to make operations safer, advances in robotics in surgery to make surgery safer. In the last 30 years we've seen MRI and cancer advances, but advances since 1970 pale in comparison to what we're talking about now. Driverless cars would be enormously valuable and time-saving. That's exciting as well. The huge breakthrough innovations will be the ones that allow us to enjoy our time or use our time.

What makes an innovation valuable to the larger economy?

Two aspects. One is that it expands the amount of goods and services we can produce and earn. Henry Ford, when he perfected the assembly line, he doubled worker productivity just like that. It creates new markets, new opportunities and new business lines. If we hadn't had a technological revolution in farming, we would still need half our population to produce our food rather than the 4 tenths of one percent that do today. It also creates new goods.