Everywhere you look, it's clear the economy is undergoing fundamental changes as it adapts to a global marketplace harnessed to the speed and power of information technology. But it's not yet clear how the New Economy should be reflected in public policy.

Earlier this year, the Progressive Policy Institute (PPI) published the New Economy Index, which showed how to define and measure the New Economy, and State New Economy Index, which challenged state officials to rethink their economic development strategies to reflect the very different needs of a very different economy.

This week, PPI's New Economy Task Force, co-chaired by Senate Minority Leader Tom Daschle (D-SD) and Gateway CEO Ted Waitt, will release the ground-breaking Rules of the Road: Governing Principles for the New Economy, a set of guiding principles for the role of government -- federal, state, and local -- in the Information Age. It presents ten basic guidelines for public policy:

• 1. Spur Innovation to Raise Living Standards: Research shows that in the New Economy, innovation is essential to productivity growth. Productivity growth is the key to raising real wages and living standards and expanding opportunity for all Americans. Government should promote policies that boost innovation and productivity across the board, rather than protect ever shrinking slices of an old economic pie or reward special interests at the expense of overall economic progress.



• 2. Expand the Winner's Circle: Spreading the benefits of innovation and change broadly will require that everyone, including those now not engaged in or benefiting from the New Economy, has access to the tools and resources necessary to get ahead and stay ahead. Government needs to prevent a new division in society around learning and skills by providing every American with access to continuous and affordable life-long education.



• 3.Invest in Knowledge and Skills: The "knowledge infrastructure" of the 21st Century includes world class education, training and life-long learning, science, technology, technology standards, and other intangible public goods. These are the essential elements of economic progress today. Moreover, skills and knowledge increasingly determine individual opportunity as well as national economic growth.



• 4. Grow the Net: The Internet is central to the information technology revolution and the increased economic efficiency and productivity it has created. Policymakers should craft a legal and regulatory framework that supports widespread growth of the web, "broadband" telecommunications, and expanded access for all Americans.



• 5. Let Markets Set Prices: In the new, hyper-competitive, global economy, distorted prices are more likely to lead to economically inefficient decisions and unfair, politically driven allocations of resources. In the absence of clear market failures, markets, not governments, should set prices of privately provided goods and services.



• 6. Open Regulated Markets to Competition: Government should move away from regulating economic competition among firms and instead promote competition to achieve the public interest. Competition keeps prices down, lowers costs, spurs new product introduction, creates greater consumer choice, drives innovation, and ultimately provides the greatest benefits for consumers and citizens.



• 7. Let Competing Technologies Compete: In the New Economy, technology is not just the province of Silicon Valley: it is the catalyst for profound change throughout the economy and society. Technological innovation has now become central to addressing a wide range of public policy goals, including better health care and environmental protection. Government should look for technology-enabled solutions to public problems, but in ways that do not freeze in place today's winners at the expense of tomorrow's innovators.



• 8. Empower People with Information: Access to information gives individuals greater power to make informed choices and creates accountability in government and the private sector. By ensuring that citizens and consumers have the information they need, government can go a long way to addressing questions in public policy like quality, affordable health care.



• 9. Demand high-performance Government: Government should become as fast, responsive, and flexible as the economy and society it serves. The new model of governing should be decentralized, non-bureaucratic, catalytic, results-oriented, and empowering. In some cases government agencies should be transformed into Performance-Based Organizations that have both the accountability and flexibility to achieve publicly defined goals. In other cases, governments should let organizations, both public and private, compete to deliver public services.



• 10. Replace Bureaucracies with Networks: In the New Economy, many problems cannot be solved without government, but government alone can't solve problems. New Economy governments need to co-invest and collaborate with other organizations--networks of companies, universities, non-profit community organizations, churches, and other civic organizations--to achieve a wide range of public policy goals. This does not mean that government should abdicate its responsibilities. Instead, it should strive to be as innovative and adaptable as the world it governs.

Following these "rules of the road" will go a long way towards reinventing government to reflect the realities of the New Economy. For a copy of the report call (202) 547-0001.