Amid the often irresponsibly conducted debate about health insurance reform arises a must-read report by the Center for Economic and Policy Research (CEPR) comparing the extent of the small business sector in the United States against other nations. And, the results are quite surprising.

For a nation that historically has pegged its reputation on individualism, exceptionalism in innovation, and its welcoming environment of entrepreneurship, the analysis suggests we need to focus our long-term economic development priorities in capturing once again that historical sense of innovative leadership.

As the summary notes:

‘The international economic data, however, tell a different story about the state of U.S. small business. By every measure of small-business employment, the United States has among the world’s smallest small business sectors (as a proportion of total national employment). One interpretation of the data presented here is that self-employment and small-business employment may be a less important indicator of entrepreneurship than we have long thought.

‘Another reading of the data, however, is that the United States has something to learn from the experience of other advanced economies, which appear to have had much better luck promoting and sustaining small-business employment.’

The analysts also quickly jump to the fact that other countries which relatively have much larger self-employment sectors enjoy universal access to health care. They rely on data from Organization for Economic Cooperation and Development in 22 rich democracies.

In every measure, the United States falls short and by rather significant margins in each instance. The findings are dismaying to say the least:

The United States has the second lowest share of self-employed workers (7.2 percent) – only Luxembourg has a lower share (6.1 percent). France (9.0 percent), Sweden (10.6 percent), Germany (12.0 percent) the United Kingdom (13.8 percent), Italy (26.4 percent) and 14 other rich countries all have higher proportions of self-employment. (NOTE: Even after adjusting for agricultural industry employment, the United States still ranks similarly.)

The United States has among the lowest shares of employment in small businesses in manufacturing. Only 11.1 percent of the U.S. manufacturing workforce is in enterprises with fewer than 20 employees. Eighteen other rich countries have a higher share of manufacturing employment in enterprises of this size, including Germany (13.0 percent), Sweden (14.4 percent), France (18.0 percent), the United Kingdom (18.1 percent), and Italy (30.9 percent). Only Ireland (9.6 percent) and Luxembourg (8.5 percent) have a lower share of manufacturing employment in enterprises with fewer than 20 employees.

U.S. small businesses have a much lower share of employment than the comparison economies do in the two high-tech fields for which the OECD publishes data: computer-related services and research and development.

The United States has the second lowest share of computer-related service employment in firms with fewer than 100 employees (32.0 percent). Only Spain had a lower share (27.0 percent), while 13 countries with available data had a higher proportion of employment in this sector in small businesses including France (44.7 percent), Germany (48.7 percent), Sweden (49.4 percent), the United Kingdom (67.5 percent), and Italy (73.2 percent).

Similarly, the United States has the third lowest share of research and development related employment in firms with fewer than 100 employees (25.3 percent). Only the United Kingdom (22.5 percent) and the Netherlands (20.3 percent) had a lower share, while 9 countries with available data had a higher proportion of employment in this sector in small businesses including France (33.1 percent), Sweden (34.4 percent), Germany (35.0 percent), and Italy (74.8 percent).

All of these statistics should demand our immediate attention. Michael Mandel, the always astute economist for Business Week, wrote this week about the “lost decade”:

‘The last decade has the slowest economic growth rate in the postwar period.

‘From the second quarter of 1999 to the second quarter of 2009, real GDP grew at a 1.9% annual rate. That beats (in a negative sense) the 2.0% growth rate for the decade which ended in the first quarter of 1983.’

Earlier this summer, Mandel addressed the failed promise of innovation despite the merited championing of the information technology revolution:

‘With far fewer breakthrough products than expected, Americans had little new to sell to the rest of the world. Exports stagnated, stuck at around 11% of gross domestic product until 2006, while imports soared. That forced the U.S. to borrow trillions of dollars from overseas. The same surges of imports and borrowing also distorted economic statistics so that growth from 1998 to 2007, rather than averaging 2.7% per year, may have been closer to 2.3% per year. While Wall Street’s mistakes may have triggered the financial crisis, the innovation shortfall helps explain why the collapse has been so broad.’

However, even Mandel is far from being completely pessimistic. He sees a time lag in scientific innovation that is now being caught up with an increasing sense of urgency and speed.

Here in Utah we see plenty of evidence of that as well. Former Gov. Jon Huntsman’s most enduring legacy might be the research and development infrastructure he has set in place with the USTAR initiative. For the second year in a row, the University of Utah was ranked second in the country (among more than 150 institutions) at starting technology companies based on its research. The ranking is based on the U’s accomplishment of starting 18 new companies in 2007 from technologies based on its varied research.

The average number of startup companies per universities across the nation is three. The Massachusetts Institute of Technology (MIT), with 24 new companies, was the only university with more startup companies than the University of Utah. The U’s accomplishment is made more significant as MIT receives more than four times as much research funding than the Utah school.

The principal reason Utah has been so successful is that the partnerships between academia and business are cultivated along the lines of envisioning the big picture. The U has been extraordinarily successful in this regard. The technology commercialization office at the University of Utah evaluates almost 200 new inventions every year, some of which are nurtured and become new companies. Since the inception of a specialized Technology Venture Development Office in 2005, more than 60 companies have started from the university, almost all of which still reside in Utah. These new companies represent advances in energy, medical devices, personalized medicine, graphic design, software, nanotechnology, disease diagnostics and more.

As usual, a lot of people will parse the data to deflate the conclusions of the CEPR analysis and to avoid the big-picture questions placed before us, whether they are in the health insurance reform debate or in our capacity for business development. (We’re certainly not getting much clarity in these town hall discussions regarding health insurance reform. There is a lot of circus, however.) On the other hand, the CEPR analysis should sober up all of us to the essential challenge of restoring the core innovative trait of America entrepreneurship and to ensuring the infrastructure is conducive to development of small business and self-employed entrepreneurs. On the level of innovation, the Utah example is a worthy one to follow.