With financial markets in disarray, the timely publication of "The Venturesome Economy" by Columbia University professor Amar Bhidé reassures us that we can survive even this latest crisis.

Bhidé argues that American innovation is insulated from economic ups and downs. The personal computer revolution was forged in the early 1980s when inflation was nearly in double digits and interest rates even higher. Because innovation continues in good times and bad, America's long-term trend in prosperity will continue upward.

Meticulously researched, clearly written and based on interviews with chief executive officers, the book offers a ground-breaking and counter-intuitive view of innovation and globalization.

Bhidé demonstrates that Americans should not be concerned about continued expansion of innovation abroad. "As long as the United States maintains its capacity to harness the high-level know-how to improve the performance of its mid- and ground-level industries, the expansion of the global supply of cutting-edge research, regardless of where it originates, is a good thing for the United States," Bhidé says. American companies, he explains, frequently use high-quality managerial and marketing skills to develop new products from foreign technology. Global innovation is hard to keep secret, and many American products, such as iPods, are based on foreign technology.

American consumers help, too, because they buy millions of new products, giving American firms a healthy return on successful products and financial opportunities to develop new ones. "At the dawn of the automobile era, only a few very rich buffs served as guinea pigs. Now, the not-so-well off use their credit cards - or what they 'save' by buying paper napkins in bulk at Walmart - to take their chances on laser surgery and flat panel TVs without much foreknowledge of the utility of their purchase," Bhidé writes.

So what are Bhidé's recommendations, and how do our presidential candidates stack up? He says increased government funding of science and technology is not the answer, because funding is not necessarily directed to the most productive investments. Investments in mid- and ground-level research could have more payoff than in cutting-edge research, because this might result in a greater diffusion of existing technology. Senator Obama wants to encourage scientific research through funding, and Senator McCain wants to do it through tax credits.

Second, he says government shouldn't put money into persuading Americans to pursue advanced degrees in science when they really want to be managers and marketers. Managers and marketers are as important to American technological advancement as scientists and engineers, as the phenomenal success of the iPod shows. But both candidates want to encourage students to major in science.

Third, Bhidé favors increased immigration not only by giving visas to highly skilled foreign scientists, whose education has already been paid for by our competitors, but also to immigrants without advanced degrees, who can help advance and support technology efforts in labs and banks. Both candidates have this right.

Although financial markets rise and fall, American innovators can continue to bring us prosperity if we treat them right. Read the book to find out how.

Diana Furchtgott-Roth, dfr@hudson.org, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.

The Venturesome Economy

How Innovation Sustains Prosperity in a More Connected World

by Amar Bhidé

Princeton University Press