We are all painfully aware of the current economic situation with a very high rate of unemployment, and yet I cannot help but be confident that America will bounce back. Here's why:

The market economy of the twentieth and twenty first century is driven by innovation. The principle is simple: somebody figures out that there is an unmet need, figures out how to exploit it and comes up with a product that meets the need, giving him (or her) a slice of the market. After the first innovator succeeds, others jump on board; some succeed and some fail, but in the balance a new segment of the economy comes into existence and those who came on board from the ground floor make a bundle. This was the case with home computers, software applications and the Internet to name just a few recent examples. So how does this give me confidence in America? after all, in today's global village it appears that everybody has an equal shot to be innovative...and yet not.

Innovation requires imagination and thinking outside the box, and many people around the world can do that - but developing a product requires a receptive society and an environment that favors change. While many societies favor change, only American society or those modeled after her promotes change as a positive value. It doesn't mean that most Americans welcome change, after all we are still Human and Humans abhor change. What it means is that when innovation does occur, American society embraces it; at least most of the time.

Let me give you a contrary example. I grew up in Argentina, and one of the favorite games in Argentinean society is to mention how many things were first developed in Argentina but only flourished abroad. Sound panels were a development of an Argentinean engineer, one of the first artificial hearts was conceived and implanted by Dr Liotta, an Argentinean; the first buses - just made over trucks really - were built in Buenos Aires, yet today Argentinean buses are pitiful. Probably another Argentinean example would be Dr Cesar Milstein, and Argentinean physician who for year begged for subsidies for research and was turned down, finally moving the England and a few years later winning the Nobel prize for his work. But probably the most astounding example is that of a Czech immigrant to Argentina who came up with an innovative writing instrument...his name? Josef Biro. Of course we all know he ended up moving to the States and establishing what we today know as BIC, the first manufacturer of ball point pens ("biromes" in Spanish). So what is Argentina lacking? Certainly not Education, since it has one of the highest educated populations in the world.

What Argentina lacks is what America - and other democratic societies like Israel - have. Freedom. Freedom is the necessary companion of invention for innovations to become an economic engine of society. Freedom to choose, freedom to dream, and freedom from government interference. One of the myths of American society is the garage inventor who makes a fortune and for a good reason - many did!

When America is called the Land of Opportunities, it is not because opportunities only come up in America, but because only in a free society the individual is free to develop those opportunities into concrete ideas and products. It is truth that in other dark periods of our society some invention were given away to overseas partners such as the fax machine, first invented in America and dismissed by the Captains of the industry at the time as useless. But by and large, most of the time innovations do drive the American economic market, and that power of innovation (sometimes called "Yankee Know How") is now focusing in the green industry which the world is craving. And that's the next economic wave.

While it is truth that China and India started first down the road of green products, they cannot sustain change without a major transformation of their societies to develop the freedom and individualism that characterizes an innovative society. India might in fact have started down the road of such changes, but China will not do so anytime soon, so they will remain a factory country with cheap labor producing what others invent or develop. And those Chinese who are truly innovative will have to move somewhere else to pursue their ideas, as Cesar Milstein did.

America might now be weak, but I'm confident that the weakness is temporary because I believe in the American ideals, corny as it sounds. Only in free democratic societies like America or Israel or Western Europe we are truly free to follow the rainbow. And that's why we'll bounce back!