What can be done? Sadly, not much in the short term. Washington can and should pass bipartisan programs that create infrastructure jobs, ease the pain of unemployment, and hasten lending for small business. But progress will be painfully slow for millions of families.

The bigger challenge is whether we rally and renew for the long run. We are facing the toughest international competition in our lifetimes, and we are no longer winning. The signs are all around us. Who can believe that the first 20 floors of the new World Trade Center will be wrapped in glass made in China? Or that the new 28-foot statue of Martin Luther King Jr. will be coming to the Mall in Washington from Chinese workshops? These should be made-in-America jobs.

It is easy to get mad; great nations get even. We shouldn’t erect trade barriers—those helped to spark the Great Depression. We have to remember what made us the most dynamic nation in the world and can do so again: education and innovation.

In their new book, Harvard economists Claudia Goldin and Larry Katz point to the fundamental truth that the U.S. became the world’s richest nation at the beginning of the 20th century because we educated  more of our kids than anyone else. Generation after generation, children finished about two more years of schooling than their parents. We created the top research universities. But then we slowed down and others sped up. In the 1960s, the U.S. had the top high school graduation rate in the world; by the early 2000s, we were 19th. Our college graduation rates of young people have fallen into 12th place. To reignite job creation, Goldin and Katz say, we must once again be the best at educating our kids.

Fortunately, we’re finally firing up on education reform. Cities like New York, Chicago, Houston, and, yes, New Orleans are pushing reforms. Arne Duncan is a first-class Secretary of Education. More than 40,000 college seniors applied this year to Teach for America, the volunteer teaching corp. Even unions are getting the message. We are far, far from where we should be—but at last there is fresh hope.

The second fundamental truth is that scientific and technological research is key to job creation. MIT president Susan Hockfield notes that investment after World War II created waves of new industries and jobs in electronics, nuclear power, aerospace, communications, and computing. Yet again, we’ve slowed relative to other hungry nations. As New York Times columnist Thomas Friedman points out, we have only a tiny handful of the top 10 global companies in emerging green industries.

Relentless global competition is here to stay. We shouldn’t be scared nor discouraged. That’s not who we are as Americans. As my favorite preacher, Peter Gomes, says about how one should handle adversity in life, “Get used to it, get over it, and get on with it.”

David Gergen is a professor of public service at Harvard and a senior political analyst at CNN. He serves on the board of Teach for America and has advised four Presidents.