The core theme of Clinton’s 1992 presidential campaign was
the slogan “It’s the economy, stupid”. It was true then, and it remains just as true
now. While the administration fusses and
fumes about various liberal ideological goals, and fumbles around in our foreign
policy, and while Congress dithers, the core thing that matters before all else,
and the core thing they all ought to be focused on (but are not), is the state
of the American economy.
Why the economy? Because it is the economy that makes
everything else possible. Want a strong military? Only a robust economy can
fund it. Want more social services and
health care? Only a strong economy can fund
them. Want more soft power in the world?
It takes a strong economy to produce that. Want a better standard of living for America
workers? That only comes with a stronger
economy. There is no free lunch – all those
things liberals and/or conservatives want cost money, and that money in the end
can only come from taxes and payrolls and reinvested profits in a robust
economy. It’s not rocket science!
So what would a rational administration and Congress be focused
on if they really wanted to insure a strong America economy in the long run? Here is my own top 3 list:
Revitalizing the
nation’s infrastructure. A strong economy
is built on, and requires, an effective, reliable and efficient infrastructure;
roads, bridges, rail lines, airports, seaports, electric grids, communication
systems, water systems and the like. We
once had the best in the world, but decades of neglect at the state and federal
level have taken their toll. The last major infrastructure investment in this
nation was under the Eisenhower administration when the Interstate Highway
system was started. Since then our national infrastructure has deteriorated significantly.
For example:
·
Engineering societies (who study these things)
give our bridges and roads nationwide about a D average, and we have even had a
few spectacular failures recently to remind us (eg – the I-35W Mississippi River Bridge collapse in
Minneapolis). The Federal Highway Administration estimates that a capital
investment of about $170 billion per year would be required to (eventually)
bring our roads and bridges back just to an acceptable level of performance and
safety. Annual federal, state and local investments are currently running at
about half that level.
·
Despite
the central importance of electric power to EVERYTHING in this nation, expansion
and modernization of our electric grid system has not kept up with demand,
and it is now straining at its limits, and moreover is highly vulnerable to failure
from natural disasters and/or terrorist attacks. The American Society of Civil
Engineers has estimated that an additional investment of at least $107 billion
is needed by 2020 just to keep the current electric grid operating relatively reliably,
and that doesn’t include any investment in modernization.
·
We invented the internet, yet according to The
World Economic Forum the United States ranks 35th out of 148 countries in
Internet bandwidth, a measure of available capacity in a country. Other studies
rank the United States anywhere from 14th to 31st in average connection speed.
And more than that, broadband connectivity costs about twice as much in America
as in Europe. Things are pretty bad when broadband speed in Riga, Latvia is two
and a half times faster than in San Antonio, Texas, and costs only one-fourth
as much.
·
The US has built only two new major airports in
the past 40 years, Dallas-Fort Worth and Denver International. (China, by
contrast, is adding 56 new airports over the next 5 years.) The World Economic
Forum ranks US aviation infrastructure 32nd in the world, behind that of
Panama, Chile, and Malaysia. The FAA currently estimates that about $52 billion
in investment in airport capacity expansion is needed just to manage the predicted
passenger load by 2020, and that investment is not being made. Beyond that, the US air traffic control
system is woefully inadequate to handle even the current load, as frequent flight
delays and periodic computer crashes demonstrate, and needs a complete redesign. The FAA has talked about a Next Generation
Air Traffic Control System for a decade now, and had just started to implement minor
portions of it, but then Congress cut the funds even for that as part of the budget
sequester.
Improving workforce education
and training. The world is increasingly
dependent on technology, and that means more and more of the well-paying jobs
in this country require technology training.
Whether it is a secretary using a word processor, a machinist running a
numerical control milling machine, a medical technician running an EKG, an auto
mechanic reading the problem codes from the on-board auto computer, a stock
broker entering on-line orders, a webmaster building web pages, a mechanic
servicing or programming an assembly-line robot, or a pilot flying a plane,
more and more of the good jobs require significant technical training.
A 2013 Oxford University paper entitled The Future of Employment
estimates that up to 47% of current jobs can soon be automated. These are the jobs that a computer can do,
and do faster, more reliably, and at less cost (since a computer doesn’t need
health care, sick leave, a pension, or vacations, and doesn’t belong to a union). The jobs that are left are those that require
initiative, creative and flexible thinking, interpersonal skills, complex
assessments, and the like. To maintain a
robust economy we need to keep a high proportion of our labor force employed in
well-paying jobs, which means we have to invest heavily in training or retraining
that workforce and providing them with the skills needed for the best jobs
available.
At
the college and postgraduate level the US does just fine, though the costs of
higher education are excessively high.
But that is even now in the process of correcting itself, as free or
inexpensive on-line courses are bringing competitive market pressures to bear
to drive costs down again. But at the
elementary and high school level we need to do better, and in particular we
need to establish the sort of alternate track hands-on technical or trade
school training route that some European countries have for those youngsters
who have neither the need nor the interest in traditional academic training. In
America we tend to look down at trade schools, because we have this idealized cultural
myth that everyone ought to be able to go to college, but that is a mistake we
need to change. Lots of youngsters have neither the aptitude nor the interest
in traditional academic studies, but are fine, even sometimes brilliant, at
hands-on technical work. We need to
capture that talent and put it to good, well-paying work.
Reducing the regulatory
burden on small businesses and new start-ups. Here is the problem: bureaucracies
tend to produce more regulations than are really needed. There are natural
reasons for this. First, bureaucracies tend to make work to justify their existence
and budgets. Second, bureaucracies tend to “cover their butt”, meaning they don’t
want to be accused of missing something, so they over-regulate. The public is part of this; if people get
sick because of a batch of bad meat, they will promptly blame whatever food
safety bureaucracy they think should have prevented the problem, and that bureaucracy
will promptly add a mass more layers of regulations to protect itself in the
future. Finally, big companies will sometimes press for onerous regulations to
be added that help keep competitors at bay.
Big companies can afford teams of lawyers to fill out masses of regulatory
paperwork, while small new start-ups can’t.
Now the problem is that despite the publicity that big corporations
get, in fact small businesses make up most of the economy. According to 2011 US Census data, small businesses
with less than 500 employees make up 99.7% of all US businesses, and in fact
98% of all US businesses have less than 20 employees. And these small
businesses generate about 46% of the Gross National Product, and create about
60% of new jobs. So any time the
government places a regulatory burden on a business sector, they
disproportionately disadvantage small businesses and potential new start-ups,
who have far less resources than large corporations to comply. Yet it is these very small businesses and start-up
who are the life blood of the economy. Just ask a local small business owner
about the regulatory burden they bear. It can be enlightening.
According to a recent report from the Competitive Enterprise
Institute, at this point in the Obama admiration (which has continued to expand
federal regulations at an unprecedented rate) the cost to businesses of federal regulations, at an
estimated $1.8 trillion per year, is now bigger than the entire economies of
all but nine countries in the world. For small businesses, federal regulations
cost almost $11,000 per employee.
And some of these regulations are just ludicrous. As The Economist recently reported
A Florida law requires vending-machine labels to urge the public to file a report if the label is not there. The Federal Railroad Administration insists that all trains must be painted with an “F” at the front, so you can tell which end is which. Bureaucratic busybodies in Bethesda, Maryland, have shut down children's lemonade stands because the enterprising young moppets did not have trading licenses. The list goes hilariously on.
and
Dodd-Frank is part of a wider trend. Governments of both parties keep adding stacks of rules, few of which are ever rescinded. Republicans write rules to thwart terrorists, which make flying in America an ordeal and prompt legions of brainy migrants to move to Canada instead. Democrats write rules to expand the welfare state. Barack Obama's health-care reform of 2010 had many virtues, especially its attempt to make health insurance universal. But it does little to reduce the system's staggering and increasing complexity. Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis.
Certainly we need regulations. The problem is that we don’t need nearly as
many as we now have, and that these excess regulations are a significant drag
on the economy and a strong disincentive to start new businesses in America.
Posts
