I haven’t been able to sleep ever since I read that Larry Summers is leaving his post as President Barack Obama’s top economic advisor.
Why doesn’t the phone ring? I’m eating with it at my elbow. I’ve changed the way I walk to work to avoid cell phone dead zones. I’m even sleeping with the phone. And still no one has called to offer me the post.
I know the phone’s going to ring though and I want to be prepared for the BIG QUESTION: What would you do to turn around the U.S. economy?
I’ve quickly worked up this draft of an answer. I don’t now how much more time I have before the President calls.
Change the way we define the problem.
No more baby steps. You don’t fix a crisis this big by tinkering around the edges. I had this drummed into me in a business school class in 1984. The assignment was to come up with a budget to fix the New York City economy. The professor read my carefully prepared solution and laughed. Well, actually he guffawed. You think you can fix this budget by closing firehouses? he said. Now I’m looking at a $14 trillion U.S. economy with an unemployment rate pushing 10%. Tinkering with the tax code or offering a FICA tax holiday isn’t going to fix this crisis.
Admit that as bad as things are now they weren’t exactly swell before the crisis. Incomes for the average family have stagnated for the last 30 years—especially if you take out extra dollars that come from having more moms in the workforce and having one or both parents work an extra temporary job. For some workers—blue-collar industrial workers and workers without high school degrees, the Great Recession that officially ended in June 2009 began not in 2007 but in the 1980s. Even the great job creation surge in the Clinton years doesn’t look like the best of times when you look at the kinds of jobs being created—lower paying, predominately service jobs–to replace the kinds of jobs—higher paying manufacturing jobs–the economy was losing.
Let’s admit that the ideas now getting recycled in the mid-term elections from both parties haven’t prevented, turned around, or reversed that long crisis—and they aren’t likely to. Not because tax cuts, tax increases, education credits, No Child Left Behind, spending cuts, spending increases and the other patent medicines peddled by politicians don’t have any effect, but because they’re too narrowly focused to fix the 30-year long crisis.
As Larry Summers would say—if we transplanted James Carville’s brain into the Harvard economist’s body (well, that would sure be fun)—It’s the global economy, stupid. Fixes that ignore the global economy are just going to be too small or completely misguided. And those of us who live in the United States are going to have to give up some of our economic illusions. (Come on, you can do it—it’s not nearly as painful as giving up Mad Men.) For example, it’s time to admit that when it comes to exports the U.S. has become essentially a commodity economy. We export corn, and coal, and scrap paper, and we import TVs., and cars, and solar cells. Export our way out of this crisis with an extra paragraph here or there in our trade treaties? Oh, puleez!
Decide to play hardball with the big dogs. (Or fill in your own favorite tough guy sports cliché here.)
Let me give you an example ripped from the headlines, as we say here in New York. China slapped quotas on its export of rare earth minerals essential for building hybrid cars, wind turbines, amplifiers for optical cable communications networks, and the newest fluorescent lights. Companies that want to build these products and who are worried about their source of raw materials can always make sure they have plenty of rare earth minerals to work with my moving production to China. And we’re going to fight back by lowering mortgage rates (by having the Federal Reserve run up its balance sheet) or creating a $30 billion loan fund for small businesses?
It’s war out there in the global economy (which is way better than real war, let me remind you) and the battle is to secure the world’s scarcest commodity—good jobs. To stand a chance in this war, the U.S. has got to at least match the firepower of the other countries.
And in this competitive economic war, we can’t afford to have all the battles fought on our turf and we can’t always be on the defensive. European and Chinese high-speed train makers are going to fight it out to see who gets billions in U.S. taxpayer money to build a high-speed line in California. Where’s General Electric in the competition? And if we don’t have the team that can play in the big leagues in high-speed trains in California, how about we go after China’s market for freight cars or freight locomotives. It’s not like our stuff can’t compete with their stuff—in many cases all they’ve got that we haven’t got is cheap financing. (And I find it hard to believe that it isn’t cheaper to provide cheap taxpayer financing to U.S. companies than it is to spend taxpayer money saving an industrial shell from bankruptcy.)
If moving from a defensive crouch to offense means creating competitive industries from scratch so be it. It’s cheaper in the long run than paying for years of unemployment and the social havoc it causes. It’s insane that the U.S. doesn’t have a domestic source of rare earth minerals and that we’re willing to give anybody in the world control of something essential to 21st century technology.
Think big. NO BIG! BIGGER!
The world’s companies want our metallurgical coal? Fine. Have then build steel mills in Pennsylvania and West Virginia and even more car plants in Alabama. The world’s companies want our corn? Fine. Make their home countries tear down the trade barriers that keep U.S. chickens out of Russia and other nations. (Granted, it might help if we guaranteed not to dip them in bleach.)
Countries such as France and China have official national champions, companies that the government backs to drive the domestic economy and the country’s exports overseas. The U.S. has de facto national champions. They haven’t been awarded that title by some bureaucrat but have earned it in the actual market place. Intel (INTC), for example. Of course, our de facto national champions often don’t get much actual support (although we do provide last century industries like oil with hefty tax breaks) from Washington so that Intel winds up building a chip plant in Vietnam because that country supplies cheap land. The U.S. could match that. And don’t say that isn’t our system. Alabama and South Carolina and Tennessee are perfectly comfortable paying BMW or Toyota to build a plant in their state.
Get over our bad case of Not invested here. Maybe once upon a time we were justified in looking down at other countries’ technology or to make jokes about their claims to have invented the telephone. But if that superiority was ever justified (and I’ll bet my Madam Curie fan club ring that it wasn’t), it sure isn’t now. We need to stop exporting technology and start importing some of it too. I’ve got no problem with Boeing (BA) subcontracting work to Chinese companies and giving a boost to China’s aircraft industry through legal or extra-legal technology transfer. But how about some of it flowing the other way. How about a U.S. company getting its hands on the technology to build a high speed train as part of any contract in California? How about getting ArcelorMittal (MT) to transfer its best practices back to U.S. steel company partners when it builds a plant in the U.S.?
We need to recognize that you don’t win in this global economy playing with out of date infrastructure. Our airports, highways, ports, and railroads aren’t up to the standards of the toughest of our competitors. And then there’s our electronic technology where our wireless and Internet network increasingly lags. Countries, especially countries such as Singapore that don’t have huge natural advantages, spend to create infrastructure advantages. We let ours decay because it costs too much money. In the short run the expense is certainly considerable although it could be spread over years or decades by a mechanism such as a government-seeded infrastructure bank. (One of the great ironies of the moment is that to find good infrastructure investments I have to send my money overseas.) In the long term it is again cheaper than running a country in permanent recession.
And let’s upgrade our human capital too. If the workers who are feeling the brunt of the pain in this 30-year crisis are those without a high school degree, let’s make sure that the next generation has more education and the next generation even more. And make sure that it’s education that’s appropriate to the new global economy. Raising standards so that every kid getting out of high school can do 12th grade math and write good (or is it “gooder”?) is a decent goal, but it won’t get the job done in the long run. We can’t learn only English and expect that the rest of the world will too. We can’t say, We’ve got a shortage of engineers and then turn out kids who can’t do trigonometry. It will take a long tough battle but again it’s cheaper to fight the battle than pay the long-term cost of losing it.
We should recognize that there’s a potentially nasty strain of xenophobia built into this idea of global economic competition and we should fight it actively by expanding all existing programs that get Americans acquainted—or better yet immersed—in other cultures. If you play any competitive sport, you know it’s possible to play to defeat your opponent with all your strength and still go out for a beer afterwards. And it’s fun.
Your response to this is likely to be “We can never get anything like that through Washington.” (Although I do recognize that another possible response is, Thank goodness, nothing like that would ever get through Washington.)
I refuse to accept that. If the current politicians won’t act, dump ‘em. It may take years to create a responsive government. But if it took 30 years to get the crisis to this stage, what’s another 30 years fixing it?
And as long as we’re thinking BIG, doesn’t it strike you as hopelessly antiquated that we elect representatives to vote our will (HAH!) in the age of social networks and online collaboration? Why not do away with the current budget system entirely and let voters actually vote on line for what programs they want to fund? Maybe with a limit of no more than a 20% change from one year to the next to ensure some kind of continuity? (So it would take 5 years to kill the kind of boondoggle that now lives on forever.) And with a simple rule that—adjusted for the economic cycle—we couldn’t spend more than we have. Of course, to do that we’d need to actually implement a capital budget in Washington.
Or how about something like American Idol where Washington department heads compete on TV for our money. Or “Budget Survivor” where the worst government programs could get voted off the island (or out of the District.) I’d watch, especially if they had tiki torches.
Looking at that program I can’t understand why the White House hasn’t called. Come on, phone, ring!
Jim, that was a good reading.
Sure, there are plenty of things that can/should/need to be done, and baby steps clearly will not work. However, at certain point we have to switch from talking to actually doing something, and it will not happen until our government stops printing money to support those who want to do nothing.
uhm … Education is not that expensive in the US. With all the scholarships available it is actually almost free. You want to get MD for free? No problem – just get admitted to MD/PhD program. Very hard to get, but, if you get in, it will be free for you. If you want your loan you got to pay for your medical school to be forgiven – work for non-profit, and in 5 years it will be all gone. If you are A student (i.e. you know how to work hard and is willing to work hard), there are plenty of opportunities to have free ride through college education. If you are not, someone has to pay for the lack of your abilities or wiliness to work hard. I think it is fair enough.
However, what makes me laugh is the number of degrees, which give you nothing in return. Some guy from a very good school, after completing his BA, is proudly announcing that he got a job … at a local Starbucks. Will it pay for his education? I seriously doubt that, but too many people just do not want to think about. I call it the lack of responsibility, which occurs on different levels: from those type of borrowings to get an education, which does not pay off, to government borrowing to help irresponsible borrowers.
This irresponsibility really scares me … And it is not a baby step to get out of it and finally try to be financially responsible.
jacques63 :
Thanks for a wonderful comparison. But will we change and learn – I doubt it.
Highlighting your point about medical doctors: It costs almost 240, 000 dollars to get a 4 year degree medical degree and that is after 4 years of undergraduate – which at the minimum costs 80,000 to 90,000 at state schools. If one goes to private colleges we are talking another 200,000. So a doctor starts with an outlay (either from pocket or on loan) of anywhere from $ 320,000 to 440,00 . Then they serve as “resident” for 3 years minimum getting barely “living” wages. So by the time they are ready to practice, a doctor is 29 years old, has slogged for 11 years and has to pay off humongous loan. Why should we be surprised that this stupid set-up is not going to have doctors work for charity and minimum wages that our dear president wants and expects!!
If I were the President you’d have the post Jim ! But I am not even a US citizen, so that is not going to happen. Sorry.
Many posts hereby relates to the Global Economic Competition we are in, the deficient US Education system (K-12) or supporting parental values, the subsequent shortage of locally grown Engineers / Scientists and the lack of openness of the Americans toward foreign culture, language (paradoxally, considering that most American have foreign origins).
For everybody’s information, and for comparison purposes, I give you an idea of what kind of competition US students would face in the Engineering fields, if they were in Vietnam (my wife) or in France (I).
In the vietnamses culture, Intellectuals were the highly regarded class at least among the older generation. Teacher’s may not be paid much today there but they are still at the pinnacle of your consideration. Farmers come seconds because you depend on them for your basic needs. At the bottom of the scale are the traders, merchants and business men. They may be rich but they have your complete disregard because their work is seen as unproductive, the “middle man that take his commission on your back” kind of thing. In that Asian culture, I don’t think engineers will be in shortage, once they have enough schools and funds for them.
At least I believe the values are in place that will promote the development of Engineering there.
It seems to me that the scale of values in the US is opposite. What do you think will be easier to achieve: change the views/values of the parents/students or develop the funds for higher education in an Emerging Country?
In France, the “Grandes Ecoles” (Great School), independent from the Universities, are public, pluridisciplinary or specialized but they are where the engineering elite and most engineers are educated/trained.
Out of High School, the best students in Math and Physics enrolled in “preparatory classes” to Grandes Ecoles Exams. Practically one spends 2 to 3 years to prepare (weekly about 15 hours of math + 12 hours Physics/Chemistry + 2 hours of each English , French Litterature , Industrial Drawing , Gym , written and oral tests) at the highest level possible, for series of “national exams”. Evenings are studious, tests weekly. Nobody is engaged in small paying job after school: there is no time and classes are free anyway, dorms and cafetaria are largely sponsored by the government. The “national exams” (covering a whole month) are written exams for admissibility into most of the Engineering Schools in France from the most prestigious ones (Ecole Polytechnique,…) to the least known, about 10,000 places in all. Competition is intense and national.
Each written exam spread over 2 to 4 days and give you access to a subset of schools. There is no personnal file review, no essay, no recommendation letter, no catch-up date if your are sick (you may try again the following year). It is all about Math, Physics, Chemistry, Computation and occasionnaly English/French. Your score in each subset of schools allows you, or not, to go into the oral exams thereafter. Your final score (written+oral) gives you a ranking and function of your (and other students’) choice of schools, you get admitted here and/or there. Once you are admitted somewhere, the ambiance is more relax and you’ll get your engineering degree fairly safely 3 years later. There is little drop-out. Only the best students access the best schools. Social background is of no issue. It is performance based. Each student reaches the best school he/she can.
Engineer Schools also are free and room / cafetaria mostly subsidised by goverment.
Grants are also provided to students from low income families. Ecole Polytechnique even paid you a (small) salary as a student, because you are then already considered the civil servant you will be, required to work for state companies for a certain number of years.
There are no such a thing as “nerd” or “geek” there since those persons will most likely end-up with a decent high skill job.
Business/Management Schools typically are private and expensive.
Medical/Dental Schools are also free, but drop-out is high at first. Only the really motivated and the ones feeling a vocation for the field remain. Further without significant student debt to repay, doctors can take more or less fee-regulated jobs. Universal Healthcare is one of the best in the world, based upon many measures.
Bureaucracy is minimum here and you don’t have an army of clerks dealing with insurance issues, at the doctor’s office, at the insurance company, at the companies trying the chase the lowest premium each year. Medicines are half the price you would find in the US, because (I think) it is the government that negociates the contracts with big pharma.
Because so many American believe in the freedom of choice at all cost, they are caught-up in a maze of choices (healthcare plan, meds, 401k plan,…), that they can barely comprehend themselves and they end-up paying a big price for that illusion of freedom, through an heavy bureaucracy and complexity.
The space shuttle is another embodiement of that illusion of freedom. Isn’t it nice to be able to lauch the thing, do whatever you like up there, land and refuel and be quickly ready to lauch again (as if you had a car) ?
But what was the cost for that freedom, compared to other means of spatial transportation ? I thought that Americans were the pragmatic and efficient ones ?
LOL, Jim. April Fools Day has come and gone.
No baby steps? Everything you mention is no more than baby steps. If incomes for the average family have stagnated for the past 30 years, that’s a good thing – perpetual growth in a finite system is unsustainable ‘wishful thinking’. Better to focus on more equitable distribution of that ‘average income’ or, better yet, reduce the population so each individual can enjoy a bigger slice of that finite ‘pie in the sky’ we call home.
Your big question is really just a baby step question – too limited and ‘crisis management’ oriented to solve any BIG problem we are now facing. The current economic crisis HAS been averted, so let’s work on more important issues. BIG and BIGGER thinking led us to our current state, what’s now needed is a paradigm shift towards SMALL and SMALLER. Having a single, worldwide economic structure leaves us all vulnerable to tiny glitches in that system. Better to promote a diversity of local economic systems with less interdependency.
Stumpy and Tommy,
Amen.
Jim, you need a facebook and email link on this one. It NEEDS to go viral.
Great article, but, judging by the comments posted, you are preaching to the choir. This country is full of special interests, as big as GM and ATT, and as small as me [ a SS recipient] and you [a SS payor]. One by one, these special interests must be unwound. It took years to build our current system, which served well, but now is badly out to date. I wonder if the world will give us enough time to make the necessary changes. Frankly, I doubt it; we live in a time of rapid change, and “rapid change” isn’t in the lexicon of any blue-ribbon committee made up of special interests that our government might appoint to investigate and report back. Flexible, adaptive, educated individuals are needed now to navigate the rocks and shoals of today’s economy as this country competes with the world. Speaking of a Jubak global fund…..
Well meaning but off target. Pointless to join in the race to the bottom with export countries with endless cheap labor. We already HAVE to best tech exporting our universities can pump out. Look to the North to see what works for a developed economy: single payer and 1/4 our defense budget means a stable middle class and a balanced budget. And Canada doesn’t even have our universities…
Jim,
As a friend of mine is fond of saying “it’s basic thremodynamics” you cannot consume more than you produce. It takes vast amounts of energy to keep entropy at bay. Your idea about getting kids better educated is great, but is a futile quest. As long as facebook, twitter, texting, and other diversions compete for a students attention, compounded by a complete lack of parental involvment, and apathy by many in the public school system, there is no hope.
High speed rail? Why? Because we don’t have enough government employees to subsidize? AMTRAK EATS money every year. We hear the commercials about how efficient freight trains are, and how they can move X tons of goods Y miles on one gallon of fuel. Why oh why don’t the same efficiencies apply to AMTRAK moving passengers. The Accela train is another joke of “high speed” rail in this country. In many sections of the line, I can pedal faster on my bike.
What we really need is some good old-fashioned ACCOUNTABILITY from ALL our elected officials who promise the sun, moon, and stars to get elected and then promptly reward their backers with gifts.
Alexander Tytler phrased it best and accurately ‘A democracy will continue to exist up until the voters discover that they can vote themselves generous gifts from the public treasury’ I believe that we are already to that tipping point and beyond.
Stumpy-1
Jim, great comments. We need to be thinking about “Equal Trade” as opposed to “Free Trade”. My hat is off to you. Thanks for the post!
“Even the great job creation surge in the Clinton years doesn’t look like the best of times when you look at the kinds of jobs being created—lower paying, predominately service jobs–to replace the kinds of jobs—higher paying manufacturing jobs–the economy was losing.”
Why not distinguish between manufacturing employment and manufacturing output? Manufacturing output as a percent of GDP is relatively stable. The complaint seems to be then that innovation is destroying manufacturing jobs. That’s no different than complaining about John Deere killing the small farmers.
What we really need to focus on is creating jobs that are more advanced than low-tech manufacturing jobs. We could also accept that we only need so many gadgets and gizmos, and embrace the service economy that is really only possible after we manufacture enough. If you’re worried about low paying service jobs then gain advanced skills (helicopter pilot, healthcare, etc.). Besides, manufacturing innovation lowers the cost of goods so maybe a lower paying service job will suffice. This brings us back to square one–the cost of housing is really what’s hurt the average American.
Expecting high incomes for mediocre performance doesn’t make sense. We have to upgrade our capabilities. Quickly fixing our immigration policies to keep the foreign graduates of our universities and discouraging immigration of low performers the way Singapore does makes sense.
I forwarded the article above to the White House. Let me know JIm when President Obama calls you.
Rob
Jim, I am proud of you. What you say is logical and actually makes sense. I stand up and applaud this message fixer-uper. Great job. I’ll see if i can forward this to President Obama. Thanks again Jim.
Great post, Jim! The standard solutions being offered up (for our economic woes) make me think I’m in a zeppelin and people are shouting “we need to turn right”, “we need to jettison ballast”, and “we need to cut back the throttle”… all at the same time! Unless we know our destination, this cacophony of “solutions” is nothing more than random (and annoying) noise. So, first thing, we need to clarify our destination.
I think we can all agree that we want our country to be the best place in the world as far as standard of living and the best place to find well-paying, meaningful, and satisfying employment… not only for ourselves, but for our children and grandchildren.
Based upon your article and the various posts here, it sounds like that goal resonates with you and the majority of the readers of this site. In order to achieve that goal, we will definitely need to “think big”, as you put it.
Corporations and businesses will ultimately have the largest impact in making that vision a reality. As I stated in previous post, that means it is the responsibility of each of us to ensure our companies are innovating and doing what is need to stay 5 steps ahead of the competition. It is our responsibility to constantly push the bounds of our standard jobs and explore the uncharted regions where we can go to make our companies more profitable. And it will definitely help if we use our government to assist businesses and make it easier (and more profitable) for them to make choices which will keep America prosperous and a land of opportunity for generations to come.
Thanks for the thought-provoking and conversation-starting article, Jim.
If you think imaginative solutions are coming or our leaders are ready to roll up their sleeves, think again. Some of the California State Universities are cutting their computer science and information systems programs–to them it is better to turn out philosophers and history majors because they are cheap to produce! “PHHT Would you like a Hegelian Dialectic with that order, sir? PHHHSHHHT”
I have to agree with Dan, well put, we need to keep some perspective here people, China can continue growing at the current rate for the next 3 decades and the average Joe will still most likely be better off than the average Chen. The current panic smells a lot like the fear of the red curtain, we fear that which we do not know.
Sabre, you can comfortably assume that Jim was indeed merely joking, much like we all can assume him to be a gooder writer than you, I and those mysterious 120iq BRIC’s.
Mr Jubak isn’t suggesting that we twitter Paris Hilton into office, but rather taking a creative jab at the poor state of our government.
The point on protectionism and how it led to the prolonged depression and how we must under no circumstance repeat those mistakes is like comparing apples to triangles. We cannot continue letting other governments provide unfair advantages as egregiously as they have been to their constituents, while at the same time allowing our technology to be syphoned off either via our own corporate greed or multiple other means.
Jim is far too intelligent to be a replacement for Larry Summers (that’s why his phone will never ring), such intelligence never would be listened to by the Washington DC crowd. We are just lucky he does what he goes best by keeping his followers highly informed and often with just enough humor to keep us out of the doldrums. Thanks Jim!!!
Jim’s idea is perfectly on the mark. We have to plan “smartly” and not just nip and tuck around the problems that we face. Our economy was fortunate to have “come across” the semiconductor/internet innovation boost in the 80’s that propelled us out of the doldrums of late 70’s. Either it was planned that way (which I doubt) or we were fortunate to have great engineers and scientists to lead us into this era. But what is next? Will we lead again? Will it dropped into our lap again – I doubt it. World has smartened up quite a bit. China and India have learned their lessons and are “awake”; while we here are going to sleep. Jim’s suggestion of massive dose of investment to boost us into the next economic orbit is the only way.
As for education, all the comments above are valid and add to our understanding of the problem. But do we have the will to do anything about it – unfortunately the answer is NO. The problems are so deep and well ingrained that I see no hope on the front. Throwing money at the education system for more “research” and more administration is the easiest way for politicians to keep kicking the can down the road. We just dont want to face up to the fact that success in the education of youngsters begins at home. It is at home that we have to impress upon children the value of education and enforce appropriate discipline and learning skills. But no – we have the teachers and the system to blame, why bother. Of course, the fact that John and Jane works 18 hours a day with children brought up on TV, video games and now internet – what is so surprising about the outcome?
As for sitting on our hands, well maybe most of us are not, but we surely as a society are not ready to make hard choices and act in any unified manner. We need a leader who everyone can identify with and rally the whole country with a common and unified vision. Will that happen; not yet, not till we are really in deep deep trouble. We will, unfortunately, bumble along for many more years. History tells us that only when their is total despair that great leaders arise and populace unite to move towards a common good.
Hear, hear Jim!!! I’m forwarding this on to the White House. Maybe they will take note and hire you- we need someone with your intelligence and common sense approach to be in charge.
haha. Your best article since you got back from vacation.
Following the daily news and reading through these comments I am reminded that someone said that these days even the ignorant can read. Someone else said that ignorance in action is frightening. It would be funny except for my new grandson.
Jim I hope your phone rings soon for the sake of our country’s future. I heard a comment on CNBC that the US is now 26th in Math. Imagine if we placed 26th in the Olympics how the country would react. Unfortunately today’s students are tomorrow’s future
These debates remind me of that famous McKay quotation –
“…they go mad in herds, while they only recover their senses slowly, and one by one.”
If I recall correctly, Jubak himself has not been a big fan of CDO-squareds and 30:1 leveraged IBs and off-balance-sheet SIVs and….
Some of you are forgetting econ 101. Trade is not a zero-sum game – under normal conditions, it is beneficial to both parties. Trade does not imply a lowered standard of living for the US. Outright trade barriers would be another serious policy blunder.
With all due respect, some of you should have a little less acute vision for the failings of your own country and a little more for the failings of others. China and Russia are still dictatorships for practical purposes, with a corrupt form of crony-capitalism layered on top. India’s socialist tendencies make Obama look like Milton Freedman. As a scientist myself, I can tell you that the educational prowess of most EM countries is significantly overstated. The US, Germany, France, and the UK are still by far the best.
The US has problems but they are not insoluable.
Turnip and 2yrfixed: when you show me a president (either party) who can count to ten without taking his shoes off or using a teleprompter, I will refer to them by name. Until then, they get the respect they earned.
I apologize if I grouped “everyone” together, but the 22 butt kissing comments before me were so over the top that a blond bimbo cheerleader would have been embarrassed to make them (I am a blond, so I am allowed to say that)
Mr Jubak’s article was awful and poorly researched. We have spent over $3 trillion in stimulus (when you aggregate all the various programs). How is that “baby steps”?
Mr Jubak’s first suggestion is that the US offer cheap loans to promote exports — he neglected to mention that we already have at least a dozen redundant programs that do that already.
Protectionism (even if you call it “trade quotas”) was tried back in the great depression, and it is widely accepted that this made a bad situation worse. Mr Jubak should read a history book in addition to educating himself on already existing government programs
Then Mr Jubak writes “If the workers who are feeling the brunt of the pain in this 30-year crisis are those without a high school degree” Once again, he failed to mention that our society already pays through the nose to make sure everyone is given a high school education. The education system is hopelessly inefficient — promoting bureaucracy and penalizing teachers.
The US cost structure (from multiple redundant and ineffective government programs) makes the the country into the equivalent of General Motors — a bloated cost structure that makes us lose even if we have a decent product. If it costs us three times as much to educate a student as it does our competitors, we can’t be competitive. The US simply cannot afford the administrative bureaucracy that is attached to education.
Lets hope Mr Jubak was making a poorly phrased joke when he wrote “Raising standards so that every kid getting out of high school can do 12th grade math and write good (or is it “gooder”?) is a decent goal”. Anyone who is a professional writer should know how to write **WELL**.
Then Mr Jubak suggests we have “national champion” companies, like countries that **used to be** global powers. We already have those: GM, Amtrak, and Chrysler to name a few. If the government starts “helping” Intel, I will sell every share I have.
When Mr Jubak researches individual companies, lets hope he actually does the work. In this article, he clearly did not
Expecting every problem to be solved with a (usually redundant) new government program is how the US made itself a high cost competitor. I am shocked that Mr Jubak would advocate continuing this multi-decade mistake.
Great Post Jim!!
Sabre,
I tend to agree with you but calling people names doesn’t help our cause. Cheap financing and land… the only advantage of some other countries? How about 120IQ’s, a dream and a work ethic like millions in China and India? Oh yeah, and they’ll work for peanuts!
People that believe we can stop the slide of our SOL relative to those previously mentioned countries are, in my opinion, very much wrong. But it is fun to watch those of all political persuasions arguing that if we just tried what THEY suggested everything would be OK.
Anyway, Mr. Jubak is FAR better equipt to find global opportunities than I am and that’s why I read (and invest with) him. But hey,
I’m reasonably wealthy and gorged myself on the orgy of financial deregulation, so don’t listen to me.