Is America losing its competitive economic edge to compete
in the global market? Although the immediate dangers and fears of the 2008
recession have gradually reduced, the long-term worries regarding growth still
loom in the face of future American generations and policy makers. This
question faces many as the position of the US recedes to the “world’s
seventh-fittest economy, a big slide from first place just four years ago” (TheEconomist). These conclusions come from a report conducted by the WorldEconomic Forum, which rate a country’s global competitiveness (1-7 scale)
according to 12 pillars. These include: institutions, infrastructure,
macroeconomic environment, health and primary education, higher education and
training, goods market efficiency, labor market efficiency, financial market
development, technological readiness, market size, business sophistication, and
innovation. The only pillar in which the US trumps all other countries as
number one is market size. The others seem to come under competition from
emerging and expanding economies such as China.
Recalling President Obama’s State of the Union speech, many of these issues/pillars were addressed. He vowed to advance education by
redesigning high schools and making college more affordable, proposed to
improve infrastructure through a “Fix-It-First” program, and make “America a
magnet for new jobs and manufacturing”. Yet with all of these proposed
improvements, economic growth “is sluggish, unemployment is high and investors
are wary”. Various reasons can be
pointed to but one that particularly stands out is America’s political
gridlock. The disputes between Republicans and Democrats have led to
dysfunctional politics that threaten any political, social, or economic
advancements. Even Bill Clinton has been quoted on the fighting in Washington saying, “We live in a time
where there's this huge disconnect between the way the political system works
and the way the economic system works”. These political battles mostly revolve
on decisions regarding health care, social security, and how to approach the
massive public debt.
Hearing all of these pessimistic speculations can often lead
to an overwhelming sense of burden and loss of faith in America’s future.
However, there is indeed hope. New reforms and innovations are occurring
vigorously at the local and regional levels. Spending on research and
development has dramatically increased. Intellectual property rights are
well-respected and upheld. Last month, businesses added 236,000 workers,
indicating that America’s economy is in fact generating jobs. It seems as if
America’s growth and improvement is seen in just as much of a controversial
light as the political differences in Washington. It remains a prominent debate
whether the US economy is indeed recovering or declining.
I'm so glad you blogged about this issue, because I do believe the America's future is often in question. Your blogpost did a great job at presenting both sides of the story. One, America is in fact no longer the fittest economy, moving to position seven. America is lacking in the 12 areas of criteria; politicians are not unaware. Our president is not unaware. Then, what then is the issue? You presented the other side of the argument. Politics in America, with two distinct parties, cant seem to agree on issues. The economy and who is in charge of what remains in question. However, I really like how you ended on a positive note showing concrete reasons(236,000 new jobs) to believe that America could be gaining its ground back and repairing what honestly needs to be repaired. I like how in the final link article posted, that the fiscal cliff raised taxes was brought up. I think this is yet another concrete example to show that America is trying to repair damages made. Finally, I like how the article said that the cliff as well as the sequester were helping to remove uncertainty. From the way the blogpost ended, I have hope. I have hope America is moving in the direction of full recovery.
ReplyDeleteAlthough I agree with the assertion that America is losing its competitive nature within the global economy. With the continual expansion of the import sector within the united sates economy, the influence felt by imports augments the importance of domestic manufacturing. The size and efficacy of the United States’ economy has been demonstrated to be an agent of global change throughout the interconnected nature of global manufacturing. The institutional restructuring of the education system needs to be a top priority in order to bolster the resiliency of the US economy. By elevating the education that each student receives, the earning capacity of future worker will be greatly expanded, thus created larger amounts of tax revenue generated for the federal government. By having a work force that has greater income, they will be able to provide themselves health care, retirement, and be elevated to a higher tax basis. By creating such a populous within the Untied states, the problems confronting Health Care, Social Security, and the growing federal debt. Under such an assertion, the elevation of the education system within the United States may rectify the current problems facing the competitive nature of the United States. I.e. Education = Competitiveness.
ReplyDeleteTo go along with increasing education I think a bigger emphasis needs to be put on the development of new energy technologies that are made and used at home. There are a lot of small firms that are developing new ways to create biofuels and other environmentally friendly energies. If the US can help these new industries achieve economies of scale there would be less import of energy from abroad. The US could also improve the efficiency of the coal burning plants we are using at home. These things could greatly help the US improve its economic edge.
ReplyDeleteI think rather than looking at just the monthly job report for this month that we should look at the unemployment over a longer period of time. The link from trading economics shows how the unemployment rate has decreased quite a bit over the past year from close to 10% to 7.7% which is a 4 year low. However, according to an article done by The Guardian the US economy still needs aggressive measures to bolster growth. It seems in the short term, the US economy is growing, however, there need to be long term changes, such as those mentioned above, if the US wants to keep up with other countries that are growing at an even faster rate.
ReplyDeletehttp://www.tradingeconomics.com/united-states/unemployment-rate
http://www.guardian.co.uk/business/2013/mar/28/us-economy-grows-faster-rate
Great post. I don't necessarily agree with the "competitiveness scale" but I do think it raises some interesting questions about the growth rate of the US versus those of competing nations. The growth rate of the US economy has historically been low, but positive and consistent. In this way, through steady growth, America has become the largest, most powerful economy in the world. All politics aside, that still remains to be true. The rapid growth rates of developing countries, especially in Asia, are exactly that: developing. The reason we see such rapid growth is because these countries are industrializing and America has already moved beyond that. Many economists (although no, I don't have a quote here) believe that rapid industrialization can backfire and lead to eventual stagnation in these countries. Does economic growth in developing countries concern me as an American? Not really.
ReplyDeleteWhile “America’s decline” is a popular subject these days, the fact is that the recession hit rock bottom in 2009 and economics is cyclical.
ReplyDeleteWhile metrics can be useful for certain specific comparisons, these types of sweeping generalizations are inherently flawed and most comparisons are apples and oranges. The United States is the size of many other developed nations combined, and yet is far more developed than any nation of similar size and ethnic, resource, geographic, etc. diversity
Some food for thought http://www.cnbc.com/id/100606163. The article discusses the fact that the US is no longer the world’s lead oil importer and is projected to become a net exporter by the end of the decade due to improvements in drilling technology as well as the complimentary effects of new green technology. This means a seismic shift in global politics and greater legitimacy for US foreign policy and international security objectives.
This is very interesting, but the question still remains as to what America needs to do to fully recover its economy. Some of the things other countries are doing and their forms of government and some America will never adopt, therefore it may be unlikely America becomes #1 again. While the U.S. may be on the rise with their economy, there is still a long way to go and awareness that needs to be made relevant to the entire population. Economics and politics need to work together. I agree that the industrialization of other countries is not necessarily something for the U.S. to be afraid of, but it definitely may change where the U.S. stands.
ReplyDeleteMany people argue that the EU has a democratic deficit but by the contents of this post is seems like the US has one too. Like you said, the political gridlock is a reason that stands out the most. The dominance of the two party system creates this gridlock, preventing any third party to have the chance of win. I think America is lagging behind because of the democratic deficit.
ReplyDeleteI commend Clinton for addressing the large gridlock in Washington and showcasing how it is hurting the economy. I agree with his support for increased investments outlined in President Obama's jobs plan. Clinton notes that this plan can work with private sector investments to spur growth and reduce unemployment. I think his popular idea of focusing on possible areas of job creation which will free up some of the corporate money that's in treasuries now, could be invested in America, and make bank loans more attractive to create job is a new approach to this growing problem.
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