The Economist: What's Wrong with America's Economy?

[IndyPragmatist]

http://www.economist.com/node/18620710

"Of course, plenty more could be done to spur innovation. The system of corporate taxation is a mess and deters domestic investment. Mr Obama is right that America’s infrastructure is creaking (see article). But the solution there has as much to do with reforming Neanderthal funding systems as it does with the greater public spending he advocates. Too much of the “competitiveness” talk is a canard—one that justifies misguided policies, such as subsidies for green technology, and diverts attention from the country’s real to-do list."

"Apart from Japan, America is the only big rich economy that does not have a plan for getting its public finances under control. The good news is that politicians are at last paying attention: deficit reduction is just about all anybody talks about in Washington, DC, these days. The bad news—and the second reason for gloom about what the politicians are up to—is that neither party is prepared to make the basic compromises that are essential to a deal."

"All this means that grappling with entrenched joblessness deserves to be far higher on America’s policy agenda. Unfortunately, the few (leftish) politicians who acknowledge the problem tend to have misguided solutions, such as trade barriers or industrial policy to prop up yesterday’s jobs or to spot tomorrow’s. That won’t work: government has a terrible record at picking winners. Instead, America needs to get its macro-medicine right, in particular by committing itself to medium-term fiscal and monetary stability without excessive short-term tightening. But it also needs job-market reforms, from streamlining and upgrading training to increasing employers’ incentives to hire the low-skilled. And there, strange as it may seem, America could learn from Europe: the Netherlands, for instance, is a good model for how to overhaul disability insurance. Stemming the decline in low-skilled men’s work will also demand more education reform to boost skills, as well as a saner approach to drugs and imprisonment."




Personally, I felt this article was spot on. Especially the part about propping up yesterday's job. I think in general, too many politicians are trying to use policies from the past that worked at the time, but are worthless in today's global economy.

[leveymg]

1. I don't think teaching basic PC usage is going to do it for job retraining, this time.

On that, we all can surely agree. I wonder what the Oxbridge worthies at The Economist have in mind for America's millions of underskilled workers?

[xchrom]

2. some i don't disagree with -- but some i disagree with strongly:

'Unfortunately, the few (leftish) politicians who acknowledge the problem tend to have misguided solutions, such as trade barriers or industrial policy to prop up yesterday’s jobs or to spot tomorrow’s. That won’t work: government has a terrible record at picking winners.'

politically when we do a thing right -- that sets in motion for the other party to begin to dismantle it.

epa comes to mind -- education now -- but we got it right with the internet and new tech investment -- and now it looks like we want to screw with that.

we can get it right no problem -- lets get private vested interest away for government -- and then see where we stand.

[tularetom]

3. Infrastructure does not involve extensive retraining

And a ton of low tech jobs would be created fast if we made a commitment to save America's public facilities.

The spin off from these new jobs would spur investment in other goods and services, conceivably also in r & d for new construction systems and products.

It may not be sexy, but it's critically necessary and it would produce the most bang for the buck.

[quaker bill]

4. You cannot "train" your way out of this

This is the biggest misguided notion of all. All the constant kvetching aside, the US has never had a higher percentage of HS graduates, BS degrees and advanced degrees in its population. This isn't and hasn't helped. There is not another level you can take that to that will start helping. You cannot train your way out of the impacts of truly bad trade policy. You have to change the policy.

[mmonk]

5. The Economist has a fairly conservative outlook on economics.

And there are no "leftist" type politicians with any real power to change or move legislation in the United States.