U.S. Remains No. 1 Economy, but Won’t Be Without Change
It’s time for New Year’s resolutions and here’s a good one: Let’s resolve to keep America the world’s most competitive and innovative country.
[IMGCAP(1)]It’ll surprise many Americans to know that we even have that position.
In a poll released earlier this month by the Pew Research Center and the Council on Foreign Relations, 44 percent of Americans regard China as the world’s leading economic power, while just 27 percent name the U.S.
An NBC/Wall Street Journal poll asked what country would lead the world 20 years from now. Thirty-nine percent said China, to 37 for the United States. When asked whether they felt confident that their children would live a better life than they do, only 27 percent of respondents said yes and 66 percent said no. When asked if America is in a state of decline, 61 percent said yes, 35 percent said no.
The truth is that the United States is still the world’s biggest economy, with an expected 2010 gross domestic product of 13.2 trillion to China’s 3 trillion. The European Union ranks second at 12.9 trillion.
The World Economic Forum ranks the U.S. as the world’s most competitive and innovative economy. China, while described as an “emerging giant,— is still 30th.
The United States is still the world’s largest manufacturer, with China second and Japan third. And we spend more money on research and development than any other country.
So, Americans needn’t be quite as gloomy as they are about the nation’s present position — but if we want to keep it, we need to get our act together.
And if we don’t, we will lose our lead and the poll respondents may well be right — our children will lead a less-prosperous life and, 20 or 30 years from now, China may lead the world, not us.
What it will take is a bipartisan decision to invest in the future — in innovation, education and research and development.
We need to consume less and save more and invent, manufacture and sell more products to the world.
As a result of America’s past over-consumption and under-manufacturing for export, China has the largest foreign exchange results of any country, $2.3 trillion. The United States ranks 23rd, with just $70.5 billion.
The United States ranks fourth among the nations in total exports — behind the European Union, Germany and China — and 15th in “export intensity,— the percentage of manufactured goods exported.
The federal government is piling up debt at an alarming rate — it was at 40 percent of GDP in 2008, 53 percent this year and is estimated by the Congressional Budget Office to rise to 87 percent in 2020, 181 percent in 2035 and 320 percent in 2050.
Under those circumstances, paying interest on the debt will be such a burden that there will be little money remaining for investment in infrastructure, education or research and development.
Moreover, as Education Secretary Arne Duncan warned in a speech in October, “Compared to our peers in other countries, our students are stagnating.
“In science, our eighth graders are behind their peers in eight other countries that participate in international assessments. In math, our 15-year-olds’ scores now lag behind those of 31 countries.—
The overall New Year’s resolution that the U.S. should make was described in a speech at West Point on Dec. 9 by General Electric CEO Jeff Immelt as “a new strategy for this economy.
“We should dedicate ourselves again to be the most competitive country in the world. …
“I’ve had people tell me that America has seen a natural evolution from farming to manufacturing to services. But there is nothing predestined or inevitable about the industrial decline of the United States, if we are prepared to reverse it.—
Even though Republicans and Democrats quarrel constantly in Washington, they need to agree on a bipartisan basis to cut the federal deficit. It will take a combination of spending cuts and revenue increases, which is why bipartisanship is necessary.
It’s important in 2010 to pass the Obama administration’s education reform package — about which there is a lot of bipartisan agreement — to have each state set and meet international performance standards.
Sens. Lamar Alexander (R-Tenn.) and Jim Webb (D-Va.) have teamed up to sponsor a $20 billion, 10-year program to invest in clean energy projects — especially nuclear power, but also solar, advanced battery technology, biofuels and clean coal.
The federal government should increase the R & D tax credit for business, which now ranks 17th in the world in generosity toward big firms and 18th for small firms, according to the Organization for Economic Cooperation and Development.
Republicans habitually merely want to cut taxes and keep the government out of “industrial policy— — picking winners and losers — while Democrats want to redistribute wealth and spend on social programs.
But they ought to remember — the Internet, the interstate highway system, lasers and cancer treatments are all products of federal funding. They ought to come together in 2010 to reverse their constituents’ view that America is in decline and that the future of their children is grim. If they don’t act, the worst will prove to be true.