What economic challeges for Prosperity, Growth

GET THE FACTS BEHIND THE NEWS

Professor Michael Porter distinguished Harvard Business School Professor has written in the Nov. 10 issue of Business Week an article explaining why he believes the economic advantages of the US are eroding and why the development of a economic strategy is critical.

Prof Porter states” a series of policy failures and have offset and even nullified “US “ strengths just as other nations are becoming more competitive”. Let’s have a look at some of the economic areas that worry Prof Porter.

1) “An inadequate rate of reinvestment in science and technology is hampering our feeder system for entrepreneurship. Research and development as a share of the GDP has declined, while it has risen in other countries”. This is well recognized but policy makers have failed to act.
2) Our belief in competition is waning. “A creeping relaxation of antitrust enforcement has allowed mergers to dominate markets”. “We are seeing more interference in competition with protectionism and favoritism.”
3) US colleges and universities do not have a serious plan, such as GI Bill or National Science Foundation programs, to improve access to them. The US now ranks 12th in educational attainment for 25 to 34year olds. For 30 yrs we have not improved ourselves in this area. This is an “ominous trend in an economy that must have the skills to justify our high wages.”
4) At a time when job insecurity and turnover are high the US gov’t has not taken responsibility to provide a transition safety net for US working people. The job training system is ineffective and receives less funding each year. Pension security is declining. Social security is not being adjusted and strengthened. Access to affordable health insurance is a major worry to most people. The gov’t could equalize the tax deductibility of individuals purchasing insurance to assist those not covered by employers, but has failed to do so.

More problem areas on our next blog. Please note so far no mention of “Kick Starts”, economic stimulus’s, or bank liquidity. For Prof Porter’s views of our economic advantages please see Blog, “Why an Economic Strategy.

Where does the US really stand? Prof Porter says the US has prospered because of unique competitive strengths. 1) The US has an unparalleled environment for entrepreneurship and starting new companies. 2) US Entrepreneurship has been fed by a science, technology, and innovation that is by far the best in the world. 3) The US has the world’s best institutions of higher learning. 4)The US has been the cuntry with the strongest commitment to competition and free markets. 5)The task of forming economic policy and putting it into practice is highly decentralized across states and regions. This decentralization maybe the US greatest competitive strength. 6) The US benefits from the most efficient capital markets of any nation. This especially true of risk capital. 7)The US has remarkable dynamism and resilience to take losses and move on.