WHY AN ECONOMIC STRATEGY

GET THE FACTS BEHIND THE NEWS

Elizabeth Warren head of the oversight panel setup by Congress to monitor the Federal Bailout says, “THE GOV’T STILL DOES NOT SEEM TO HAVE A COHERENT STRATEGY FOR EASING THE FINANCIAL CRISIS. “ Instead the gov’t seemed to be lurching from one tactic to the next without clarifying how each step fits into the overall plan. The overall impression is one of confusion by a leadership(?) that does not know what it is doing.

One of the reasons for Ms. Warren’s observation is the US does not have an economic strategy. As Yogi Berra a modern day philosopher has observed. “If you don’t know where you are going you may not get there.“

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 development of a economic strategy is critical.

Professor Porter notes the American political system as it has evolved with piecemeal reactions to current events. Each candidate during the election presented a set of disconnected policy proposals for their political appeal. Each “approached the economy with long held ideologies and policy positions, many of which no longer fit with today’s reality. I believe Professor Porter would like to see an ORGANIZED APPROACH TO POLICIES THAT PROMOTE LONG TERM GROWTH AND COMPETITIVENESS.

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 country 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.

Prof Porter warns us that what has driven our success is starting to erode.
TO BE DISCUSSED IN OUR NEXT BLOG.