WHY A NEW ECONOMIC POLICY

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 go from one tactic to the next without clarifying how each step fits into the overall plan.

A reason for Ms. Warren’s observation is the US does not have an economic policy or strategy. Professor Michael Porter distinguished Harvard School Professor Porter is a strong advocate of the need to develop an Economic Strategy.

Professor Porter notes the American political system as it has evolved with piecemeal reactions to current events. I believe Professor Porter would like to see an ORGANIZED APPROACH TO POLICIES THAT PROMOTE LONG TERM GROWTH AND COMPETITIVENESS.

Is what has driven our success starting to erode?
.
Prof Porter believes” a series of policy failures have offset and even nullified “US“ strengths just as other nations are becoming more competitive”. Let’s have a look at some of these economic areas.

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 12in educational attainment for 25 to 34 year 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 their employers, but has failed to do so.

5) The US is energy inefficient. Public policies fail to promote energy conservation.

6) “Trade and foreign investment are fundamental to the success of the US economy but the US has lost its focus and credibility in shaping the international trading system.” “With no strategy the US has failed to work with other advanced countries to assist poorer countries to feel confident about opening markets and internal reform.” “Our foreign aid is still tied to the purchase of US goods rather than the actual needs of countries.”

7) “The federal gov’t has failed to recognize and support the decentralization and regional specialization that drives our economy.

8) Lack of regulatory oversight combined with lack of a strategic plan has resulted in a hodge-podge of policies that have driven up the costs of doing business. TO SUM UP WE HAVE HAD POOR ECONOMIC MANAGEMENT.

9) Is good strategic economic plan possible considering our political system?
It requires political parties and private leaders to come together and chart a long term plan. Prof Porter recommends a bipartisan joint planning group to coordinate priorities,

Does our new Stimulus Bill help these weaknesses?