East Vs. West on Clear Display

Are there competing headlines that better tell the story of where our economic world is heading than these two from this morning?

While the Far East grapples with growth:

India Raises Interest Rates, Warns on Food Inflation 

The West remains stuck in neutral, at best:

British Economy Unexpectedly Shrinks

What's sad is, we've done this to ourselves.

Sadder still is the fact that the root cause of our lack of competitiveness has yet to be accurately identified by those in power.

It's not our currency, nor the value of China's. For proof, just look at the 3-year collapse in the Greenback from 2002-2004 and the corresponding explosion in our trade deficit over the same time. Those screaming about the value of the Yuan as the cause of our woes simply cannot prove their case.

Nor is it our national debt. Certainly, we're on a collision course with demographic destiny if we don't restructure national entitlements and put them on sustainable footing, but even the Obama-enhanced level of our current indebtedness could be easily carried in a strongly-growing economy.

These things are the symptoms, not the disease.

What causes us to be wholly uncompetitive with the developing world are the suffocating regulatory burdens we force our producers to carry. Minimum wages, environmental laws, corporate tax rates, a runaway tort system, healthcare regulation, laws empowering unions over employers, a workers compensation insurance system dominated by fraudulent claims, state and national welfare burdens-- and this is merely a partial list.

Make a case for any one of these things as worthwhile public policy, if you will. But insist on all of them and a nation makes a conscious decision to literally give away its economy-- first the lower-wage, unskilled jobs and later, the rest.

competetiveness It is not that can't compete. We can. The real problem is that virtually every trading partner we have enforces a "buy local" rule and penalizes the purchase of our goods. The solution is to levy a tariff on every nation, not products, but the nation, that would be sufficient to offset the trade deficit with that particular country. We subsidize the payroll of foreign nations to the tune of $400 to $600 billion annually. Were we to recover this, we could fund the unemployment and offer incentives to manufacturers to re-open their domestic manufacturing plants, hire workers and produce a tax revenue stream that would fund current operations and eliminate the deficit in a few short years. Submitted by ClydeB (not verified) on Wed, 2011/01/26 - 4:27pm » reply |

I agree... I think sound money would go a long way as well. The current monetary regime as it exists has allowed the financial services industry to grow like a cancer lowering our long-term potential GDP growth rate as their profits continue to become a larger portion of overall GDP. Submitted by Bulleri on Thu, 2011/01/27 - 1:40pm » reply |