America Must Play to Its Strengths to Fix Inequality
America Must Play to Its Strengths to Fix Inequality

Inequality is replacing the American dream, because the U.S. economy—thanks to Washington’s mismanagement—is underperforming.

America still produces one-fifth of the world’s goods and services, but accounts for a much smaller share of global growth. Many U.S. products are no longer the best in class. Consequently, the economy can’t adequately employ many of its college graduates, and wages are stagnant or falling for ordinary folks.

America still has great strengths. High labor productivity, coupled with rising wages in Asia, makes American workers a good value for global investors. Along with cheaper energy, thanks to the onshore oil boom, that should attract new factories, but the promised flood of new jobs has been only a trickle.

Simply, the bureaucratic quagmire created by complex and ineffective business regulations makes it easier to produce in Asia than in America. The steep corporate tax rates make the cost of investing here too high.

It is increasingly difficult to refine and efficiently move oil to California and the Northeast—gasoline costs too much in Monterey, Calif., and heating oil in Massachusetts.

Whether businesses are taxed or directly pay for health care, higher costs than in Europe or Japan require radical reforms in delivery and pricing that “Obamacare” won’t accomplish and Republicans refuse to discuss.

Germany punches above its weight. Whether in aerospace or Web-based businesses, its companies compete effectively for customers in rapidly growing developing-country markets by emphasizing proven technologies, execution, and patience.

Cities from Bangkok to Lagos are too congested and cluttered with street vendors to support American middle-class drive-to-the-mall retailing. German firms like Rocket Internet are recruiting suppliers and sending young women with tablets into marketplaces and workplaces to demonstrate their websites.

American companies eschew such boring approaches in search of big profits to pay for Uncle Sam’s terribly burdened regulations and taxes.

Apple will only sell the very best for the highest price, while Microsoft ties up PC customers with awkward software. Now, too few Americans can afford an iPhone and even fewer want a Windows smartphone. Korea’s Samsung offers state-of-the-art handheld devices and gives American companies fits.

In a globalized economy, America must play its strengths. It can’t continue to permit China and other Asian nations to rig their currencies, and otherwise lock out competitive U.S. exports with subsidies and protectionist regulations. With Asia, the Bush and Obama administrations have placed higher priority on other goals.

America shouldn’t import 6 million barrels a day of oil and pay the cost of policing the Persian Gulf, when opening up offshore drilling and smart conservation could eliminate foreign purchases.

Together, the trade deficit on otherwise competitive manufactures and oil is costing Americans 5 million good-paying jobs—many that would go to struggling working-class families.

America’s best and brightest can earn big bucks by heading for Wall Street, Silicon Valley, and industries that innovate and sell in global markets. Meanwhile, the army of more ordinary workers remains underemployed and underpaid.

A slow-growing economy is the cause of increasing inequality, and the best way to reverse those is to clear a path for investment and entrepreneurs. The ticket is to streamline regulations, simplify and cut taxes, open up offshore energy production, radically reform health care, and make exports and jobs America’s No. 1 foreign policy priority.

With lower taxes, how would Washington pay for entitlements and a big defense budget? Simply, an American economy growing at 5 percent and producing its own energy would need less of both, and generate a bounty of government resources for good purposes like the world has never seen.

Peter Morici, professor at the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Previously he served as director of the Office of Economics at the U.S. International Trade Commission.

Views expressed in this article are the opinions of the author(s) and do not necessarily reflect the views of Epoch Times.

  • Denni A

    America is no longer the country of BIG IDEAS and BIG THINGS, in today’s America the Hoover Dam would not be built, the interstate highway system would not be built, putting a man on the Moon would never have happened, we have become a country of mediocrity and ever expanding ignorance. we have two parties, one that couldn’t care less if the country and its economy crashes and burns in their lust for power on behalf of the plutocrats and the other party filled with a feckless bunch of mealy-mouth cowards who have allowed a minority of wackos to take control of the gov’t and a President who is passive, tentative and hesitant to take the reigns of power and lead the American people in this fight against inequality and erosion of rights. we need a Teddy Roosevelt or FDR, unfortunately that mold of leadership has gone the way of the dinosaurs.

    added – someone please ask Obama why is he pushing TPP.

    • allison1050

      And President Eisenhower, he did the interstate highways, you know the ones that are crumbling.

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