CNN, Global Public Square, Freed Zakaria, 12/11/11: "The real burden on the US Economy", a video of the following text is imbedded in the article. "President Obama gave an important speech in Kansas last
week. Whether you agree with all of it or not, he has begun a national
conversation about the economy and the role of government. That's what
this election should be about. And in presenting his view, Obama shifted
the economic conversation from deficits alone to the crucial issue of
growth. After all, deficits matter because they could have a harmful
effect on growth.
So the question we should all ask is: What would make this economy
grow? What has stopped it from growing much over the last few years -
indeed over much of the last decade? One theory heard a lot these days is that the economy is burdened
by excessive government regulation, interference and taxes. Cut them,
the Republican candidates all say, and the economy will be unleashed. It's a compelling picture, but the data simply do not support it.
The Organization for Economic Cooperation and Development (OECD) released a study last week measuring tax revenue as a percentage of GDP. Of the 30 countries studied, the United States came in 27th. Taxes are low in historical terms as well - the lowest since the early 1950s. The Kauffman Foundation, which looks at the level of U.S. entrepreneurship, found that in 2010, 340 out of every 100,000 Americans started a business each month. That rate hasn’t changed much in the past few years; it is only slightly higher than in 2007, before the recession. Regarding regulations, Bloomberg News has crunched the numbers and found that the Obama administration has not reviewed or issued significantly more rules than its predecessors.
Or look at competitiveness. The World Bank publishes a report that looks at "Doing Business" across the globe. The U.S. ranks 4th in the world. The World Economic Forum does an annual ranking of overall economic competitiveness. The U.S. ranked fifth. In both these rankings, the countries that score higher are tiny places like Singapore and Finland, with populations often at 5% that of the United States. And these rankings have not slipped much over the last decade. So where has there been change?
Where have we slipped? The answer is pretty clear. Only five years ago, American infrastructure used to be ranked in the top 10 by the World Economic Forum. Now we're 24th. U.S. air infrastructure has gone from 12th in the world to 31st - roads from eighth to 20th. The drop in human capital is even greater than the drop in physical capital. The United States used to have the world's largest percentage of college graduates. We're now number 14, according to the most recent OECD data, and American students routinely rank toward the bottom of the developed world in international tests. The situation in science education is more drastic. Even with the increase in college attendance over the past two decades, there were fewer engineering and engineering technologies graduates in 2009 (84,636) than in 1989 (85,002).
Research and development spending has risen under Obama, but the basic trend has been downward for two decades. In percentage terms, the federal share of research spending - which funds basic science - is half of what it was in the 1950s. In other words, the big shift in the United States over the past two decades is not a rise in regulations and taxation but a decline in investment - in physical and human capital. And investment is the crucial locomotive of long-term growth. In our interview, Michael Spence, the Nobel Prize-winning economist, pointed out that the United States got out of the Great Depression because of the spending associated with World War II but also because during the war, the U.S. dramatically reduced its consumption and expanded investments. People spent less; they saved more and bought war bonds. That surge in investment - by people and government - produced a generation of growth after the war. If we want the next generation of growth, we need a similarly serious strategy of investment."
Posted by Kathy Meeh
The Organization for Economic Cooperation and Development (OECD) released a study last week measuring tax revenue as a percentage of GDP. Of the 30 countries studied, the United States came in 27th. Taxes are low in historical terms as well - the lowest since the early 1950s. The Kauffman Foundation, which looks at the level of U.S. entrepreneurship, found that in 2010, 340 out of every 100,000 Americans started a business each month. That rate hasn’t changed much in the past few years; it is only slightly higher than in 2007, before the recession. Regarding regulations, Bloomberg News has crunched the numbers and found that the Obama administration has not reviewed or issued significantly more rules than its predecessors.
Or look at competitiveness. The World Bank publishes a report that looks at "Doing Business" across the globe. The U.S. ranks 4th in the world. The World Economic Forum does an annual ranking of overall economic competitiveness. The U.S. ranked fifth. In both these rankings, the countries that score higher are tiny places like Singapore and Finland, with populations often at 5% that of the United States. And these rankings have not slipped much over the last decade. So where has there been change?
Where have we slipped? The answer is pretty clear. Only five years ago, American infrastructure used to be ranked in the top 10 by the World Economic Forum. Now we're 24th. U.S. air infrastructure has gone from 12th in the world to 31st - roads from eighth to 20th. The drop in human capital is even greater than the drop in physical capital. The United States used to have the world's largest percentage of college graduates. We're now number 14, according to the most recent OECD data, and American students routinely rank toward the bottom of the developed world in international tests. The situation in science education is more drastic. Even with the increase in college attendance over the past two decades, there were fewer engineering and engineering technologies graduates in 2009 (84,636) than in 1989 (85,002).
Research and development spending has risen under Obama, but the basic trend has been downward for two decades. In percentage terms, the federal share of research spending - which funds basic science - is half of what it was in the 1950s. In other words, the big shift in the United States over the past two decades is not a rise in regulations and taxation but a decline in investment - in physical and human capital. And investment is the crucial locomotive of long-term growth. In our interview, Michael Spence, the Nobel Prize-winning economist, pointed out that the United States got out of the Great Depression because of the spending associated with World War II but also because during the war, the U.S. dramatically reduced its consumption and expanded investments. People spent less; they saved more and bought war bonds. That surge in investment - by people and government - produced a generation of growth after the war. If we want the next generation of growth, we need a similarly serious strategy of investment."
Posted by Kathy Meeh
4 comments:
Pres Obama and his class warfare speech protects the rights of public sector union employees.
"COLUMBUS, Ohio - After nearly 40 years in public education, Patrick Godwin spends his retirement days running a horse farm east of Sacramento, Calif., with his daughter.
His departure from the workaday world is likely to be long and relatively free of financial concerns, after he retired last July at age 59 with a pension paying $174,308 a year for the rest of his life."
Read more here:
http://www.startribune.com/local/135374348.html?page=all&prepage=2&c=y#continue
From WPRI/Associated Press, 12/10/11:
..."Godwin said all the antagonism toward public retirees is misplaced. His pension payout follows 36 years as an English teacher and school administrator in California, with two years' sick-leave credit added for never being absent.
He said lack of accountability on Wall Street and exorbitant corporate salaries are a more justified target of the public's anger.
"Those things I think are a much larger problem than what a public employee is making as a pension," he said. The AFL-CIO labor coalition's Executive PayWatch project estimates chief executives went from making 42 times the average blue collar worker's salary in 1980 to 343 times as much last year."
And.. "An initiative circulating for California's 2012 state ballot seeks to increase the minimum retirement age to 65 for public employees and teachers, and to 58 for sworn public safety officers."
Pathetic response from Godwin. He shouldn't be making more than $50K/year as a pension. That goes for any other public employee.
Chief executives making 343x wages of blue collar workers is also a major disconnect from my view, compare to the 1980 average of 42x, (AFL PayWatch).
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