The energy boom: According to the latest data, American oil production has been increasing at the rate of more than 10 percent a year and gas production at the recent rate of more than 5 percent. The United States leads the world in natural gas and, by some estimates, could surpass Russia and Saudi Arabia even in the former later in this decade. The comparative advantage the U.S. enjoys in any industry that requires natural gas as a raw material or cheap gas-produced electricity is, for the near-term at the least, now insurmountable.
The manufacturing rebound: American manufacturing, though down substantially as a fraction of world totals and of the overall U.S. GDP compared with a decade or two ago, has stabilized and in fact ticked up slightly in the last couple years. We are now in a clear No. 2 position behind China, with the latter producing $2.6 trillion in manufacturing value-added according to the most recent annualized figures in comparison with $2.0 trillion for the United States. But the U.S. share of the world total has nudged up slightly to just under 18 percent and there is considerable reason to think that the North American energy revolution will continue to “bring jobs home” and otherwise create manufacturing opportunities that had been rather rare in the early years of the 21st century otherwise.
The innovation edge: America continues to lead the world unambiguously in overall spending on research and development, on new patents, on the quality of its higher-education system, and in computer, aerospace and pharmaceutical innovation. And despite the logjam on immigration reform, its continued reputation as a melting pot and its modest but positive population growth rate (especially together with the growth of our North American partners) give it easily the best demographic profile and trajectory of any major power on Earth.
Put all this together, and a few important conclusions emerge.
First, we need not panic about today’s deficit but we still need reform on entitlements and tax policy—with each political party compromising more than it currently would like on sacred political cows—so that the situation remains acceptable come 2020 and beyond. Barring that kind of compromise, our deficit-to-GDP ratio will begin to climb once again.
Second, while the Murray-Ryan budget deal of 2013 stopped the indiscriminate sequestration axe for a while, we need a sounder budget deal for the short term since sequestration is due to return in 2016 (and in fact, the deal’s budget levels in 2015 for defense, and for domestic discretionary accounts that fund infrastructure development and science research and development and education, are already too low).
Third, we need immigration reform to keep our workforce dynamic, and if a big deal proves elusive in the short term, smaller deals on issues like increasing quotas for H1-B visas are long overdue.
Fourth, education reform at home, a slow and difficult project to be sure, needs to continue, with experimentation in various ways as we seek to improve our international competitiveness, with a particular eye on science and math. The White House can help further by establishing a high-profile project to make science and math education seem more alluring to children by showcasing the amazing accomplishments of Americans whose stories should be inspiring to our youth.
Fifth, and even more so in light of Russia’s ongoing threat to Ukraine, and also given the uncertainty that Iran’s nuclear program continues to cause for Middle Eastern markets, we need to get moving on energy, notably by allowing and encouraging the export of American natural gas to economic partners in Europe and Asia (action in particular is needed to speed the final approval process for the firms granted export licenses for liquefied natural gas).
Sixth and finally, despite our challenges, we need to avoid talking ourselves down. More than a decade of harsh partisanship in Washington, D.C., and profound anxiety across the country over our national future—a longer stretch of national doubt than we had even in the 1970s, arguably—have taken their toll. But we are doing much better than the common wisdom often holds, and that should help us face everyone from Vladimir Putin and Ayatollah Khamenei to an increasingly assertive China with confidence and rational optimism, not gloom and doom.
Read more: http://www.politico.com/magazine/story/2014/04/the-great-american-comeback-106060_Page2.html#ixzz30AeHR9IH
No comments:
Post a Comment