9 Practical Steps to Producing Prosperity
This is a followup to an earlier blog post, "The 5 Challenges America Must Tackle in 2015."
The basic strategy for stimulating economic growth is no mystery. It centers on creating an environment that encourages the investment and risk-taking essential to actuate business expansion, entrepreneurship, innovation, and productivity.
Moreover, the properties of an ecosystem for producing prosperity and growth are time-tested and clear. They point to the practical steps we must take:
- Providing greater access to new customers. Customers are king. Without access to new ones, investors, innovators, and risk-takers look elsewhere to grow business and create jobs. America is losing the race to conclude international trade agreements that provide our enterprises with access to 95% of the world’s customers who live beyond our borders and are eager for American-produced goods, services, and solutions. Let’s resolve to expand trade. We can do that by concluding the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), and providing the President with fast-track trade promotion authority (TPA).
- Instituting a sensible tax code that rewards investment and productivity. An onerous tax system is a well-known killer of jobs and investment, particularly in a borderless global economy where investors and job creators have so many options where to establish operations and deploy capital. America has the highest business tax rates in the OECD and a tax code of astronomical complexity and gamesmanship. Let’s resolve to make our tax system less burdensome, fairer, and more competitive. We can do that by taking the modest step of lowering our rates—even if it’s just to the middle of the OECD spectrum—and cleaning up egregious forms of tax gaming, abuse, and disparity. Then let’s keep the rules in place so enterprises can plan sensibly to produce more jobs and greater tax receipts.
- Assuring an efficient and cost-effective regulatory system. Necessary, clear, and efficiently administered rules are essential to the proper functioning of society and its business system, but bad rules and bungling regulatory networks are their worst nightmare. Even Europe finds the U.S. regulatory system to be a byzantine, productivity-sapping mess. America’s competitors love it that way. Let’s resolve to achieve a more coherent regulatory system. We can do that by combing through our mountain of codes to identify and rid the system of useless, outdated, contradictory, and counter-productive rules; by reducing bureaucratic overlap and producing more coherent oversight; by focusing on rules that achieve necessary performance-based outcomes rather than imposing bureaucrat-generated solutions; and by generating better partnerships and communication between business and regulators. Let’s be leaner, faster, and more consistent
- Building a properly-skilled workforce. A country’s economy is lifeless without a properly-skilled workforce. The needs of today’s technology-based economy require that a nation’s education and job training systems produce workers who are competent in science, technology, engineering, and math (STEM), along with a large portion of world-class expertise. Yet, the interest and performance in STEM studies of our students still lags their international peers. America’s training programs are churning out workers deficient in the technical disciplines and other employment-critical skills. Meanwhile a multitude of good paying jobs sits unfilled. Let’s resolve to ensure that America maintains the highest-skilled and most productive workforce on earth. We can do that by establishing model STEM curricula and teaching techniques, and modernizing our job training system, and inspiring the nation’s youth to achieve educational excellence with the same zeal we reward in athletic prowess. Moreover we can perform far better at producing good teachers, high-performing schools, and fruitful training programs. That starts with helping underperforming teachers improve their craft or else help them find new lines of work, along with providing students with educational options so that they aren’t stuck in failing schools.
- Providing greater access to capital. The economy has ample cash, but it’s not getting to the small and medium-size enterprises that create the majority of new jobs in America. Despite record-low interest rates, mixed signals from Washington are creating chokepoints in capital pipelines. On one hand, policymakers are telling financial institution to lend; on the other, the government’s rules and requirements are making it much harder to do. Let’s resolve to remove artificial impediments to getting small and medium sized enterprise the capital needed to thrive. We can do that by ensuring financial market efficiency and integrity through a modern regulatory structure that is lean, agile and doesn’t smother lending and investment with ill-conceived rules and added costs. This must be combined with increasing the supply of capital through tax policies that reward domestic savings and investment; instituting sensible legal reform to stop scaring away foreign direct investment for fear of unwarranted and excessive legal risk; and promoting coherence between U.S. and foreign financial rules so that America doesn’t lose out from regulatory arbitrage. We also need to get with the times by promoting alternative means of linking lenders and borrowers, such as utilizing the Internet, crowdfunding and other modern platforms that ease transactions costs, speed processing, and promote access. We can do take all of these steps while assuring the market transparency and integrity of financial markets the country demands.
- Energy security and excellent infrastructure. Few national assets are as conducive to economic well-being as access to an affordable and reliable energy supply, as well as modern infrastructure to keep our people and goods on the move at home and throughout the world. We have seen the economic benefits of America’s remarkable new energy abundance. Yet it remains uncertain we will seize the opportunity it brings. America still lacks a comprehensive strategy to capitalize fully on the opportunity; and we have failed to mirror our improving energy picture with a credible campaign to modernize America’s crumbling infrastructure. The American Association of Civil Engineers gives our infrastructure a score of D-, citing the need for over $3.6 trillion in investment by 2020. Let’s resolve to fully make America’s energy and critical infrastructure systems the best in the world. We can do that by coordinating government policy to promote an “all of the above” energy production and world-leading efficiency, along with modernizing and securing our power grid. This requires a policymaking apparatus that understands affordable energy is a virtue not a vice, as are sensible policies to protect the environment and human health. Moreover, we must develop ample new financial resources, sound policies, and creative partnerships to upgrade our critical infrastructure in order to move people and get goods to market rapidly, seamlessly, and affordably.
- Fiscal balance. The destructive nature of America’s massive fiscal imbalance cited earlier is well known. It’s hard to sustain affluence and influence when debt tends to outrace growth in the real economy in both good times and bad. When Congress asked former Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, to identify the greatest threat to America’s national security, his answer was the national debt. That says it all. Let’s resolve to stop mortgaging our children’s future by excessive borrowing. We can do that by addressing the problem sensibly, slowly, and surely. First, by committing to a growth strategy that is still the best means of keeping the national treasury well-stocked, but must be accompanied by careful entitlement reform and sensible constraints on unnecessary spending as well as by laying out a long-term plan of sure and steady deficit and debt reduction—similar to a home mortgage. The speed of deficit and debt reduction isn’t nearly as important as its certainty.
- Good governance. No economy can thrive without a capable public sector that competently fulfills the necessary and proper roles and missions of government—among them ensuring the rule of law, a healthy civil society, and a safe, secure, and fertile operating environment in which hard work is rewarded and prosperity can thrive. Let’s resolve to make the public sector more productive and worthy of the people it’s constituted to serve. That starts with a polity that is demonstrably less partisan and more patriotic; one that looks to national long-term interest rather than the ambitions of the next election. It requires a government that knows and respects its rightful roles and practical limits and performs its duties with maximum efficiency. A first step is instituting productivity measures for governmental departments and programs. We need to bring private-sector level discipline and accountability to a government apparatus that sees among its primary duties as fostering sustainable, private-sector led economic growth.
- Innovation. America has been one of the principal architects of both the Industrial and Information revolutions. The quality and ingenuity of our products, services, and solutions are the envy of the world. Our inventiveness and entrepreneurship remain, as always, the heart and soul of the American economic miracle. Let’s resolve to sustain the greatest innovation system known to man. We can do that by many of the aforementioned resolutions, along with making major public and private-sector commitments to research and development, expanding the nation’s roster of innovation clusters and hubs, and creating an intellectual property protection system that incentivizes invention and improvement through both vigorous competition and collaboration.
None of these steps can be achieved without overcoming obstacles, managing their side-effects, and striking responsible balances among competing interests. If the actions were easy they would be accomplished already. All of us know that meaningful resolutions are demanding. Nothing is easier, of course, than finding a multitude of reasons to maintain an unsatisfactory status quo and so avoid the discomforts of change—but we also know that’s no excuse.
By exercising a determined will to conquer our inertia, we can transform January’s personal and national “to do” lists into next December’s “done list.” Even if we can’t complete it all we can at least make a very good start. If so, then 2015 will be a time not only of outstanding individual improvement but national progress as well.
That would make it a year for the ages!