The headlines about the economy in the US are terribly worrisome.
Labor productivity growth has declined steadily from the early 2000s to a recent figure of 0.5%, which is close to a 40-year bottom.
The economy has been growing at an anemic rate of just barely over 1% in the past 12 months. The “recovery” in the economy since the last recession is by far the weakest since World War II.
Business investment in recent quarters has actually turned negative. It’s down 2.2% in the second quarter, which was also the fifth straight quarter in which businesses drew down inventories. Indeed business investment has been so weak in recent years it now subtracts from GDP growth.
As important as economic growth is and as potent as it typically is in presidential campaigns, the question arises: why have the two main candidates shown such meager leadership in presenting compelling plans to strengthen America’s economy?
The candidates and their supporters have made a big deal of how awful their opponent is, but they’ve been unusually short on what they would actually do to transform and strengthen the economy.
The campaigns say they have plans, and they do. Here’s a short description and comparison of their positions: Comparing economic agendas Hillary Clinton & Donald Trump
But, at a time when we need a vision to move us forward fundamentally, it’s hard to see how these ideas will do much more than, at best, affect the economy at the margin. And, given the deep partisan differences that exist, it’s also hard to see, whichever of these candidates wins, any of these ideas coming to bear or having a real impact.
Further, given our huge and growing debt, one wonders where the funds will come from, for example, to inject significant and telling increases in infrastructure spending and, indeed, whether any feasible increase would much boost the economy. On the other side, we have proposals to threaten trade barriers to make trade fairer. More trade through fairer trade is certainly a worthy goal, but limiting free trade is not an effective growth strategy. So, even if one of these candidates could get his or her way, it’s not clear at all it would help much.
Could a president lead us culturally or socially to be more productive as a people? Are there other ideas, such as those of the House leadership, that would lead to greater growth and wages? That’s possible, but it’s certainly not convincing to voters generally that these candidates would be effective at much beyond announcing their paper plans.
The one thing I know a lot about from decades of research and experience is this: significantly improved education proficiency and workforce development could dramatically improve our economy and its prospects for our people.
The better paying jobs increasingly involve knowledge and skills many in the workforce do not have. A dwindling percentage of adults are working or looking for work. The workforce is less efficient. And, as mentioned above, our productivity and business investment seem to be dwindling.
I see nothing but rhetoric and/or throwing spending without accountability at the problems of our underprepared workforce. There are no serious proposals to get better results out of our education system. Rick Hanushek and others have shown that modest, steady increases in education proficiency could have dramatic effects in improving our GDP.
Happily, also, we have jobs, and we could have more, if we applied more effective policies and strategies to create them. But, as to jobs that are currently available, many of our graduates and workers are frequently unprepared to take them on. Smarter coordination between business and higher education could turn the tide. Some companies, mostly in technology, are already experimenting with stackable certificates and other approaches. A president could turn these successes into a major, broader, and effective strategy, much of which could be pushed with little or no new federal spending.
But, instead, we mainly get huge doses of nastiness from each side about the opposition. We get old and stale policy plans. Yet, we get little in the way of doable, promising strategies and truly strong personal leadership that could both draw popular support and make a real difference in improving the economy and how it works for our people.
Demand more, friends. The nation deserves more.