Harvard competitive strategy guru, Michael Porter, lays it on the line in BusinessWeek:
The stark truth is that the U.S. has no long-term economic strategy—no coherent set of policies to ensure competitiveness over the long haul. Strategy embodies clear priorities, based on understanding the strengths we need to preserve and the weaknesses that threaten our prosperity the most. Strategy addresses what to do, but also what not to do. In dealing with a crisis, experience teaches us that steps to address the immediate problem must support a long-term strategy. Yet it is far from clear that we are taking the steps most important to America’s long-term economic prosperity.
More here. The economy is the new adminstration’s job one. The crisis provides the opportunity to move beyond patchwork and develop the kind of broad economic strategy Porter advocates. Can Obama and company deliver here?
November 7th, 2008 at 12:58 pm
I would conclude from Porter’s analysis that our politicians have been confusing ideology with strategy, adhering to free-market ideology and assuming that strategy will emerge from the choices made by individual players in a laissez faire game. With this approach we have encouraged creativity in both entrepreneurship and financing. But we also have been living off the long-term investment made by our predecessors, without putting our share into the kitty to benefit future generations.
My local school system was managed for decades by a man who felt that frugality was fiscal responsibility. For almost 40 years he invested the bare minimum into our facilities. Now we face 40-years-worth of significant renovation and rebuilding for the future. In the past 10 years, perhaps one third of the schools have received the necessary work. Our real estate taxes have risen substantially to pay for it. Our elderly are crying out that they cannot afford to pay more. They got used to the ‘frugal’ budget during their earning years, and don’t understand why we need to do anything more. They lived off the investments made by previous generations, and did not notice that they were not paying the true cost of their share. At this late date we are scrabbling to put together a plan that will update the rest of our physical plant, in order to prepare our children for the future.
Though some of our residents truly are desperate, I think others could pay more if we rearranged our priorities. It’s to our self-interest: our Social Security checks come out of the paychecks of the current workers. The better the education we give the next generation, the larger those paychecks will be.
Similarly, the USA cannot afford NOT to invest in infrastructure, education, basic scientific research, renewable energy, public health, etc. Even if it feels like we cannot pay for it now, we’re going to have to find a way. Otherwise, our quality of life and our international competitiveness will continue to erode.
November 7th, 2008 at 1:46 pm
I recoil from anything remotely similar to a “plan”.
What we really need is a national cheerleader. The changes that need to be made (work harder, save more, get more education) are not ones that government can really push people to do.
Think about how the US reacted to Sputnik. The years from 1958 to 1963 were a golden age of American education. Was it so because the Federal government pushed it to be, or was it so because individual Americans working together made it so?
Why can’t we react to Indian and Chinese competition the same way we did to the Soviets way back when?
November 7th, 2008 at 2:31 pm
a couple of suggestions:
1. Stop taxing income, and instead tax consumption
2. Don’t throw money at losing industries (a la GM,Ford,Chrysler).
Why not take that money and put it towards businesses/training/education that are in growth industries such as alternative energy,biotech,technology, and so on.
We think we have to throw money at these dinosaurs all in the name of saving jobs. I know that times are tough, but I’ve always found that putting off the inevitable is always the wrong decision.
Stop clinging to the past, let’s take our medicine now!
November 7th, 2008 at 6:25 pm
[...] Tagged deindustrialization, federalism, manufacturing, resources Richard Florida points out that the US has no long-term economic strategy. [...]
November 8th, 2008 at 7:32 am
I agree wholeheartedly with Porter’s basic premise. Yes, we need a plan. Tax reform is great, too. However, I’m finding his reference to “onerous environmental regulation” to be almost anachronistic. Welcome to the 21st century, Dr. Porter. Any comprehensive plan must include consideration of environmental impacts and true costs. In fact, global warming may provide the United States with its next great period of innovation and global competitiveness. Regulation is not always evil.
November 8th, 2008 at 6:01 pm
Buzzcut recommends: “work harder, save more, get more education”
But that seems to be the reverse of what our government wants of us in the current situation:
1. Work harder! – But unemployment rates are going up. So work less hard, and leave more work for others to do.
2. Save more! – No spend more! Wasn’t that why we all received a tax refund a few months ago? So we could spend our way out of a potential depression?
3. More education! – No, that cuts down on free time and spending opportunities. Unless, of course, it is educational travel. The airlines are eager for us to fly again, to anywhere, for any reason, …