What’s wrong with this picture?
China has now overtaken Japan as the world’s second-largest economic power. The news came with the inevitability we have come to expect, given their record of 10 percent annual growth. This rise from poverty has never been equaled in world history. Two hundred years from now, historians will remember this as the most important event of our times.At almost the same moment came the news that Germany’s economy is charging ahead, growing faster than any other European economy. It is being powered forth by the reforms they have undertaken in the last five years.Those reforms ditched the old European social welfare system in favor of smaller government, lower taxes, less regulation and more market freedom. Germany is no longer the sick man of Europe.
And yet here in the United States, we are looking at the prospect of continued economic stagnation, fearful that we will continue to lose our manufacturing base while our infrastructure deteriorates, and less confident than we have ever been for our children’s future.
What’s wrong with this picture? Simply put, both China and Germany are being powered forward by the historic American model for growth which we seem to have abandoned for the moment. Smaller government, lower taxes, less regulation and market freedom work. These are all the lessons we used to advocate to the rest of the world with pride and confidence. Those policies were “Made in the USA.”
Ironically, we are now following in the tracks of a stagnant Japan and the failing European economies — Portugal, Italy, Ireland, Greece and Spain, otherwise known as the PIIGS. More dramatic still, those economies have or will soon hit the wall, as Greece has.
The pattern of excessive government spending, mounting taxes, stifling regulation and an indifference – even hostility – to the needs of the business community continues, even after it is obvious that such a road leads nowhere.
You would think the Obama administration could see that its economic plan simply is not working. We are increasingly mired down with even larger government deficits, higher implicit taxes through the loans we are racking up, the nationalization of health-care insurance, not to mention the auto industry, student loans, etc.
Although we seem to have lost our confidence, America still stands at the pinnacle of the world economy. We are the largest and most successful economy.Though we have lost much of our manufacturing base, we are still the world leader in manufacturing. But we are heading in the wrong direction and we need to get back on track.
For a number of years, I professionally advised governments on how to grow their economies. There is no great secret about how a nation can thrive in today’s economic world. A country needs to: 1) stress English language usage and good low-cost education – particularly technical education 2) stress competition under the rule of law 3) keep taxes low, transparent and simple 4) keep its fiscal house in order and 5) build a consensus around these points between labor, management and government.
The really difficult part is summoning up the political will to undertake these measures. We need to remember what we have been teaching the world and get back to work implementing these lessons here at home.
We can and must do so – for our children and for our country.
Bob Bestani, a businessman and economist, was a candidate in the recent Republican primary in the 1st Congressional District.