LifeZette asked leading economic analysts and scholars to address one question: Is America’s economy in decline?
There was near-unanimous consensus that the rising, uncontrolled national debt, development of a regulatory climate hostile to business, and poor trade conditions have seriously imperiled the economic health of the U.S. economy.
“America’s secular stagnation also no doubt results from the decline of a national manufacturing base that’s crucial to healthy levels of productivity growth and innovation.”
These conditions have already had a terrible impact on the American labor force — but nowhere more so than in manufacturing.
There were just over 12 million Americans employed in manufacturing in September 2016, down roughly 30 percent from the 17 million workers employed in the industry at the start of the year 2000, according to the Bureau of Labor Statistics.
Here is what the experts said on the direction of the U.S. economy and the impact on the labor force:
Soon the national debt will top $20 trillion. Three-fourths of that has been borrowed from domestic and foreign investors. The rest is money the government has “borrowed” from government trust funds, like Social Security. In total, the gross national debt already exceeds 100 percent of what the economy produces in a given year (GDP) — and taxpayers are on the hook for all of it.
This excessive debt is highly problematic. The Congressional Budget Office warns that the nation’s current debt trajectory will lead to higher interest costs, lower wages and productivity, a reduced ability to deal with national security and economic challenges, and a greater risk of plunging into a full-fledged Greece-like fiscal crisis.
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Moreover, it’s immoral to consume today’s resources and leave younger and yet-unborn generations with the bill.
The nation’s fiscal condition is weak not because of insufficient taxes, but because of out-of-control government spending, especially on old-age and health care benefits. To reduce debt, lawmakers should enact a responsible budget that controls spending.
Romina Boccia is the deputy director of the Thomas A. Roe Institute for Economic Policy Studies and a Grover M. Hermann Research Fellow at The Heritage Foundation.
George Washington understood that the United States needed domestic manufacturing as well as agriculture in order to be prosperous and independent.
The Constitution was adopted to “promote the general welfare” of the people of the United States. For nearly two hundred years, economic policymakers took that as their lodestar.
This philosophy guided our nation and transformed a raw wilderness into the greatest producer of industrial and agricultural goods on Earth.
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By the latter half of the 20th century, patriotism fell out of fashion among the elites. Globalism replaced nationalism. Instead of citizens of a unique, self-governing nation, they saw themselves as part of a global economy.
They justified offshoring our manufacturing industries and importing foreign guest workers as “free trade” and inexorable economic forces.
But in truth, this is not free trade, but labor arbitrage — replacing American workers with poorly paid foreign labor. Nor is it inevitable — it is the result of policies made by officeholders in thrall to special interests.
The national interest — and the general welfare of the people of the United States — must replace utopian theories of radical globalism, or else America will not only decline, it will cease to exist in anything but name only.
Curtis Ellis is the executive director of the American Jobs Alliance.
Even a former top Obama adviser like Larry Summers views the U.S. economy’s recent troubles as downright historic. He calls America’s plight “secular stagnation,” and his version holds that the nation has become so incapable of generating healthy growth that its only chance for sparking any growth is playing with fire — inflating credit and spending bubbles that are doomed to burst disastrously, as in the 2000s.
Summers — and many others — blame secular stagnation on developments beyond any government’s control (like slowing population and therefore labor force growth) and those that poor policies have fostered (like growing inequality).
But America’s secular stagnation also results from the decline of a national manufacturing base that’s crucial to healthy levels of productivity growth and innovation. Thanks in part to a record trade deficit that could approach $900 billion this year, U.S. industry has actually shrunk by more than 4 percent in real terms since the recession’s 2007 onset. Not surprisingly, therefore, America’s overall labor productivity during the current sluggish expansion (which began in mid-2009) has improved by only a third as fast as during the bubble years — which were no productivity barn-burner.
Moreover, manufacturing accounts for some 70 percent of the nation’s private-sector research and development spending and 90 percent of its patents. So good luck trying to remain a high-tech economy without a major manufacturing resurgence.
Contrary to conventional wisdom, there’s nothing inevitable about manufacturing stagnation to this degree. Trade policy overhaul in particular could reshore literally hundreds of billions of dollars in production in the advanced sectors that have been weakened by offshoring-friendly trade agreements and predatory foreign practices. Staying the current policy course, however, is bound to bring an economic future that will foster nostalgia for today’s secular stagnation.
Alan Tonelson, who writes on economic and security policy at RealityChek, is the author of “The Race to the Bottom” (Westview Press, 2002).
When it comes to regulation, the question isn’t whether the burden on Americans has risen — but by how much. Since the start of Barack Obama’s presidency, regulators have imposed new red tape that costs consumers at least $100 billion annually. And that doesn’t even count the $70 billion in rules created by President Bush before him.
These estimates cover only costs that can be quantified and put into a spreadsheet. No one can count the more intangible losses such as: slower innovation in new technology (thanks to Federal Communications Commission rules); less investment in small businesses (thanks to Dodd-Frank restrictions); and even curtailed freedom of conscience (thanks to Obamacare mandates).
Unlike direct taxes, regulatory burdens are hidden from most Americans. Their costs are built into the prices we pay, the paydays we miss, and the opportunities that never appear. And without real change, the burdens of regulation will continue to grow.
James Gattuso is The Heritage Foundation’s senior research fellow in regulatory policy.
Analyzing the state of the U.S. economy is the first installment of this five-part series on the question of whether America is truly in decline. The series will also feature leading experts on culture, the immigration system, crime, foreign policy, and the U.S. military.