Great strategy requires a solid grip on the situation. Here are five situational facts Obama missed in today’s economic address at Knox College.
Urgency is needed to prevent a second recession.
China is slowing. Europe is imploding. Rising interest rates are slowing the housing recovery, with continued government cutbacks strengthening the headwinds against US private sector recovery. We risk a double dip recession like the US Great Depression or the triple dips being observed in Europe. Therefore infrastructure investments, retraining of workers, and revitalization of manufacturing and aging cities are a necessity, not an option.
Overseas job creation is the new reality.
With the middle class growing across the globe, US companies should be investing in jobs abroad. Therefore our economic strategy should be to maintain US headquarters and create new companies – not prevent overseas job expansion. Corporate tax reform and incentives for the true job creators (versus the hedge fund investors, law firms, etc) are needed.
Obesity is the elephant in the room.
One-quarter of Americans are obese – driving healthcare costs in the wrong direction as new health policy tries to reverse the trend. We need public support and financial incentives to get more Americans off their couches. Obama should never talk about healthcare costs without reminding all of us to make healthier choices.
A global economy understandably lowers some wages – but need not lower all wages.
Wages are flat because of global competition – but we’d have less flattening if playing fields were level. We would not let Pittsburgh go back to black skies or allow apparel manufacturers to risk worker limbs and lives. So why, in 2013, do we sign trade agreements that make China the Pittsburgh of 1940 or Bangladesh the mill towns of Charles Dickens day? As important, why do we buy these damaging products as consumers?
In protected US markets – think local retail and fast food – higher wages will not reduce competitiveness and would in fact benefit the economy. This is the argument for a higher minimum wage and for buying from Costco ($40k starting full-time salary) versus Walmart.
Crony capitalism is to an economy what cancer is to the body – deadly if not contained or cured.
Our pay-to-play system, coupled with politicians creating non-competitive districts, undermines our economic health more than the forces that Obama addressed. Why? Crony capitalism prevents our government from responding effectively to a changing set of economic forces.
China is wisely trying to pull political influence out of its economy as its led to unproductive investments and decisions. So why are we as citizens letting our economy become more supercharged with political influence?