My last blog post touched on the issue of poverty in the United States of America. We saw that one of the major causes of poverty in the USA is globalization. Coming from that background, in today’s blog post, we have to start by appreciating that the only way to deal with the negative effects of globalization on USA’s economy is by improving the nation’s economic competitiveness. In a globalized world, only the nations that are highly competitive economically will be able to prosper, and protect their people from the potential vagaries of globalization. And that question, of how we can improve the economic competitiveness of the USA, is the one I will be attempting to tackle in today’s blog post.
We have to start by acknowledging that some of the options for improving economic competitiveness that are available to other nations are not available to the USA. For instance, whilst other nations have the option of trying to improve competitiveness by lowering the cost of labor, that option is really not open to the USA (at least as far as manufacturing labor costs go). The USA can’t, for instance, hope to compete with a nation like Vietnam or Ethiopia in lowering labor costs: for those are nations where you have people working for as little as a couple of dollars per day. But there are lots of other things that the USA can do to improve economic competitiveness.
One thing that the USA can do to improve economic competitiveness is by investing heavily in Research and Development (R&D).
Another thing that the USA can do to improve economic competitiveness is by investing heavily in education: and ensuring that, in the first place, what we are looking at is education that empowers learners to deal with the challenges of the 21st century.
Yet another thing that the USA can do to improve economic competitiveness is making changes to the financial system, and getting rid of the blockages in the financial system that slow down progress. This is important, because experience has shown that the USA can actually live quite comfortably simply by serving as a ‘financier’ to the rest of the world.