A Better Offer From China, Unless…

New York Stock Exchange on Wall Street in New ...

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In today’s New York Times Business Section there is a story about a solar panel manufacturer moving from Massachusetts to China, taking away 800 jobs and squandering millions in financial help provided by Massachusetts.  Briefly, a couple of things to note about this.

First, note that the jobs didn’t move from Massachusetts to Texas or South Dakota or Wyoming.  They moved overseas.  In some ways, the structure of government in the United States is outdated and handicaps competition.  We have politicians who pit state against state, arguing for tax and regulatory advantages, when the competition is not state against state.  We operate in a global economy more so now than ever before and that trend will only strengthen, not weaken.  

Politicians, especially politicians on the right, argue that states need to be “open for business” and eliminate “uncertainty” in the marketplace.  That all sounds great, but they base that argument on naive interpretations of competitive advantage in today’s economy.  This is 2011, not 1950.  And if you’re looking for certainty are you more likely to find it in Wuhan, China, or Devens, Massachusetts? 

These red herrings employed to manipulate voters have to go.  As conservatives roll back the clock, the rest of the world is racing ahead.  It will be hard for us to be an economic leader when we are following countries like China and India for jobs and growth.

The second issue that stands out in this story is the economic assistance that China provides the solar panel manufacturer.  Unfair or prudent?  In the United States we have politicians — again mostly from the right — who still complain about TARP and the stimulus programs as a step toward socialism and “tyranny.”  (Tyranny in quotes…I’m convinced no one knows what they hell they are talking about.) 

By coincidence, on the same page in today’s paper is the story “A.I.G. Pays Its Full Debt To The Fed.”  General Motors is back on its feet, too, in fact the entire U.S. auto industry is pulling itself together.  The financial industry…well, no need to bring that up, it will just tick off the average thinking American who sees our wealth trickling up to that sector again.  The road to tyranny.

We can’t get support to save what’s left of our domestic economy without whining and (literally) crying about it, unless, of course, you drill for oil or dig for coal…old economy industries…or perhaps ration health care in the insurance industry.  So how do we expect to compete in emerging economies that do collaborate with government to support investment and growth? 

Of course American business has always asked for and still receives American tax breaks, but today these breaks do little to ensure stability in local economies.  American business is more likely today to move investment opportunities overseas than ever before, effectively taking the tax breaks and incentives that they get with them.  No one wants to talk about that — again, especially on the right (what is right about the right?) — but it is a fundamental problem standing in the way of economic recovery and growth here.

Look at General Motors.  Many thousands of jobs saved directly, certainly many, many more indirectly, and quite possibly an industry that has been an American economic mainstay saved with it.  More importantly, however, is the fact that an important economic domino did not fall.  The economic repercussions of a failed GM or auto industry would have been devastating.  As it turned out the auto industry recovered better than economists expected and the United States might even earn a profit in the end. 

But even if the US Treasury does not earn a direct profit, the economy will.  Our investment pays off in a stronger GDP and better growth.  Think of compounding interest and growth.  Doing what we can as people of our government to invest in our common economic interests is a respectable way to use the tool of government.

American needs to be more nimble, especially in the world of business and economics.  Conservatives are by definition less forward-thinking than others, but even supposedly more-progressive Democrats need to wake up.  The economic world is not at the end of economic history, economies will evolve and grow.  Our unfortunate disadvantage in the labor market means we need to find opportunities that will command the compensation levels once taken for granted in our past.

How do we do that?  First we need a fresh outlook.  Relying on economic and social reactionaries has not helped.  Since Republicans began blaming government for problems real and imagined and began a renaissance in favoring old economies, the United States has lost tremendous ground.  We are not better off now than we were 30 years ago, not at federal, state, or local levels.  The American middle class is losing…fast.  Incomes measured in real dollars have remained flat at best, most have fallen.  Prospects for the future look bleak at the moment.  We keep making the same mistakes, electing the same failed policies.  We need a fresh outlook and better leadership.

We also need to reinvest in America again.  This would seem like a no-brainer, especially to the GOP who claim to know something about wise investment.  Unfortunately by vilifying government, people don’t respect government as a responsible and necessary place to invest part of our resources.  Yes…taxes. 

We shouldn’t have a “barely get by” mentality, we should have a “whatever it takes” approach to success.  Schools from grade school through universities should be strongly funded…and respected.  Creativity and ingenuity were keys to American exceptionalism; it spurred entrepreneurship and responsible hard work.  Do we still have that in this country?  You tell me.  Look at the attitudes in America today, look at our social environment as much  as our economic one.  What do you see?

We have opportunities to rebuild our infrastructure and we need competitive infrastructure.  Keep in mind that the world competing against us is mostly new!  Infrastructure in the United States is aging and failing.  Can we leave this to the private sector?  No.  Public goods need public support.  The rest of the world is winning on this level while we fall further behind.

The way we choose to compete today is not working and it is supported by a simple-minded, outdated form of rhetoric that does not promote our interests in either the short term or the long term.   It takes hard work to succeed, but we need to know where to begin that hard work.

Too often we elect the people who seem to speak simply to our common sense, but if that common sense is steeped in outdated assessments of our strengths and advantages, we stand to fail.  American business already understands this.  They move to places offering better economic advantages.  These are advantages that in some ways we no longer have a competitive edge, such as wages and even skills. 

So we need to begin making ourselves better offers than those coming from China and elsewhere, we need to look ahead patiently and plan for success.  This includes retooling our physical infrastructure and encouraging our human capital with opportunity and security.  If we let red tooth and claw free market capitalism rule, the majority of America loses and our wealth and advantages will shift to places that are already better positioned than we are for the future.

It is time to embrace a more progressive and forward-thinking approach to our future.

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