America's Long-Term Future
© Jesse Alan Gordon, 1995
This article provides a framework for identifying and promoting policies which make America more internationally competitive in the long term:
- 1) Identify our inherent advantages based on our "national character";
- 2) Identify industries and activities which exploit those inherent advantages;
- 3) Identify policies which foster those industries and activities.
This framework seeks policies in a context of America's "relative decline." Our share of the world economy has declined steadily, from 31% of the world's GDP in 1960 to 26% today. Our trading partners have grown faster than us, and this trend seems likely to continue. Our relative decline marks the success of our ongoing policy to foster capitalist democracies worldwide, but requires that we consider how to compete in a world of equals. This article focuses on the contemporary US, but the framework could be applied to other countries or other time periods as well.
AMERICA'S NATIONAL CHARACTERISTICS: Step 1 of the framework:
- FRONTIER MENTALITY: We favor innovation and being avant-garde.
- We prefer the new to the old, as did our ancestors who immigrated.
- INVENTIVENESS: "Yankee ingenuity" was necessitated by the frontier.
- We have more patents, and win more Nobel Prizes, than our competitors.
- ENTREPRENEURIALISM: We favor risk-taking and start-up enterprises.
- 98% of US establishments are small businesses (under 100 persons).
- We have our share of, but by no means dominate, multinational corporations.
- American banks are small in comparison to the banks of our competitors.
- POLITICAL & LINGUISTIC UNITY: The US is "monocultural" (same everywhere).
- Our large competitors have internal borders, or ethnic or linguistic regions.
- Our language and currency are the world's international standards.
- THE CONSTITUTION & EQUALITY OF OPPORTUNITY no longer define our character.
- These advantages have passed, since our competitors are similar to us in these issues.
- OUR NATURAL RESOURCES no longer define us, except that we are geographically large.
- We are not well-endowed when compared with our competitors per area.
AMERICA'S COMPARATIVE ADVANTAGES: Step 2 of the framework:
- HIGH TECHNOLOGY: Requires inventiveness and risk-taking.
- We get early leads and lose the lead when product's innovativeness fades.
- We have increased our share of high-tech exports despite our GDP decline.
- NEW PRODUCTS AND R&D: Requires same inventiveness as high-tech.
- The steel industry collapsed because we tried to preserve existing technology.
- SMALL BUSINESS: The home of entrepreneurialism and our economic engine.
- 56% of us work for small businesses but policy focuses on big business.
- POP CULTURE: Our movies, music, TV, clothes, toys, and food are "in" worldwide.
- Foreigners want to learn American culture, and to use international English.
- EXPORTING DEMOCRACY: Capitalist democracies don't go to war with each other.
- All recent US wars have been in non-democracies in the developing world.
POLICIES PROMOTING OUR ADVANTAGES: Step 3 of the framework:
- NEGOTIATE AN INTERNATIONAL PATENT SYSTEM: Promotes new products.
- Incorporate the existing Patent Cooperation Treaty within GATT.
- Add copyrights, biological entities, software, and entertainment to the PCT.
- SIMPLIFY TRADE REGULATIONS: Allows more cultural exports.
- GATT focuses on legislative barriers; now focus on regulatory hurdles.
- AVOID PROTECTION OF "MATURE" INDUSTRIES: Favors start-up enterprises.
- "Infant industry" argument doesn't apply in a well-developed economy.
- "Job protection" argument takes the short-term view & hurts small business.
- "National security" argument doesn't apply in a physically big country.
- REMOVE DISINCENTIVES AGAINST SMALL BUSINESSES: Favors 98% of US.
- Favor small business to balance lobbying and constituencies of big business.
- LOOSEN CREDIT: The Fed's "tight money" policy hurts small business growth.
- REDUCE EMPLOYMENT TAX PAPERWORK: It's a disproportionate burden.
- AVOID MANDATED BENEFITS: Small businesses pay disproportionately more.
- TAX COMPANY BENEFITS: Untaxed benefits strongly favor big business.
- MAKE CAPITAL GAINS DEDUCTIBLE: But to encourage risk, not large profit.
- REINTRODUCE INCOME AVERAGING: Allows small business multi-year R&D.
- COMMERCIALIZE OUTER SPACE AND DEEP OCEANS: Exploits "frontier mentality."
- Rent the space shuttle and space station for business purposes.
- Developing the "space plane" for eventual private transportation businesses.
- Explore the sea floor for mining, energy, or other commercial applications.
- RAISE THE GAS TAX OR INSTITUTE A BTU TAX: Opens a new high-tech industry.
- Our competitors have begun the "energy efficiency industry" without us.
- Energy is cheap here, and energy efficiency is low, compared to competitors.
- Government cheap-energy policy stops our entry into a big high-tech field.
- PROMOTE INTERNATIONAL ENGLISH: Helps pop culture and exports democracy.
- Provide international development aid for English-language schools.
- Promote foreign tourism here by reducing visa requirements.
- Fervently pursue anti-tourist crime and other forms of xenophobia.
- "MAINSTREAM" IMMIGRANTS INTO ENGLISH: Fosters linguistic unity.
- ENCOURAGE "GRASSROOTS" INTERNATIONALISM: Socially export democracy.
- Putting a good face on Americans abroad promotes the US model.
- Sponsor "grassroots" aid projects instead of large-scale industrial projects.
- Allow tax deductibility of foreign travel to encourage mixed business trips.
- Teach more foreign languages to encourage more American tourism abroad.
- INTERNATIONALIZE THE MILITARY: Militarily export democracy.
- Acting as the unilateral "world cop" will bankrupt America.
- Use military alliances for all wars and "internationalize" our military.
- Specialize military production among allies, with US doing high-tech.
- AVOID INDUSTRIAL POLICY: because it runs counter to our national character.
- Avoid "picking winners and losers" but allow options for upcoming decades.
- Industrial policy favors big business, as does all federal government activity.
All material copyright 1995 by Jesse Gordon.
Reprinting by permission only.
Jesse Gordon, 1770 Mass Ave., #630
Cambridge, MA 02140
Voice mail: (617) 354-2805