America 2021: Jobs & the Economy
In 2021, we will still bear scars from the Great Recession. But will America be a mighty economy again? What key investments are needed to ensure our growth and prosperity? Five experts take the long view.
What will America’s economy look like in ten years? Will the jobs that we lost come back? And what policies must we put in place now and in the coming years to make sure America will be healthy and prosperous again by 2021?
“America 2021” is a series that we began in our Summer 2010 issue. The idea is to bring together some of our brightest progressive minds to discuss what our country might look like roughly a decade from now.
For this edition, we take a look at jobs and the economy. We brought together five distinguished experts–Robert Atkinson, Heather Boushey, Harry J. Holzer, Thea M. Lee, and Sherle R. Schwenninger–to debate the big picture. E.J. Dionne Jr., Democracy’s editorial chair, moderated the discussion. Editors Michael Tomasky and Elbert Ventura also participated.
E.J. Dionne Jr.: It’s 2021. America is competitive in the world again. Middle-class incomes are rising. The poverty rate is going down. We’re making things. What did we do right in this period to get the United States to that point in 2021?
Heather Boushey: First of all, we did not let the hysteria over long-term deficits stop the United States from doing the right thing. If we’re in a good place in ten years, it’s because we made the investments we needed to make both in creating jobs and strengthening infrastructure. Also, it means that we did what we needed to do on energy and climate change because that’s one of the critical pieces in encouraging domestic manufacturing and investment.
The other thing we did right is refocus our economic policy on sustainable growth and growing the middle class, rather than giveaways to the wealthiest that don’t lead to greater investment growth or greater job creation.
Sherle R. Schwenninger: With the departure of Christina Romer and Larry Summers near the end of 2010, the Obama Administration underwent a historical evolution in its economic thinking, from a philosophy of general demand stimulation, short-term, to massive targeted public investment to drive economic growth. That was accompanied by a major push for global currency realignment, with the United States after several false starts putting on a full-court press to mobilize international support for pressuring China and other surplus economies to let their currencies appreciate and stimulate domestic consumption–or else face the imposition of tariffs.
This general shift in macroeconomic strategy was accompanied by three important legislative initiatives. First, there was the passage of the authorization of a national infrastructure bank, which allowed the government to leverage a trillion dollars in private capital for long-term infrastructure investment, greatly enhancing the productivity of the American economy.
That was married, secondly, with a major energy initiative–and here I differ slightly with Heather–to develop America’s natural resources, particularly natural gas, that allowed the United States to shift large parts of its heavier transportation fleet to natural gas and to begin the construction of all-truck highways that greatly reduced congestion and moved goods and services in a more efficient way. Finally, in a truly revolutionary moment, the Administration, realizing that the 2010 health-care reform bill was not going to achieve the results it thought, put forward a follow-on reform that opened up Medicare for all and allowed the federal government to more fully regulate health-care costs. Even some Republicans joined Democrats in passing the measure because the thought of endless health-insurance premium increases that were going to drive most employers into dropping coverage and bankrupt states was too much for even ideologically hardened members of Congress.
Dionne: A remarkable set of predictions. Rob, do you want to take it?
Robert Atkinson: We were able to emerge in 2021 as the most innovative and fastest growing–at least from a productivity standpoint–economy in the world because in 2011, we finally realized that neoclassical economics is a fundamentally misguided and bankrupt philosophy and cannot guide a twenty-first-century economy. Instead of bringing in neoclassical economists, we brought in innovation economists who understand the real economy and how economics is about institutions and not about prices.
Through the guidance of those folks, we did two big things. One, we finally put in place a tough and aggressive trade policy to stop foreign mercantilism. Not that we erected our own barriers or became mercantilist ourselves, but we took firm and hard steps to go after these countries, particularly China. And not just on currency manipulation but on a wide array of unfair practices, including intellectual-property theft.
Slightly more importantly, we put in place a proactive domestic growth and innovation agenda that I would call the “Chinese menu” strategy: a bunch from column A, a bunch from column B. In other words, there are ideas that Republicans and conservatives have, and there are ideas that Democrats and liberals have. And I think our problem right now in Washington is we can have only one of those menus–you can’t have both. We did something on the corporate tax side–not cut the corporate tax rate per se, but cut the effective rate by doing things like having a workforce-training tax credit, a more generous research-and-development tax credit, and giving companies a tax incentive for investing in new capital equipment. But at the same time, we had a domestic investment agenda that invested not just in physical infrastructure, but also what you might call “New Economy infrastructure.” Intelligent transportation systems. Smart grid. Electric battery charging systems.
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