REBUILD AMERICAN SUCCESS
Economic growth should be at the top of policy agenda for U.S. leaders
As world leaders debated at the United Nations last month, most of the attention seemed to be on hot spots. Ukraine, Syria, Iraq, conflict zones in Africa and East Asia, and the latest news from Afghanistan got lots of discussion. In many respects, this was inevitable, and necessary. Indeed, our own careers have been largely shaped and dominated by such pressing issues.
Even so, in a world of troubling headlines, less dramatic and more structural developments could determine the future of the global order even more than the latest crises. Many of these concern technology and economics.
While military might was a necessary ingredient in the West’s victory in the Cold War, it was more like a moat than a battering ram — it provided time and protection for the inherent strengths of the Western democratic and economic systems to prevail. This is likely to be just as true in the future.
A few basic realities about the modern world need to be remembered. The post-World War II international order set up by U.S. and other key world leaders 70 years ago produced more economic growth in more places on earth, benefiting a far higher percentage of the human race, than had any previous global order in any period in history for which we have data.
Our purpose here, then, is to remind policymakers that as they establish their priorities for 2016 and beyond, attention to economic fundamentals should play as big a role in their thinking as crisis management and domestic political maneuvering.
Indeed, economics can even shape crisis management, if often with a lag effect.
Economic sanctions established by Presidents George W. Bush, Barack Obama and many others brought Iran to the table over its nuclear weapons program (an accurate observation whether one likes the actual deal). Sanctions, together with the fall in global oil prices, might not have yet limited assertive (and illegal) Russian interventions, but they could well constrain President Vladimir Putin in the years ahead.
Beijing ’s policies in the East China Sea and South China Sea, even if sometimes more assertive than we would like, have exhibited at least some restraint that might reflect an awareness that we could introduce various economic sanctions against China if things got out of hand.
Meanwhile, the North American shale revolution, and the North American economic revolution more generally, have improved U.S. growth prospects and the fundamental strength of the U.S. economic foundation. They have also helped Mexico provide more jobs to its own workers, reducing demographic pressures and actually making the immigration problem easier to address (even if we have not yet managed to address it appropriately and comprehensively).
The implications are many, ranging from major to modest in their importance, but we would highlight the following:
Congress should reauthorize the Export-Import Bank, an efficient (and profit-making) tool for promoting U.S. business interests in foreign markets.
Congress should avoid any government shutdown or self-induced debt crisis over anything except the most historic and major issues (which we do not see on the horizon).
Democrats and Republicans, in shaping their messages and agendas for the 2016 election, should recognize the importance of government programs in areas such as scientific research, infrastructure investment and education, and then fashion budget priorities accordingly.
Both parties and the Obama administration should conclude agreements such as the Trans-Pacific Partnership, important for economic growth as well as for setting appropriate standards to help incentivize China to reform economic practices ( because TPP membership will not be available to China until it does so).
Meanwhile, the U.S. should join the Asia Infrastructure Investment Bank and seek to conclude a bilateral investment accord with Beijing, so that Washington is not left behind in important ways in interacting with what is still the world’s fastest-growing major economy.
It is all too easy to conflate the temporarily important with the truly significant issues in today’s political discourse. It is also easy to view the latest crisis as the be all and end all. But attention to our economy will probably be the most important legacy of political leaders today — as has often been the case in the past.