...while America is running a trade deficit, this deficit is smaller than it was before the Great Recession began. It would help if we could make it smaller still. But ultimately, we’re in a mess because we had a financial crisis, not because American companies have lost their ability to compete with foreign rivals.There's a lot more in the article, go read the whole thing.
But isn’t it at least somewhat useful to think of our nation as if it were America Inc., competing in the global marketplace? No.
Consider: A corporate leader who increases profits by slashing his work force is deemed successful. Well, that’s more or less what has happened in America recently: employment is way down, but profits are hitting new records. Who, exactly, thinks this is economic success?
Still, you might say that talk of competitiveness helps Mr. Obama quiet claims that he’s anti-business. That’s fine, as long as he realizes that the interests of nominally “American” corporations and the interests of the nation, which were never the same, are now less aligned than ever before.
So what does the administration’s embrace of the rhetoric of competitiveness mean for economic policy?
The favorable interpretation, as I said, is that it’s just packaging for an economic strategy centered on public investment, investment that’s actually about creating jobs now while promoting longer-term growth. The unfavorable interpretation is that Mr. Obama and his advisers really believe that the economy is ailing because they’ve been too tough on business, and that what America needs now is corporate tax cuts and across-the-board deregulation.
The financial crisis of 2008 was a teachable moment, an object lesson in what can go wrong if you trust a market economy to regulate itself. Nor should we forget that highly regulated economies, like Germany, did a much better job than we did at sustaining employment after the crisis hit. For whatever reason, however, the teachable moment came and went with nothing learned.
Sunday, January 23, 2011
Krugman Takes on Obama over "Competitiveness"
Here's a bit from an excellent NY Times op-ed by Paul Krugman that anticipates the theme of the upcoming State of the Union Address by Obama: competitiveness. Krugman wants to make it very clear that this isn't America's problem: