Opinion

The Great Debate

American business needs immigration reform

One thing the overwhelming majority of Americans agree on, regardless of political party, is the need for immigration reform.  Not only is it one of the keys necessary to create a healthier national economy and critical to America’s security, growth, and prosperity, it is also an integral component for the success of American business.

The current employment-based immigration system is broken to the point of disarray — but not to a point of disrepair. The facts speak for themselves:

1. In the European Union, work-related visas account for 40 percent of immigration (excluding intra-EU movement). In the United States, only six percent of foreign workers are granted permanent entry on work-related visas. Outdated institutional quotas are shutting talent and expertise out, when other countries are ushering them in.

2. Overall, 36 percent of those receiving a highly-coveted, highly valuable STEM-related doctorate in a U.S. university were students holding temporary visas. The situation is further exacerbated in PhD programs for engineering, mathematics, and computer science — over half of candidates enrolled are foreign students, studying in the U.S. on temporary student visas. They’ll go home, or elsewhere, equipped with gold-mark U.S. university credentials to put their education to work.

3. Between 1993 and 2008, the proportion of scientists and engineers over 50 in the U.S. increased from 18 percent to 27 percent. We’re simply not preparing to replace those who will soon retire.

Can America innovate its way to growth?

America is banking on economic growth. Its ability to pay debts, lower unemployment, and provide better living standards all depend on growth returning to its pre-recession levels and staying there. But what if it doesn’t?

Several economists are worried it won’t. Growth can come from three sources: more labor, more capital, or more innovation. The 20th century was remarkable because each of these factors grew. America’s final push to manufacturing, and away from agriculture, increased the use of capital. The volume and quality of labor also increased. More people than ever finished high school and went on to college, and many women joined the labor force. But we can’t repeat these events. Not only that, future demographic trends are not favorable. American education isn’t giving many young people the skills they need to be competitive in the global economy. An aging citizenry means a smaller share of the population will be working to support everyone else. Lower rates of economic growth will make it harder to repay America’s debt — both entitlements and outstanding treasury bonds. Servicing debt will take more resources from the economy, creating a vicious cycle of high rates and low growth.

But not all hope is lost; there’s still innovation. Innovations make existing resources more productive. Productivity is measured by calculating how much output (GDP) increased or decreased given the inputs (capital and labor) used. If you get more output for the same amount of inputs, productivity has increased. That means if western economies innovate more, and thereby constantly increase productivity, they will still grow. If productivity outpaces the economic headwinds, America can still grow at the pace it used to. But that’s easier said than done.

An unstable global economic system that is being ignored

Today, the International Monetary Fund announced yet another a reduction in its global growth projections for 2014, with its estimate of U.S. growth also reduced (citing reduced government spending, but not the present U.S. government shutdown — or the heretofore unthinkable notion of the U.S. government defaulting on its obligations). Despite the seeming urgency of global economic slowdown, when world leaders attended their annual fall confabulation at the United Nations in New York last month, they focused on the diplomacy of physical security (Syria, Iran, etc.). Thus another year has passed in which global economic security issues were on no one’s reported agenda.

Policy makers continue to fail to appreciate that the most formidable economic challenge today lies in the area outside the borders of any one nation or region — and that multilateral action to address this challenge is arguably more important than efforts at increasingly less-effective internal stimulus.

Present-day economic imbalances — particularly those stemming from the rapid emergence of the post-socialist nations over the past 15 years, with their associated supply of excess labor, productive capacity and global capital, relative to demand — have hamstrung the economies of the advanced nations. Such economic dislocation can no longer be resolved by any one power, or even by two or three. Indeed, there is enormous risk today of unilateral or bilateral actions being viewed by players left out of such actions as economically threatening or even hostile, leading to economic countermeasures. The issue is compounded by the complexity of the relationships among and between developed nations on the one hand and emerging ones on the other. It is hard to imagine moving beyond a global economy that is just getting by, and therefore at material risk of new and deeper crisis, without a more open dialogue among the Group of 20 (G20) nations and proactive steps toward mutual accommodation.

Mass flourishing: How it was won, and then lost

This essay is adapted from Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change, published this month by Princeton University Press.

The epic story of the West is the development in the 19th century of a mass prosperity the world had never seen and its near-disappearance in one nation after another in the 20th. Mass Flourishing is a history linking this story to the rise and fall of homegrown innovation. It is also a text on the nature and sources of prosperity. It has two components. The material part is growth of productivity and wages. The non-material part is flourishing – successful exercise of creativity and talents. To flourish, people have to engage a world of challenges and opportunities. The economy’s dynamism and the resulting experience of business life are central to our well-being.

Mass prosperity came with the mass innovation that sprung up in 1815 in Britain, soon after in America and later in Germany and France: It brought sustained growth to these nations — also to nations with entrepreneurs willing and able to copy the innovations. It also brought flourishing to large and increasing numbers of people — mass flourishing. There were experiential benefits: Routine work, dull and lonely, gave way to careers that took twists and turns and jobs that were rewarding. There were also developmental benefits: As people used their imagination to create new things and their ingenuity to meet challenges, they found self-expression, self-realization and personal growth in the process.

The G20 summit should commit to growth

By Gordon Brown
The views expressed are his own.

The build-up to the G20 summit has been dominated by the euro’s failings. With Europe now the epicenter of the global crisis, its continued weakness will dominate the G20 discussions. Even now, uncertainties about Greece’s future — and about the real strength of Europe’s commitment to its new stability fund — has left little opportunity for a focus on the global economy as a whole.

But even if the state of the world economy has featured less than the euro in the preparatory work for the summit, the decisions world leaders will make on the global economy will dictate the mood of the coming two years. President Sarkozy has major global initiatives he will unveil to improve global food security, and may even force his plan for a global financial levy on the agenda. But there is a big choice the G20 must make. Either the world will come together and agree on a coordinated growth plan — or we will retreat into a new, more acrimonious protectionism.

Already the head of the World Trade Organization is warning of a return to protectionism, and every day we find yet another new country following Brazil, Switzerland, Indian, Korea, and Japan in introducing either new tariffs, currency controls, or capital controls. In response, the draft G20 communiqué assumes a free trade world where each continent steps up what it is doing in order to achieve sustained growth.

from The Great Debate UK:

Heather Rogers on fixing “Green Gone Wrong”

BRITAIN/

How can human production be transformed and harnessed to save the planet? Can the market economy really help solve the environmental crisis?

Author Heather Rogers argues in a new book that current efforts to green the planet need to be reconsidered.

The growth-based economy can't help but add to the problems the planet faces, Rogers writes in "Green Gone Wrong" published by Verso.

Sluggish investment will hamper recovery

– John Kemp is a Reuters columnist. The views expressed are his own –

Unable to rely on the wounded consumer, the outlook for U.S. growth in the next three years depends on business investment and exports to take up the slack when stimulus programmes wind down.
Ultra-low interest rates will help. But with the economy struggling to work off a huge overhang of unused real estate assets, and not much sign of investment elsewhere, investment spending is set to remain sluggish, condemning the economy to a weak recovery in the medium term.

Federal Reserve Chairman Ben Bernanke and other senior U.S. officials have already warned the rest of the world can no longer rely on over-indebted U.S. consumers as the principal source of global growth. There is no choice but to rely on investment and exports to take up more of the burden.

Quality early education: Good for kids and the economy

Joan Wasser Gish– Joan Wasser Gish is a consultant in the Boston area. A former senior policy adviser to Senator John Kerry, she recently testified before the U.S. Senate Committee on Small Business & Entrepreneurship. The views expressed are her own. –

When the toys are put away and the last youngster is picked up for the day, early childhood education providers like all other entrepreneurs sit down to assess their revenues, account for expenses and make difficult business decisions. And though their services are rife with hugs and games and songs, their work has serious implications for the economy. The child-care sector is a critical driver of economic growth and workforce development. That is why financial leaders and policymakers should do more to support providers as both educators and small-business entrepreneurs.

There are more than 400,000 licensed child-care facilities across the country. They span the economic sectors, with the majority run as sole proprietorship home-based businesses, and the rest split between for-profit and non-profit centers offering early education and care. Most are run by women, and a significant proportion are owned and operated by members of minority groups. Because of the early education and care services they provide, they contribute to both short- and long-term economic growth.

  •