US Must Lead in Changing Global Economy
By Damon Dunn
The U.S. economy has undergone major shifts from the time of our founding, transitioning from agriculture to manufacturing to services now comprising the majority of our economic output. Free market advocates have rightly pointed out that our economic growth has occurred as a result of free enterprise; by millions of individuals communicating their preferences through prices and producers responding to changes in demand, leading to the virtuous cycle of wealth creation we have enjoyed as a result. Throughout history, nations that privilege the role of the government in wealth creation and distribution tend to have little wealth to redistribute, certainly by modern standards.
However to believe that the state has played no role, and can play no role, in helping to ensure that we as a nation are prepared for what lies ahead is not the right answer. Rather, we need to strike the optimal balance between allowing the creative destruction and wealth creation of free markets to drive innovation and job creation, while also remembering our countrymen who view warily many of the changes that innovation brings. Many Americans rightly recognize that global competition poses (or one day may pose) a risk to themselves, their families, and to their communities. These people have largely been forgotten, or even worse are completely ignored, by too many in the political class today.
We are all familiar with the rock stars of the new American economy, companies like Apple and Amazon with thousands of employees and market values larger than the GDP of many countries. For those with the requisite skills to work in high value roles within these organizations, delivering a new world of advanced services for consumers and businesses brings with it some of the highest employee compensation levels the world has ever seen. By combining people, data, and technology, American companies are reshaping the way they do business, and shaping the future of economic growth for the next century.
However, despite the rational and justified optimism felt by many winners in the new economy, the educationally and geographically isolated mega-success of these companies provides no relief, let alone hope, for the millions of American workers employed in industries that have been harmed by exposure to global competition. Offering support in the form of unemployment, welfare, or Medicaid is, at best, a temporary and partial solution. We need to look beyond policy band aids to offset the costs of global competition, and instead give American workers the opportunity to reap the benefits of the new economy for themselves. This can be done in many ways, most directly through re-training workers in a range of skills in high demand.
An even more powerful set of policy tools would use supply side incentives to encourage capital investment and job creation, including targeted business and broad-based consumer tax cuts to encourage risk taking and entrepreneurship.
Supporting a culture of entrepreneurship is vital as well, letting young Americans know that they don’t just have to look for a job, they can also create a job. This country has the ability to create opportunity and hope for all Americans, and we need not choose between redistributing the wealth of a small portion if economic “winners” on the one hand and ignoring the plight of the forgotten millions across our country on the other. We can, and we must, consider the interests of all Americans when politicians chart the government’s role in our economy in the 21st century.
Those who suggest solutions such as universal income show a fear of the future, that we are near some end of history point when the broader spirit of creativity has retreated, when entrepreneurship has become something owned wholly by the elite rather than the foundational trait that has renewed and reformed our state and national economies time and again.
Damon Dunn is small business owner, minister, and former National Football League player.