Back to Work - Bill Clinton [44]
America is also still the world’s most entrepreneurial country. It’s easy to start a small business, and for several years small businesses have accounted for a majority of our new job growth. Though other countries are working hard to catch up and surpass us, the United States is still the world’s hotbed of innovation, with active research centers in university, government, and private labs and a vigorous group of venture capitalists to help early survivors grow. We’re still the world’s largest exporter of goods, services, and remittances, though China and Germany have surpassed us in the export of merchandise, and trade is a smaller percentage of our national income than that of several of our competitors.
American workers are highly productive and willing to put in long hours. We have untapped natural assets, especially in natural gas and in clean energy, where we rank first or second in studies measuring nations’ capacity to generate electricity from the sun and wind. And we have people here from all over the world, increasing our chances of selling products and services in fast-growing countries.
There are even large successful countries with a higher debt load than ours, led by Japan, with a national debt of more than 200 percent of its GDP, a rapidly aging population, and higher barriers to immigrants entering its workforce. The Japanese have weathered a long dry spell following their real-estate collapse in the 1990s because they have a personal savings rate of more than 20 percent of disposable income and a national passion to cut costs through greater efficiency in energy use and other areas.
The troubling thing about all these rankings and several others I haven’t bothered you with is not what they say about where we are but what they reveal about where we’re going. We simply are not doing what we have to do to stay ahead of the competition for good jobs, new businesses, and breakthrough innovations. Lots of other countries are hot on our heels with rising incomes, declining inequality, increased educational attainment, and big investments in the key drivers of today’s and tomorrow’s economy.
Oh, I almost forgot one critical comparison, perhaps the most important one, given our raging debate over the role of government and whether taxes are always bad. If the antigovernment activists are right, the countries catching up to or surpassing the United States in all the areas discussed in this chapter must have done it by cutting taxes, spending, and regulations—there’s no other way. So here’s the last chart, I promise. The numbers are the percentage of national income paid in taxes by different nations, including, for the United States, federal, state, and local taxes. Of the thirty-three nations in the OECD, we rank thirty-first in the percentage of GDP directed to taxes, with only Mexico and Chile taking a smaller percentage, and we’re twenty-fifth in the percentage of GDP devoted to government spending.
Click here to view a larger image. (Illustration credit 5.9)
There are only three ways to view this. First, the obvious conclusion: low levels of taxation and weak government investments don’t necessarily bring prosperity, equal opportunity, and growth and, if too low, can prevent a nation from reaching its full potential in employment, rising incomes, and social mobility. Second, the “I don’t care, I still don’t like it” conclusion: even if it would be good for the country and our children’s future, we just don’t want the government to make these investments, especially with our money. Third, the ideological conclusion: all taxes are bad, all programs are a waste of money, and all regulations distort the perfect working of the free market. Therefore all charts in this chapter are wrong! Or, as my daughter and her friends used to say when they were younger, “Denial is not just a river in Egypt.”
If there are any militant antitax folks still reading this book, I can hear the counterattack forming in your minds: “Clinton wants European-style social democracy! He wants to tax us to death!