Back to Work - Bill Clinton [68]
Denmark is an especially interesting case. The Danes generate almost 25 percent of their electricity from wind, have biomass (waste-burning) power plants, and high home efficiency standards, including triple-paned windows, more insulation, heat pumps, and solar panels. Farmers are encouraged to put up their own windmills, which they can pay off in three years with savings from lower electricity costs, then earn a 12 percent profit on energy they sell to utilities. The results? The Danish economy expanded by 75 percent with no increase in fossil fuel use. We can do all of this and more.
THE PRODUCTION AND DEVELOPMENT of clean energy leads us naturally into the final opportunity for job creation in the president’s strategy: doubling exports.
It’s impossible to overstate the importance of doing this if we want to increase shared prosperity and reduce inequality. In early March 2011, two professors at New York University’s Stern School of Business, the Nobel Prize winner Michael Spence and his colleague Sandile Hlatshwayo, released a fascinating study, The Evolving Structure of the American Economy and the Employment Challenge. They found that almost all our job growth over the last several years had come in “non-tradable” areas like government, health care, and other services like real estate and food services, while most of our income growth had come in “tradable” areas like high-end manufacturing, where productivity increased more in the jobs big companies kept in the United States, as they moved more of the less productive jobs offshore. Meanwhile, slower productivity growth in the non-tradable sector, and more competition for available jobs, kept wages and benefits from growing or even keeping up with inflation. The pattern has been reinforced by the recession. In 2010, low-wage jobs increased 3.2 percent, mid-wage jobs increased 1.2 percent, and high-wage jobs decreased 1.2 percent.
The only way to get out of this trap, according to Spence and Hlatshwayo, is to increase the size of the tradable sector of our economy. They don’t argue for building trade barriers. We’re only 4 percent of the world’s population and still earn about a fifth of its annual income. We have to sell something to somebody else. There are more potential customers than ever. In 2009, the combined GDPs of Brazil, India, and China exceeded America’s GDP for the first time.
More important for the subject of this book, Spence and Hlatshwayo also debunk the antigovernment myth that we can get out of this fix with lower taxes on the “job creators” and lower wages for workers. Instead, they say we need a national economic strategy. We have to change the incentives to make companies more willing to invest in making America more productive than in outsourcing more jobs.
To double exports, the U.S. strategy should include: building on our strengths, selling more of what we know people already want to buy; identifying products or services needed in growing markets that we can provide; making sure we have an intense, well-organized effort to promote what we’re trying to sell to people who can buy it; providing adequate capital for U.S. exports and the overseas investments necessary to support them; getting small and medium-sized American businesses into export markets by helping them join together or partner with large U.S. companies to cut the costs and time delays of entering new markets; training men and women to do export-related work; and making sure we’re playing by the same rules as our major competitors.
This is a pretty fair description of the Obama administration’s National Export Initiative. It has already expanded state export-promotion programs,