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September 27, 2006
Why The World Economic Forum Is Wrong About US Competitiveness.
The US has dropped from first to sixth place in global competitiveness according to the latest survey from the WEF, because it runs huge budget and current account deficits which can only lead to inflation and erosion of the value of the dollar. Sorry, but that's just plain wrong. Despite conventional economic wisdom, which believes this stuff, there has been no tight correlation between interest rates/dollar strength and the twin deficits. I should know because I wrote about this for a dozen years when I ran the editorial page of Business Week.
The fact is that the innovative/entrepreneurial prowess of the US attracts as much capital is it needs from around the world and its deep capital markets allow China and others to recycle their surprlus dollars. We get their goods, they get our paper--and jobs and growth. So far, this has worked out. It could end, sure, if a political crisis occurred but it hasn't yet.
I do think that US competitiveness is eroding and it is because Brand USA is eroding. However you think about the Iraq war, it has generated the worst anti-Americanism around the world in many decades. The Pew polls show horrendously high percentages of people really mad at the US and not just in the Middle East but in major markets in Europe, Asia and Latin America. Are they likely to take our their anger in their buying decisions? You bet. In their investment decisions? You bet.
If you want really want to worry about US competitiveness, worry about our visa policy since 9/11 that keeps out many of the best and brightest students, scientists and immigrants. This is the very lifeblood of our innovative economy.
So US competitivness is taking a big hit, but it's because Brand America is in trouble.
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Not just our Visa policy should be a concern. But the opportunities for same-sex couples as well, especially those in bi-national relationships.
Recently, a publisher and co-founder of Windows Media (one of the leading LGBT publishers in the country with properties in DC, Atlanta, and NY) decided to move to Brazil to be with his foreign born partner, because he could not sponsor him for purposes of immigration.
This is on top of the tech executive who sold his Silicon Valley business to move to Spain to be with his partner.
And on and on, anyone with money and very often entrepreneurial spirit that is in a bi-national relationship is leaving because there is nothing they can do to bring their partners to the U.S. as they can in 17 other countries around the world, including some that don't have same-sex civil marriage like Israel.
This definitely a blow to our competitiveness that may not be as large as Visas or national debt, but is definitely part of the impression that the U.S. does not welcome the creative and innovation classes.
Posted by: DC1974 at September 27, 2006 03:17 PM
Great, great piece. Circa $5 billion a month is spent on the Iraq war and eroding the brand as opposed to maybe helping to alleviate poverty. I think Bush embodies the opposite of innovation, continuing to compete in his bloody 'red ocean' – striving to get ahead by being at war with the rest of the world.
Posted by: Tamara Giltsoff at September 27, 2006 03:28 PM
Good point about our visa policy. I hear complaints about it from the most pro-American Koreans, Chinese, and Japanese, just about every time they come to the United States.
Posted by: China Law Blog at September 28, 2006 08:25 PM