US Economic Growth
Biden v. Trump
We have taken a huge hit to our economy due to the Covid 19 recession. This comes twelve years after the Great Recession of 2008-09. The latter was paired with a financial crisis. The former is paired with a health crisis. We will have to make major improvements to our nation’s health and safety and security as we go about recovering and rebuilding.
We now also face a formidable economic competitor as well, who is also a key trading partner and a big holder of US debt; it is a relationship that needs to be well managed. China’s economy has been growing about three times as fast as the US for the past fifty years albeit from a low starting point. It also has a population four times as large. Its overall economy is getting closer and closer to our own in size although it is nowhere near the USA in per capita wealth, and our economies are heavily entwined. We out competed the Soviets and Eastern Europe economically leading to the end of the Cold War and the break up of the Soviet Union.
The Chinese economy is out-competing our own and beginning to excel in the leading innovation sectors that we have historically dominated, We have had a strong lead in the service sector and in agriculture; China now has a strong lead in the manufacturing sector.
The United States GDP was growing at 4% in the two decades after the Second World War when we emerged victorious and intact from World War Two; then it slowed to 3% for the rest of the century (1970-2000). Then it slowed to 2% since about 2000, badly impacted by the Great Recession and the Covid 19 recession and the never-ending wars we have been fighting to little avail. It may well be 10 years or so before we make up all the ground we have lost by the Covid recession. https://www.cbo.gov/publication/56442
Real growth in a nation’s GDP is produced by increasing productivity. Productivity can sometimes be increased by working longer and harder, and sometimes by working smarter. Most commonly, productivity is increased by technological breakthroughs like the internet or e-commerce or industrial robots or in earlier days by phone lines, cars, trains, mass transit and assembly line manufacturing.
In the late 70’s and early 80’s, we started to disconnect US worker’s compensation from our nation’s productivity gains. Workers wages did not increase commensurate with gains in productivity, and in fact their purchasing power has steadily declined. During the same time frame, economic inequality steadily increased as the top incomes accumulated and retained ever-greater shares of national economic output.
Donald Trump has made four serious economic mistakes in the past four years. The most egregious has been his multiple failures in addressing the Covid 19 pandemic. These were unforced errors; other nations like South Korea, Taiwan, New Zealand, Germany, China and Singapore did a much better job of containing the virus and returning to economic normalcy and growth. The second has been his all out and unrelenting assault on immigration and immigrants; they revitalize and add great economic value to the nation and to our aging workforces. The third were his tax cuts. They were both poorly timed and poorly designed at a time of high economic growth, and thus they did very little to increase “value.” They were economic sugar water and were not spent by either corporations or high income individuals who got the bulk of them to promote real economic growth. For example many companies used them to buy back stocks, inflating their stock market prices, but producing nothing of true economic “value”. They further increased economic inequality, which is a damper on true economic growth. The fourth were his trade wars and tariffs (sales taxes) with friends and foes, our allies and enemies alike. The EU and NATO are our allies, not our enemies. Economic protectionism feels really good to the protected industries and their employees; it does not make them more competitive on the global marketplace; it makes them far less competitive and weaker globally, and does the same for our nation. You would think that he has worked economic miracles when in fact prior to Covid, economic growth in the first three years of Trump was very similar to economic growth in the last three years of Obama.
Joe Biden’s economic plans have a better chance of restoring our economy and making us more productive conclude Moody’s Analytics and Goldman Sachs analysts. http://www.luciensblog.com/blog/2020/9/26/biden-proposals-v-trump-proposals-on-economic-growth For example, he would invest in better access to the internet and other communications technologies in rural areas and inner cities that lack them. Second, he would invest in value producing infrastructure like roads and highways, ports and harbors that facilitate commerce and reduce price. Third, he would invest in our human capital, like child care, education, universal health care, maternity leave, minimum wages, etc. that would improve worker productivity and increase our nation’s sadly lagging educational outcomes. Fourth, he would return to rules based international trade, fair trade that produces fast growth and reliable alliances and allies, which neo-isolationship does not. Fifth, he would invest in transformative technologies like solar and wind and battery storage and electric cars that can reduce the costs of energy production and the costs of transportation and help create new groundbreaking opportunities so needed to seed American manufacturing revival.
For our nation’s healthier and stronger economic future, vote for Joe.
References:
https://www.macrotrends.net/countries/USA/united-states/gdp-growth-rate and https://tradingeconomics.com/united-states/gdp-growth-annual and https://www.cbpp.org/research/economy/chart-book-tracking-the-post-great-recession-economy and
https://www.statista.com/statistics/188165/annual-gdp-growth-of-the-united-states-since-1990/ and
https://www.statista.com/statistics/270180/countries-with-the-largest-gross-domestic-product-gdp-per-capita/ and http://statisticstimes.com/economy/united-states-vs-china-economy.php