- - Thursday, August 4, 2016


Donald Trump’s inflammatory rhetoric and Hillary Clinton’s left-leaning promises have cast a pall over business investment and slowed growth, but Americans still have good reasons to be optimistic.

Breakthroughs in technology, trade policy, education and even business regulation will reset the economy — no matter who wins the election.

For most folks, computers and handheld devices make managing fast paced lives easier but the stuff inside — ultra-fast processors and increasingly sophisticated software — are also at the center of a revolution in robotics and artificial intelligence that will make work much less repetitive and tedious and all of us profoundly more productive.

Even as smart machines displace many workers — from factory workers to limousine drivers to even university instructors — managing it all and the wealth this new productivity creates will open new, better paying career opportunities if we have the right government policies to support private sector innovation.

Things are about to go that way.

America’s manufacturing sector is easily among the most productive in the world but it has been disadvantaged by expensive labor in Asia. Soon, artificial intelligence and robots that aid in product design, assembly and final distribution will render irrelevant the Asian wage advantage.

Look at the strides Ford and General Motors have accomplished boosting productivity, quality and content, or at Amazon — where robots are becoming ubiquitous and soon may take over altogether running fulfillment centers.

U.S. companies — whether they make SUVs or software — have been disadvantaged by foreign competition that benefits from foreign government subsidies far in excess of anything Washington or the states provide, undervalued currencies and high tariffs and regulatory barriers that block U.S. sales abroad.

Win or lose, Donald Trump (with help from Bernie Sanders) has forced radical change in American thinking about trade.

The Trans-Pacific Partnership, establishing free trade with 11 Asian and Latin American nations, has little chance of passing through Congress without fundamental changes to better combat currency manipulation and other unfair trade practices. More generally, future trade agreements will place much less emphasis on vague notions about building global community and more emphasis on ensuring American workers get a fair shot at competing for markets.

Still, businesses can’t fill many of the positions new technologies are creating for both college graduates and skilled technicians with a year or two of training, because American universities, community colleges and for profit technical training schools charge too much and deliver too few job skills.

Graduates from elite private institutions and top state universities are doing well, but too many young people who attended smaller private, state and community colleges or left school without a degree are stuck in dead-end, low paying positions or not employed at all, and living with their parents.

About 16 percent of the 43 million student borrowers are in long-term default and before it’s over, a lot more will never pay off most of their debt. Washington will be on the hook to repay creditors several hundred billion dollars in government-guaranteed loans.

A combination of taxpayer outrage and more prudent shopping by parents and students will create a crisis for post-secondary education. Market pressures will finally force a shift in focus from providing lavish student amenities and instruction in political correctness to more reasonably priced, career-oriented education — or young people won’t enroll and the government won’t finance them.

Government funded free tuition may be coming if Mrs. Clinton is elected but it will come with a lot of strings to lower costs and improve career outcomes.

Business regulators in Washington are facing a revolution too.

New business formation has fallen dramatically as young entrepreneurs can’t get loans from small banks, because post-financial-crisis regulations have forced many of those to merge with larger banks in New York and other financial centers. Now pressure from Congress is forcing regulators to exercise their discretion to facilitate the opening of more community banks and more lending.

The new president will be on the dime to create more and better jobs. History indicates economic regulation is like the pendulum of a clock. Gravity in the form of a president’s instinct for political survival will compel the new administration — regardless of its rhetoric — to relent to congressional pressure for more business friendly conditions.

The U.S. economy has been through some tough and discouraging times but innovation, markets and American democracy have a way of forcing corrections and rekindling progress. More than anything else, that’s what makes America exceptional.

• Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.

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