Living out here in Asia, it’s only too easy to see how quickly the East is catching up to, and in some cases, even surpassing the United States. The airport in Beijing is more efficient than JFK. I get dropped from mobile phone calls more readily in New Jersey than in Jakarta. Students in Seoul walk home with backpacks of books at 10pm, not 3pm. Asia is fully aware it needs to compete with America; sometimes I’m not sure that America realizes it has to compete with Asia. There’s too much national babble about airport screening and Jersey Shore and not enough about what the country must do to thrive in a world with a rising China and India.
That’s why President Barack Obama’s State of the Union address was so important. The speech was a call for a refocusing of national priorities, to get policy, money and energy directed at what is needed to compete in the future. Such an effort is long overdue, since China and India won’t sit back and wait for Americans to wake up to the new realities of the world economy. We can perhaps quibble with his choice of policy to support his goals, but not the goals themselves. As Obama outlined them:
At stake is whether new jobs and industries take root in this country, or somewhere else. It’s whether the hard work and industry of our people is rewarded. It’s whether we sustain the leadership that has made America not just a place on a map, but the light to the world….We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business…That’s how our people will prosper.
Obama is absolutely correct that the only way the U.S. is going to create jobs is by staying one step ahead of the emerging world, not competing directly with it, or, even worse, falling behind it. There is no way the U.S. can contend with China or India with an education system that is in relative decline. There is no way jobs can be created in the U.S. in a globalized world economy if Americans aren’t smarter and better qualified than lower-cost Chinese or Indian workers. Let’s be honest. If you’re an American worker, and you’re competing for the same factory job as a poorly educated farm girl from the Chinese hinterland, you’re in trouble. She’ll do the same work for a fraction of the cost. That’s why all of those low-end factory jobs have shipped off to China. The only solution is to increase the skill and education level of the American workforce, so they can be more creative, more productive, and therefore more competitive than Chinese or Indian workers, and deserving of higher salaries. As Obama said:
Maintaining our leadership in research and technology is crucial to America’s success. But if we want to win the future -– if we want innovation to produce jobs in America and not overseas -– then we also have to win the race to educate our kids… Over the next 10 years, nearly half of all new jobs will require education that goes beyond a high school education. And yet, as many as a quarter of our students aren’t even finishing high school. The quality of our math and science education lags behind many other nations… And so the question is whether all of us –- as citizens, and as parents –- are willing to do what’s necessary to give every child a chance to succeed.
The issue is exactly the same in regard to infrastructure. Just as the education system is under strain, the rail, road, phone and Internet networks are simply not up to the new challenges of the new economy. The U.S. can’t keep its companies competitive, or attract investment from overseas, without an infrastructure upgrade that matches what’s happening in China and elsewhere. As Obama said:
To attract new businesses to our shores, we need the fastest, most reliable ways to move people, goods, and information — from high-speed rail to high-speed Internet. Our infrastructure used to be the best, but our lead has slipped. South Korean homes now have greater Internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a “D.” We have to do better.
Thankfully, Obama was also honest about the fact that protectionism won’t help Americans compete. The rest of the world is rapidly integrating, especially in Asia, where countries have signed a ton of free-trade agreements (FTAs). Due to the anti-trade sentiment in Washington, however, the U.S. runs the risk of getting shut out, and that’s a serious danger for America’s future growth. New prosperity and jobs won’t come from shielding industries and workers that can’t compete with rivals from abroad. Instead, they will come from capitalizing on new sources of growth abroad. Good for Obama, then, for championing free trade and FTAs:
To help businesses sell more products abroad, we set a goal of doubling our exports by 2014 -– because the more we export, the more jobs we create here at home. ..Last month, we finalized a trade agreement with South Korea that will support at least 70,000 American jobs. This agreement has unprecedented support from business and labor, Democrats and Republicans — and I ask this Congress to pass it as soon as possible.
The one area where Obama ran into a bit of trouble concerned how the government should support American competitiveness. I’m no fan of industrial policy – which, by studying Asia’s long experience with such programs, shows they create as many problems as benefits. The idea that the government can support the development of green energy or cutting-edge industries through direct financing or subsidies is not terribly convincing. However, let’s face it, Uncle Sam is already in the business of influencing business. Tax policies, regulation and outright government grants sway how and where money gets invested. Those policies might as well be restructured to create the right incentives to support the right goals. Thus Obama was spot on in regard to tax breaks and education:
To compete, higher education must be within the reach of every American. That’s why we’ve ended the unwarranted taxpayer subsidies that went to banks, and used the savings to make college affordable for millions of students. And this year, I ask Congress to go further, and make permanent our tuition tax credit –- worth $10,000 for four years of college. It’s the right thing to do.
And the development of new energy technologies:
We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if — I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.
But perhaps the single most crucial aspect of Obama’s address was its spirit. I hear far too often from Americans that they feel the nation can’t compete with China. It’s a despondency and hopelessness that is not only dangerous, but also unfounded. Fortunately, the U.S. President has some fight left in him. Obama told America to stop wallowing in self-pity and get to work forging the economy of the future:
The world has changed. The competition for jobs is real. But this shouldn’t discourage us. It should challenge us…The future is ours to win. But to get there, we can’t just stand still. As Robert Kennedy told us, “The future is not a gift. It is an achievement.” Sustaining the American Dream has never been about standing pat. It has required each generation to sacrifice, and struggle, and meet the demands of a new age. And now it’s our turn.