In the first quarter of 2012, the U.S. economy grew at a sluggish annual rate of 2.2 percent, even less than the 2.6 percent forecast and well below the 2011 fourth quarter rate of 3 percent. A column in the latest issue of Forbes magazine by Rich Karlgaard highlights the importance of faster growth for the U.S. economy.
According to Karlgaard, the U.S. desperately needs to return to 4 percent growth, and that it’s not out of the question. He reminds readers that the U.S. economy has averaged 3.3 percent growth since the end of WWII, including recessions. When the economy is not in recession, growth has remained at 4 percent.
So what do we need to do to achieve 4 percent growth? Several imperatives are outlined in the article:
First, we must limit government spending. GDP growth is very closely tied to spending and the difference of just a few percentage points can have an enormous impact on the economy. The best growth will happen when government spending is around 18% of GDP. Now under Obama, we’ve reached 24%.
Next, Karlgaard suggests simplifying the tax code. It’s no mystery to anyone what an issue the tax code is. Then, he mentions the importance to digging and drilling for energy. We must be able to fuel our economic engine – literally.
The article also points out the importance of importing highly skilled workers. Our immigration system currently favors the opposite – uneducated and undocumented workers. Meanwhile, those who attempt to navigate the system legally are tied up in endless paperwork and bureaucracy. The brightest students simply go back to their home countries when their student visas expire.
Finally, the author suggests leveraging our technological capabilities to drive innovations in education and healthcare. We have systems that could facilitate teaching, communications and healthcare solutions efficiently, across distances and for minimal cost.
There is no doubt that the U.S. has the ability to return to 4 percent economic growth. All of these solutions are perfectly achievable, given the right direction, leadership and innovative thinking.
Click here to read the full article on Forbes.com