Friday, August 13, 2010

America: A new way forward - Kansas: a Model for the Future?

For years the American economy has moved more and more toward the service and home building industries. Now with the housing bubble a thing of the past, and, because of over supply, no relief in the long term future, we must chart a different course. Neither the service industry, nor growth in the public sector, as many Democrats promote, will create a marketable product that can correct our balance of payments on the world stage.

The models referenced below are the wave of the future, but the transformation will require entrepreneurial vision and an educated workforce, without the intrusion of governmental regulations, punishing taxes, and union involvement. Current administration policies, if continued, will be a "death knell" to this promising transformation.

Thanks to a cluster of aircraft manufacturers such as Learjet, Cessna and Hawker Beechcraft, the economic focus of Wichita – population 366,000 – is very different from the emphasis on services and consumer demand typical of 21st-century America. According to a study published late last month by the Brookings Institution, a Washington think-tank, nearly 28 per cent of the city’s gross metropolitan product is sold abroad. That makes it the most export-oriented in the country, just ahead of Portland, Oregon – noted for its computer and electronics companies – and San Jose in California’s Silicon Valley.

According to Bruce Katz, the study’s author, these areas could be at the vanguard of a fundamental transformation in the US economy – away from consumers and housing towards investment and exports. “I personally think [Wichita] will be the norm in the next 10 to 15 years,” Mr Katz says.

Many economists believe this is desirable. Don Kohn, outgoing vice-chairman of the Federal Reserve, has said it would put America on a “stronger, more resilient, and ... more sustainable growth path” than before the recession, and would make households “less vulnerable and better able to withstand shocks in the future”. It could also help moderate the global imbalances that have afflicted the US economy in the past decade.

Read the Financial Times article "America: A new way forward" here.

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