End Economic Defeatism

By: Thomas J. Donohue

Burning through the political fog in an election year is never easy, especially when it comes to assessing the U.S. economy. Political punditry aside, there is good news. Consumers have more in their paychecks. Compensation and disposable income have grown nearly 8% since the recession ended in November 2001. Home ownership and household wealth are at all-time highs. Employment is up by 2 million workers since the end of the recession, according to one government survey. Payroll growth, a lagging indicator, will follow economic growth.

But to hear some talk, trade has become the dirtiest five-letter word in the English language. Since 1995, manufacturing employment has dropped 11% in the U.S. - and 15% in China. Where did all those jobs go? To a "country" called productivity. It takes fewer workers to make our products and deliver our services than ever before.

Without question, some have lost jobs due to changes wrought by higher productivity and technology. These concerns have spread to services. Everyone agrees we should do more to help these citizens and create new jobs. How? Extending unemployment benefits will help on a humanitarian level, but will not create jobs. Raising taxes would kill jobs, especially if those tax hikes fall on the key job creators - the millions of small businesses and entrepreneurs who pay their taxes at individual rates.

Retreating to economic isolationism is the worst response. Yet 30 states and Congress are considering laws to punish companies that source around the world to provide the best products at the cheapest prices for U.S. consumers. Given our stake in the global economy and real risk of retaliation, can we afford to build walls around our economy?

Here's a better approach: Make our country a more attractive place to create and keep jobs by reining in excessive lawsuits, regulations and taxes. Invest in our roads, power supply and broadband technology. Improve education and training. Today's unemployment rate among Americans with a bachelor's degree is under 4%.

Finally, let's end the defeatism. In the '70s and '80s, so-called economic experts warned the U.S. was being overtaken by Germany and Japan. Today they're wringing their hands over India and China. If we have learned anything from the past few decades, it is that we control our economic destiny.

Thomas J. Donohue is President and CEO of the U.S. Chamber of Commerce.

As published in USA Today, March 15, 2003.