Columbia University’s Jeffrey Sachs isn’t counting on American consumers to spend the economy out of a second recession. Not while they’re struggling to make ends meet.
“Consumers are exhausted,” he told CNN‘s Fareed Zakaria recently.
“There was a little blip but it’s obviously gone away. We’re at stagnation at best and maybe entering another recession right now; so we need a different approach. My view is that we can’t have consumption-led growth anymore. We have to rebuild the foundations of our economies both in the U.S. and Europe. We have to become more competitive with our new competitors. We have to have better skills, technology (and) infrastructure. That means an investment-led recovery quite different from the short-term stimulus.”
It’s a strategy that calls for targeted and sensible investment in long-term job growth. And if you can believe it, some members of Congress actually have concrete plans. Listen to House Minority Whip Steny Hoyer, D-Md., describing some of the bills in a legislative program called the “Make It in America agenda.”
“One bill would create a National Infrastructure Development Bank to leverage private investment in much-needed, cutting-edge projects, from broadband networks to energy delivery systems to modern ports. Public-private partnerships to drive these projects can put Americans to work and help us keep pace with competitors like Germany and China, who are investing heavily in their own future growth.”
There are also plans for job-training partnerships between advanced manufacturers and colleges, permanent research and development tax credits, a simpler corporate tax code, and mechanisms “to hold countries accountable for currency manipulation,” which, Hoyer correctly notes, “costs American jobs.”
These are all great ideas. And many have bipartisan support.
Congress and the White House should work resolutely to adopt a job-creating agenda as we teeter on the precipice of another economic collapse. Buying time with short-term stimulus checks won’t put us on a path to sustainable growth. Moreover, it’s the wrong medicine for a sickness caused by our economy’s structural addiction to debt. Let’s remember that our present round of troubles began because American consumers were spending money they didn’t have. As of May 2011, the Federal Reserve reports, total U.S. consumer debt stood at a crushing $2.43 trillion. That’s roughly $7,800 for every man, woman and child.
Consumption-led growth will only make matters worse while doing little to rebalance a global economy that has come to rely on America’s insatiable appetite for stuff — purchased mostly on credit.
All things considered, we need a smart and responsible strategy to ensure our future prosperity. And bold leadership to see it through.