ON THE GREATEST LONG-TERM THREAT TO U.S. ECONOMY

EYES WIDE SHUT

Interesting question of the day in the Wall Street Journal, along with it's choice of three answers:

"Which is the greatest long-term threat to the U.S. economy?

	Global competition
	Higher taxes
	Rising inequality"

My answer would be none of the above. 

Instead I'd write in:  "Current Immigration-Phobia", as regular readers might expect.

But then, that's just me.

Comments

[Alex Tolley]

As you imply, teh WSJ's "Question of the Day" often provides a short list of questionable options.

I actually have another option, but first I want to contextualize the options already given.

If we understand Higher Taxes to mean "income/wealth redistribution", then this is the converse of the Higher Tax option.

Your own option, current-immigration phobia is about competition for jobs (not foreigners per se) and therefore the converse of the Globalization option.

Whether labor is performed in the US or abroad is immaterial if you are a free trader. Immigration, especially by poorer people just extends labor competition to local service jobs, not just factory ones.

BTW, I note that even mainstream economists are starting to recognize that the global benefits of freer trade are happening so quickly that they are causing national problems that may not correct so easily.

Let me offer an orthogonal option - "anti-intellectualism". This is the retreat from science and its use, not only to grow the economy, but also to mold policy. The former is not so tragic, we can import scientist labor whilst our own people become marketers, lawyers, sportspeople and artists. It is the issue of policy shaping, whereby directions are taken based on ideology, often religious based, that may have dire consequences. This has been particularly stark with the current administration.

A few examples that come to mind:
1. Denial of Global Warming
2. Restricting embryonic stem cell science.
3. Faith based initiatives
4. Denial of foreign aid to groups advocating birth control.
5. Abstinence based sex education.
6. Ideological based fiscal policy.

In the short term, much of this can be reversed, but if such anti-intellectual approaches continue, we could undermine the basis of our modern society.

In reality, it is a mixture of several options that will be problematic. Looking at past cultures, rising inequality which has consolidated power in the secular and religious elites has been associated with their eventual downfall. In the modern world, where science and evidence based thinking has had a relatively recent history, but powerful impact since the industrial revolution, a retreat from this approach could be especially problematic.

But of course, that opinion reflects my biases on US society and its place in history.

[Ted Rheingold]

OK, I'm pretty pessimistic on this one, but I think immigration phobia is a guarentee of America's assured decline in global standing. It's not a question of if but when.

What I would say is the greatest imminent threat to the American economy is the devaluing dollar. If China were to start favoring the Euro over the greenback, we'll see how low the dollar can go.

[Ward]

Agree with Alex Tolley, xenophobia is a form of protectionism and in that sense a tarif on foreign workers. So higher taxes is accurate choice if one interprets it that way. I think its less likely than some other protectionist measures but anything that restricts global capital flows is dangerous and it would hurt other countries such as China at the worst possible time too and cause more geopolitical instability.