Hillary Clinton’s search for an economic policy seems to forget the phrase used to caution investors: “Past results are not indicators of future success.” The world of her husband’s administration is long gone. The great goods of all economies are now commodities; volume produces wealth and flatlines jobs and wages. Apple, Monsanto (80% of world corn seed), American Water Supply (the largest water utility), Pepsico and Google are diverse examples of commodity enterprises operating in global markets that increase capital wealth with little increase in jobs; yet they are vital to economic growth.
Clinton’s advisers don’t seem to get this paradox: the modern economy is built on essential commodities that transfer wealth without the traditional means of adding value through labor and large workforces. In fact, work itself is becoming a commodity, priced by industry and region, in the same way as good and services.
Clinton economic panels ignore this reality. Yet the US economy is deeply entwined with monopolies by companies and by regions (China’s Pearl River zone, Foxconn; Vietnam, Indonesia, clothing; Brazil, agriculture; the big banks, cell, music and cable services; et al.). Working around the economic margins through taxes and fees will not restructure a system designed to vacuum up cash and maintain rock-bottom wages while the private sector shifts social costs to government.
But more importantly, her panels of economists overlook global best practices and opportunities! They agree and disagree about the wrong things! Models in several countries have successfully produced rapid growth and gains for the middle class in the last two decades (interrupted by the global recession) and continue to do so!
To cite four: China, Brazil, Botswana (per capita income, $17.1k, one of Africa’s highest!), and Mexico. Each country has structural issues, several confront major corruption and crime, but their political economies have increased wages and the size of the middle class by taking advantage of training, government partnerships, economic planning and global growth.
All four share two essential features: modifying social capital to invest heavily in health and education incentives, and protecting wages and investments for families by safety nets and identifying markets through planning with high-paying, sustainable jobs.
US politicians look at polls and avoid plans. The US creates international agreements, but lacks domestic strategy. The private sector and conservatives applaud the open market, but ignore its chaos and corruption, and see government as an adversary rather than a partner, a view contrary to the emerging global vision of government’s role in expanding national economies.
On taxes, Congress closes doors and opens loopholes. The controlling party of Congress wants to tell the sick they are unaffordable, the illiterate they are flawed, and to describe the jobs in which workers are stuck for decades as entry-level. Their proclamation of progress has no plan or specific details. We are deluding ourselves. Especially if we think only the market can pick winners and losers.
Successful models don’t debate ideas, abandon common sense, or solve blame. They don’t tilt policy to accelerate the flow of wealth to the rich while blaming others for the lack of virtues that supposedly cause income inequality and static wages. Successful models promote growth. They engage stakeholders and establish activities—real organizations and businesses supported by advanced knowledge and research, highlighted and included in state and regional plans, aided by federal policies that will innovate as markets expand.
This approach would give rebirth to America’s economy. Developing global models are driving micro (for families) and macro (for companies) growth and job expansion around the world (except Haiti, close to home). Here in the US, partisan calculations blot out the rich benefits of using the models’ far-reaching economic calculations.
Three Global Opportunities: Rails, Smartphone Operating Systems, Hydro and Solar Energy
Though it expands year over year, the US has abdicated the global rail market to China and Europe. It is a huge missed opportunity. Rail’s five main market segments (high-speed, mainline, freight, light rail, metro) include 150 or more sub-industries, among them electronics, safety, signaling, communications, maintenance, interiors, metallurgy, construction, power engines and assembly, and will have steady long-term growth, powered by the need to transport grain, coal, chemicals, automotive, intermodal freight and urban ridership.
But rail’s sustained, high-wage jobs are ceded to Canada (Bombardier), Germany (Siemens), and France (Alstom), among others. In a global market approaching a trillion dollars annually, two-thirds of rail revenues remain directly accessible to the US—orders are open and awarded to the best bids from competing global suppliers! Yet, as an example missing the present and future, the US share of the rail car market is only 5% and is not using its superior financing, technical and research knowledge, experience with large-scale projects and skilled workforces to compete for dominant share.
China holds two of the top three positions as manufacturers and suppliers of rolling stock equipment, positioned to take advantage of new sales: in the next ten years, Europe will replace 10,300 locomotives, and Africa’s demand for rolling stock will double.
Consider these recent global rail projects:
- In Basque, a 172km high speed network in Spain between three regional capitals.
- In Algiers, Africa’s second metro system carries 300,000 daily riders underground on a 9.2km line, with ten stations.
- In Ankara, Turkey, three new lines, Kizilay-Cayyolu, 16 stations, 18km; Ulus-Kecioren, six stations, 7.9km; TBMM-Dikmen, five stations, 4.8km; 108 metro cars.
- In Warsaw, a 19km route with 19 stations.
- In Mexico City, North America’s second largest rapid transit, a new Gold Line, 24km with 18 stations.
- In Brazil: Bidding a 511km high-speed line (with 90 km of tunnels!) with contracts for tracks, stations and infrastructure.
- In Argentina, a 710km high-speed line, $4B.
- The Trans-Asian Railway, a 14,000km main rail link between Singapore and Istanbul, with connections to Europe and Africa.
US companies received none of these bids or subcontracts, missing out on 80,000 to 250,000 new jobs. Nor do they recognize a key value of rail is its stable long-term growth through flexible and sustained mobility.
With rails, entrepreneurial opportunities exist in adhesives, sealants and fixings; cables, hoses and connectors; paint and protective coatings; electrification, power supply, lighting, electromechanical systems and drives; fire safety, detection and suppression; computer hardware and software, controls and monitoring systems, door systems, gangway systems, public address and alarm systems; track engineering and construction, track maintenance and repair; fare collection and ticketing; noise, shock and vibration control; heating and cooling systems and compressors; and wash plants—leaving aside the importance of locomotive, rail and passenger car design.
Research for innovation include sensors, computers and digital communications to collect, process and disseminate information to improve the rail safety, security and operations. Research also includes alternative fuels and energy sources, reducing life-cycle costs while increasing reliability of equipment and infrastructure assets, and maintenance.
Chinese high-speed train makers are increasingly selling their products to Western countries. Experts say the established European firms in the sector urgently need to develop strategies to counter the competition.
In fact, the US is absent from rail and many economic niches.
Apple dominates the high end of the smartphone market, but opportunities exist and are expanding for inexpensive models, a market in which India and China lead with no US competition. The Indian smartphone market for phones under $200 grew 186 per cent in the first six months of 2014. Other developing countries hold the same market potential.
Recently, Google announced Android One, a standard operating system intended to become the first choice for millions of new customers globally. Continue reading Hillary Clinton: Will Her Economic Policies Follow Best Global Practices?