Friday, November 09, 2012

David Wessel On the Long-Term US Economy

David Wessel, economics explainer of WSJ, talks about what Mr. Obama should do for tackling the problems lying ahead of the US economy and the world economy.

Mr. David has three points on fixing the US economy:

1) Human and physical capital that will pay off

Government spending ought to be focused on investments in human and physical capital that will pay off—which means spending less than projected on retirement and health benefits.

In regard to upward mobility,

The next four years would be more productive if they began with an acknowledgment that the gap between winners and losers in the U.S. economy has been widening. 

....the distance between the penthouse and the ground floor is growing yet the escalators of mobility—such as education—haven't improved commensurately.

Mr. David says that Mr.Obama needs to improve the education in the US, which is closely related to the accumulation of human capital.

2) Expansionary fiscal and monetary policy that will decrease unemployment

Fiscal and monetary policy should be calibrated to get more of them working before they become permanently unemployable.

3) Climate change that should be tackled soon

"Our climate is changing," New York Mayor Bloomberg wrote,"And while the increase in extreme weather we have experienced in New York City and around the world may or may not be the result of it, the risk that it might be—given this week's devastation—should compel all elected leaders to take immediate action."

...this will be hard for a political system that finds it difficult to look beyond the short term and the next election.

Mr. David says that it is not only Mr. Obama but also the future Presidents that should take the action for the climate change, but the US didn't sign the Kyoto Protocol to reduce the emission of greenhouse gases;

What will the US do for the climate change? I think it is most difficult for the US to tackle of all the issues that the US now face.

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