Peter Morici

The economy is recovering from a harsher than normal winter, but the pace of growth the balance of this year and next will not create nearly enough decent jobs for the millions unemployed and recent graduates working at venues like Starbucks.

It’s easy for President Obama to blame Republicans in Congress, and visa-versa, and for both to put their hopes in the Federal Reserve’s stewardship of monetary policy, but decades of bad trade, energy and education policies pursued by both parties have torpedoed prosperity.

A succession of trade agreements has opened U.S. markets to foreign manufacturers in Asia, whose governments continue to erect high barriers to competitive American products. Meanwhile, federal policies limit oil and gas development off the Atlantic, Pacific and Eastern Gulf Coasts.

The United States has chosen to pay its way in the world with exports of knowledge-intensive services but the math doesn’t work. The annual international trade deficit on manufactures and oil is about $615 billion, whereas the surplus on services is well less than half that amount.

Although knowledge-intensive juggernauts like Google and Citigroup create high paying jobs in science based disciplines and finance—and America still has notable knowledge- intensive manufacturers in industries like pharmaceuticals—those simply don’t create the growth and numbers of high quality jobs lost to the surge of imported cars, coffee tables and computers.

Since the beginning of this century the economy has grown 1.7 percent annually and created only 6 million jobs, as compared to 3.4 percent growth and 41 million jobs during the Clinton-Reagan prosperity.

Also, the knowledge economy requires workers with very different skills than the industrial age. It places a premium on specialized technical expertise and a capacity for self-directed learning, permitting workers to jump from employer to employer as new technologies create and destroy industries and jobs. As compared to 25 years ago, consider how many web designers and how few print journalists we have today.

What jobs the economy creates are either in the well-paying knowledge economy or in low-paying activities like restaurants, residential cleaning services and the produce aisle at Wholefoods.

Our educational system produces enough great scientific minds but not nearly enough technically sound folks with old fashioned “get up and go” to fill the needs of the new knowledge economy. It still largely graduates too many generalists who expect someone else to provide a desk and paycheck.

Peter Morici

Professor Peter Morici is a recognized expert on economic policy and international economics. He has lectured and offered executive programs at more than 100 institutions including Columbia University, the Harvard Business School and Oxford University.

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