China GDP Up 10.7%, Perhaps The US Could, Too

China’s GDP grew 10.7% in the fourth quarter, a figure that the economies in Japan, the US, and Europe will never see again.

Or will they? The US GDP grew more than 7% after the 1983 recession and there are several reasons that could happen again.

American will have to be industrialized again. That probably means the government will have to offer American manufacturers aggressive tax incentive to upgrade  plants or build new ones. That is already happening in the auto industry. New plants are more efficient and less costly.

The services sector has to be rebuilt through creating new jobs. The federal government will have to do part of this through job incentives. The balance relies on ingenuity. Software was not an industry in the early 1980s and most of the hardware industry did not exist either.

The government has to spend billions of dollars to block piracy of US entertainment and software assets. That may mean talking a hard stance with the Chinese because it bleeds billions of dollars out of the US services economy each year.

The government will have to offers incentives for companies to hire workers for less than they were paid in their last jobs, and workers a financial incentive to take those jobs by supplementing their incomes. The day of the $50 assembly line worker is over and those people will never find comparable jobs in the US or anywhere else of that matter.

Finally, the government will have to lower business taxes. These taxes may not be entirely regressive, but they do take a part of the profits from most successful companies.

Many of these programs will cost the government money, but it is probably better spent on real growth opportunities than it is on wind farms

Douglas A. McIntyre