Delaney: Policymakers must respond better to twin economic megatrends

 

By Donald C. Fry

How important to our economy is the issue of competitiveness for business growth?

It should be at the top of the nation’s priority list, Maryland’s newest congressman John Delaney told a group of chief executive officers gathered for the Greater Baltimore Committee’s 2013 Chesapeake Conference of CEOs focused on competitiveness last week.

Delaney put it rather bluntly. If the United States doesn’t become more competitive, “we’ll become a country of birthright” instead of a land of opportunity for all, he told more than 60 CEOs who gathered at the Hilton Baltimore for a day of GBC-led workshops to begin drafting a private sector-driven strategy to strengthen competitiveness for business growth in the Baltimore region and the state.

Nationally, government policymakers have not responded well to the twin megatrends of globalization and rapid technology development, contends Maryland’s 6th-district freshman who is the only former CEO of a publicly-traded company in the House of Representatives.

The result has been that two sectors – the highly educated and those with access to capital – have enjoyed disproportionate economic benefits from these trends during the last two decades. But the average American “has really been hurt” by the megatrends.

“They happened way too fast and we weren’t quite prepared for it as a country,” Delaney said. “And it has, at some level, really threatened our competitive position in a lot of industries.”

The only way to counter this is to put into place policies that take the trends of technology and globalization and “position the United States to compete at the highest level and actually create jobs that have a decent standard of living.” The depth of the challenge goes beyond sluggish employment statistics.

“When you look behind those numbers, and if you look at the standard of living of the average American, that’s where you become most concerned,” Delaney saod.

A troublesome demographic shift in America is already underway, he warned. Certain zip codes are “de-linking” from the rest of the country in terms of educational quality, levels of educational attainment, the number of job opportunities, the breadth of those opportunities, the pay scale, and the various measures of quality of life.

“That’s because, in my judgment, the benefits of globalization and technology have not been broadly distributed,” Delaney said.

He points to education as the key to reversing this trend.

“There’s never been a stronger correlation in our country’s history between the quality of economic opportunities you have if you’re well-educated and those that you have if you’re not well-educated,” Delaney said. “It’s dramatic. We really need, as a country, to think in a transformative way about how to move more educational opportunities to more citizens and make sure they’re affordable.”

Maybe education reform should include “turning some of the approaches we’ve had on their head.” For example, take the concept of lower class sizes, he brainstormed. Shouldn’t the best teachers be teaching as many students at possible?

In addition to education reform, other issues Delaney cited as essential to a national resurgence in competitiveness are immigration reform, development of a national energy policy, and re-investing in infrastructure.

“By any measure, comprehensive immigration reform will improve the competitiveness of this country,” Delaney contended.

He also cited “staggering” economic benefits that could be realized through a national energy policy. “The two most important numbers for an economy to be successful are the cost of money and the cost of energy.” The United States can keep the cost of money down through smart fiscal policy and can keep the cost of energy down, Delaney reasoned, if we have a national energy policy “that steers us toward a cleaner, energy future but also embraces the natural gas revolution.”

Meanwhile, he has proposed legislation to create a $50 billion privately-funded national infrastructure bank to guarantee infrastructure-related debt of state and local governments. The bill has garnered bi-partisan support from 28 House members – 14 Republicans and 14 Democrats.

Implementing a framework of transformative policies around education, immigration, energy and infrastructure must be done in a practical way that’s successful in a political context and that nurtures the kind of business growth “that actually creates meaningful employment,” Delaney said.

With the exception of immigration reform, which is a national issue, the same can be said for Maryland as we pursue our own state’s competitiveness agenda.

Delaney points to two key factors that shape good policy – incentives and compromise. Contrary to less-than-positive public opinions of Congress as a body, the people in Congress are, for the most part, smart and have “the right kind of motivations,” Delaney said he has discovered. “But there really are a bad set of incentives in government, in terms of how people behave and how they approach situations.”

Delaney was among 20 newly-elected, mostly Democrat representatives who in March voiced frustration with “gridlock and dysfunction” in Congress and called on House leaders of both parties to stop focusing on partisan battles and to instead negotiate “responsible compromise” to address the nation’s fiscal challenges.

Successful government policy must be framed around “good ideas that are rooted in compromise” which, Delaney said, is not a bad word. “In business, you’re always compromising. And the right answer is often through compromise.”

These are words to keep in mind as policymakers work in Washington, D.C. and in Annapolis to address the fundamental strategic issue our time – strengthening competitiveness.

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