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Introduction
We are undergoing a stress in our economy due to various factors. The present economic crisis perhaps could have a severe impact as the Great Depression had in the past. However, for the purposes of this essay, we shall assume that many adverse factors had been overcome or at least substantially tackled by the very great support extended by the federal government in an unprecedented and timely manner so that the economy is substantially restored and is on an even keel. Accordingly we are making a number of carefully thought-out suggestions which would improve the growth in different sectors of the economy. The aim is to restore the premier position held in world economy by the U.S.A. at the end of the Second World War.
Resilience of Economy
The economy posted a strong gain of 3.3 percent at an annual rate in the second quarter, led by growth in consumer spending, exports, and a well-timed and appropriately sized stimulus package. This level of growth demonstrates the resilience of the economy in the face of high energy prices, a weak housing market, and difficulties in the financial markets. (The White House, press release, Sep.8, 2008). It is not for nothing it is said that our economy has strength to overcome many challenges.
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Manufacturing Sector
This was the backbone of the economy when it surged forward to be the leader of the world economies. American manufacturing sector was full of innovations, visions, dynamism and great productivity that it could supply machineries and manufactured goods to the extent of sixty to seventy per cent in the world. It was not only the envy of the world, but it set the tone for the domination of America in the reconstruction of post-war economies after the second world war. The gradual shift from manufacturing to money market was undoubtedly a pointer to the decline of the importance of American economy today.
Efforts must be made, therefore, to restore manufacturing activities to their prime place again. We were the leading car manufacturers and also of countless machineries as well. We have allowed places like Detroit to become deserted cities. Foremost priority must be given to this. There must be revival of auto industry, and concentration of production of capital goods. Chemicals, engineering products and rubber products must be given greater incentives.
Balance of Trade
Sufficient attention and care should be bestowed on favorable trade of balance. In spite of enormous dependency on maintaining exports with practically uncontrolled imports, all is not lost. Unfortunately the present global recession trends could delay wiping out our unfavorable conditions. Still, as all the advanced nations are facing recessionary trends and possibly the wherewithal to stop imports or add to imports, the Government would do well to encourage exports, cut down marginally on imports without inviting reciprocal action from other nations.
The following data does give a re-assurance on this front.
Unemployment
There were 3.3 million job openings in the U.S. on the last day of August 2008. The job openings rate (2.3 percent) fell slightly while the hires rate (3.0 percent) and total separations rate (3.2 percent) were essentially unchanged. (Bureau of Labor Statistics, October 7, 2008). The same source explains how the lay-offs come about.
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If one were to take into consideration the shift from production to speculation in the pattern of economy, the above figures need not alarm us. The right step would be vigorously pursue manufacturing activities which would avoid a number of fluctuations in the employment level. A sustained effort would bring the unemployment figures to 3 and less than 3 percent in a matter of three years.
Interest rates
To a great extent the present lowering of interest of Federal Reserve has eased the credit crunch even among inter bank transactions. However, this will not be a permanent solution and care should be exercised in proper regulation. That apart, with reference to recent innovations in offering a higher rate to savings deserves to be encouraged. APY or Annual Percentage Yield through online reverse auctions should go a great way in mopping up resources for the banks. A relook at the Savings/Investment theories deserves careful consideration.
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Wholesale Prices
One of the effects of the increase in wholesale price which goes unnoticed is the retail purchasers will feel the impact sometimes up 25%. From pharmaceuticals to many daily consumption of articles, therefore, vigorous awareness on the part of consumers should be there. The Government must effectively check unreasonable and arbitrary increase in the wholesale price to render equity to citizens.
Income-tax rates
While much is talked about concession to the very upper crust and giant corporations, not much is done to reduce the burden of middle class tax payers. Even if the slab is reduced by 10 to 15 percent for this segment, a substantial amount would be pumped into consumption by it which would lead to buoyancy in economy. As it is this section is charged between 15 and 25 percent of its income. A reduction would, therefore, have the desired effect of increase in savings marginally and sustain spending.
Tourism Promotion
It might appear as commonplace but somehow we are not actively promoting tourism in our country. It might be argued that without much incentives there is a substantial inflow. But if efforts are made to rope in middle class families from Asia or Europe or Africa by offering concessional rates and less expensive accommodation and provide a glimpse of the grace and natural beautiful sights in the U.S.A. not only the income would be substantial but employment generated in this particular field would be substantial. Even among the citizens of the U.S.A. not all travel to all places of interest. A subsidized travel package would indeed make many not so affluent to tour the country and take pride in what the country has to offer.
Cutting the military expenditure
The budget figures of our armed forces are staggering. Honestly with a huge nuclear pile of arms and most sophisticated weaponry and equipment, are there rivals for the U.S.A.? The expenditure can be reduced by 30 to 40 per cent without sacrificing even an iota of security required to protect us. The billions thus saved could be utilized for constructive activities like development of infra-structure, etc.
Conclusion
In a brief essay like this, we have covered some areas of our economy which could be boosted with a positive and determined approach. The United States should regain its pride of place in manufacturing sector and by eschewing speculative financial activities could continue to be the champion of free enterprise, positivism and the benefits of democracy.
References
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Mastrianna, F. (2007). Basic economics. Mason, Ohio: Thompson South-Western.
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U.S.A. Today, 2008.
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U.S.Department of Treasury.
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U.S.Department of Labor in the 21st century. 2008.
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