Larry Summers wants more U.S. exporters. But how?
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President Obama’s chief economic advisor, Larry Summers, today laid out the CliffsNotes version of the administration’s plan for a revitalized U.S. economy.
In a speech at the Peterson Institute, Summers said:
‘The rebuilt American economy must be more export-oriented and less consumption-oriented, more environmentally oriented and less fossil-energy-oriented, more bio- and software-engineering-oriented and less financial-engineering-oriented, more middle-class-oriented and less oriented to income growth that disproportionately favors a very small share of the population.’
More export-oriented? That sounds good, except it’s exactly what most of the rest of the world is trying to work toward, or maintain. We could get there with a steep devaluation of the dollar, but that would enrage our chief creditors, including China.
Another way to get there is to give incentives to people with capital so they’ll want to fund new export-focused businesses or expand existing exporters.
Unfortunately, by being ‘less oriented to income growth that disproportionately favors a very small share of the population,’ you’re potentially taking away incentives from the people who have the capital that new businesses need.
It’s all a question of the right balance, of course. The proposed 5.4% surtax on million-dollar incomes to fund healthcare reform may seem fair to many Americans, but there’s no denying that it would mean the rich would have that much less capital to put to work in the real economy.
-- Tom Petruno