The U.S. Economy Is No Longer Competitive, Says Harvard Business Alumni
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What’s wrong with the United States’ economy? Ask a Harvard graduate and the answer would most likely describe the loss of the country’s competitiveness, especially against emerging Asian economies.
In a survey of 10,000 Harvard alumni, which incorporates the opinions of global executives in leadership and decision making roles, 71 percent of respondents expect U.S. competitiveness to weaken over the next three years, mostly because of the inability of U.S. firms to pay high wages and benefits.
What’s wrong with the United States’ economy? Ask a Harvard graduate and the answer would most likely describe the loss of the country’s competitiveness, especially against emerging Asian economies.
In a survey of 10,000 Harvard alumni, which incorporates the opinions of global executives in leadership and decision making roles, 71 percent of respondents expect U.S. competitiveness to weaken over the next three years, mostly because of the inability of U.S. firms to pay high wages and benefits.
The survey on U.S. competitiveness, conducted by Harvard Business School professors and Abt SRBI research firm, aimed to examine the position and trajectory of the United States as a global competitive destination in the global arena.
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In the study, competitiveness is quantified as “the ability of companies in the U.S. to compete successfully in the global economy which supporting high and rising living standards for Americans.”
Professor Michael E. Porter, head of the Institute for Strategy and Competitiveness at HBS said:
[quote] The U.S. is losing out on business location decisions at an alarming rate, and those activities being offshored are more job-rich than those coming in.However, the U.S. retains its core strengths in a number of important areas such as university education, innovation, and entrepreneurship, which means that we have the resources to reverse this trend. The vast amount of data from this survey highlights the need for business leaders, policymakers, and academics to collaborate on practical ways to make progress. [/quote]
The most favourable destinations for offshore business operations were China, India, Brazil, Mexico and Singapore.
When asked how the U.S. could improve on its competitiveness, respondents agreed that the U.S. government could simplify the tax code, reform immigration policies and reduce the corporate tax rate.
However, the U.S. is still recovering from bigger economic problems, 3 years since the start of the debt crisis. In a special feature published on EconomyWatch yesterday, Doctor Doom aka Nouriel Roubini warned:
[quote] First, US consumers remain income-challenged, wealth-challenged, and debt-constrained. Disposable income has been growing modestly – despite real-wage stagnation – mostly as a result of tax cuts and transfer payments. This is not sustainable: eventually, transfer payments will have to be reduced and taxes raised to reduce the fiscal deficit. Recent consumption data are already weakening relative to a couple of months ago, marked by holiday retail sales that were merely passable.At the same time, US job growth is still too mediocre to make a dent in the overall unemployment rate and on labor income. The US needs to create at least 150,000 jobs per month on a consistent basis just to stabilize the unemployment rate. More than 40 percent of the unemployed are now long-term unemployed, which reduces their chances of ever regaining a decent job. Indeed, firms are still trying to find ways to slash labor costs. [/quote]
Related: Beware The Bounce – Why The US Economy Is Still In Trouble: Nouriel Roubini
