Since the beginning of the recession in 2007, it has become a fashionable among intellectuals to predict a future of slow growth and gradual economic decline in America. Yet America has a way of confounding the predictions of the intellectuals, and there are many things going its way which may allow standards of living to rise in the 21st century just as they did in the 20th.A new McKinsey Global Institute report maintains that America has many opportunities for growth and offers suggestions on how the U.S. can take advantage of them. These suggestions—which include increasing productivity in health and education, improving links between education and the job market, and creating a deregulated, innovation-friendly business climate—touch on many themes Via Meadia has been closely following. The suggestions are summarized at AEI’s Enterprise Blog:
Boost productivity in the U.S. healthcare and education system. MGI notes that public and regulated sectors such as health care and education represent more than 20% of the US economy, but has persistently low productivity growth. But if the US public sector could halve the estimated efficiency gap with similar private sector organizational functions, its productivity would be 5 to 15 percent higher and would generate annual savings of $100 billion to $300 billion. How to do it? MGI doesn’t offer a specific plan other than emphasize how crucial it is that there is a strong linkage between reward and results. And part of that means better information so consumers can make better choices. […]Develop the U.S. talent pool. Think of this: MGI estimates that the U.S. may face a shortfall of almost two million technical and analytical workers and a shortage of several hundred thousand nurses and as many as 100,000 physicians over the next ten years. In aerospace, 60% of the workforce is aged over 45 years old compared with 40% in the overall economy. The United States should a) remove barriers to older workers staying in the workforce longer, improve incentives to technical and analytical training, for example through innovative funding mechanisms and direct links between jobs and educational institutions); and reduce barriers to the immigration of skilled workers.
These are just a couple of the report’s many interesting suggestions, but they may be the two most important. The way things stand right now, health care and education are becoming two of the largest burdens on our country’s finances—public and private. Both need significant restructuring to increase productivity—education especially. It is good to see prominent intellectuals devoting serious thought to these issues. We need more of it to keep America prosperous going forward.