Tuesday, June 18, 2013

Dark thoughts suitable for the midnight hour.

Many people are suggesting that the United States is going to have to develop capital for its long term economic health. We remain strong in the development of scientific and technological capital, although other countries are also strengthening their research and development capacity and increasing R&D expenditures.

We are not developing our human capital adequately. We allow a large portion of our youth to drop out of schools. A study in the news today documents that we are not preparing our teachers adequately. Out immigration policies are a mess and we are failing to import as many people with great human capital as we could. We are putting a lot of people in prison rather than helping them to prepare for contributions to the economy.

We are consuming too much and investing too little. Our infrastructure is falling behind and falling apart.

I worry that we are losing the capacity to transfer our capital into economic productivity. Our political institutions are increasingly promoting rent seeking by the one percent rather than investment in new enterprises or expansion of existing enterprises. We continue to increase regulations, making it harder to do business.

We are also running into environmental limits. Many of our non-renewable resources are becoming more expensive to exploit. We are going to have to reduce greenhouse gas emissions if we are to prevent catastrophic levels of global warming. We are going to have to deal with environmental pressures such as water pollution, depletion of fisheries, deforestation, desertification due to the growth of population and economic growth in the rest of the world.

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