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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (27387)	2/1/2004 1:52:02 PM
From: LindyBill	Respond to of 793931

ON THE CONTRARY The Weight of the World on Our Shoulders By DANIEL AKST Daniel Akst's column tilts at conventional business wisdom and appears the first Sunday of each month. E-mail: culmoney@nytimes.com. EVERYONE seems worried about an exodus of high-skill jobs from the United States to third-world countries. But those fears are probably misplaced. While some such jobs are moving overseas, the American economy will generate many more at home. And a lot of the jobs that go overseas will be more in the nature of 4 a.m. technical support for personal computers. Americans benefit from that, too. The savings from that phone center in India are built into your new $350 PC. There is no great shortage of jobs in this country anyway. Unemployment is at a level that, a generation ago, would have been considered hard to achieve without significant inflation. Immigrants continue to pour in, and to find work. Well-educated Americans will do just fine; foreigners are so confident in our economy that it is the beneficiary of huge capital inflows. Indeed, the real threat to the American economy is not competition from successful foreign lands but the enormous drag imposed by countries that cannot produce the kind of strong, consistent growth required for global prosperity. A world that depended for so long on American military power for political security now depends on American consumer spending for economic security, and I suspect that this new dependence will prove just as troublesome. Over the long run, it's probably not sustainable. By most accounts, the global economy is on an upswing. So why the worries? Consider the European Union, collectively the world's second-largest economy, after that of the United States. With aging populations, high social welfare costs, rigid labor policies and lagging productivity gains, European countries appear condemned to slow growth for years to come. The demographics of Europe are especially worrisome; an older population is likely to be more focused on preserving the status quo than on taking risks, and fewer young workers will be supporting ever more retirees. Then there is China. Its torrid growth may not be all that it seems, as Alwyn Young, an economist at the University of Chicago, has shown. China reported average annual growth of 9.2 percent from 1986 to 1998, but systematic underreporting of inflation accounts for perhaps three of those percentage points, Dr. Young says. Another big chunk is attributable to rising participation in the labor force and a shift of workers out of agriculture. All of this assumes that the data are correct, and they may not be. The numbers come from China's closed political system, which I suspect lacks the flexibility, transparency and responsiveness to cope with the challenges of modernity. The country's banking and legal systems are weak. If tapped-out American consumers stop spending, its economy could be in trouble. On to Japan. Despite some modest signs of life recently, its problems continue. Having an aging population of its own, and yet unwilling to embrace immigration, Japan still has not undertaken the fundamental reforms needed to bolster its economy. Large sections of the globe, meanwhile, are not even within shouting distance of sustainable prosperity. Africa's problems are nearly overwhelming, and the Middle East remains addicted to oil revenue and autocracy. As for Latin America, every time one country starts doing well, another appears to falter. Even recent bright spots like India, Russia and Brazil are by no means on track for guaranteed steady growth. And this says nothing of the threat of terrorism. The world's great hope is that materialistic Americans will buy enough goods to propel everyone else forward. I, for one, am ready to do my part. But what if financial markets turn sour? Or the domestic housing market crashes, or the dollar collapses? Most discussions about the American economy should end by acknowledging that everything will probably be O.K., because that is how it usually turns out. But if we must worry, we should worry about the right things, not about job flight. Let's help American workers with the cost of adapting to economic changes and redouble our emphasis on education - and then focus on nudging the world's other big economies to get themselves growing again. Copyright 2004 The New York Times Company