There is a word that is sadly missing from the national debate on how to get the US economy growing. That word is opportunity. Opportunity is what ultimately fuels economic growth. US companies did not invest a large share of their efforts in the last decade in places like India or China because the taxes were low or the government was easy to work with. They did it because opportunity was there.
America describes itself as the land of opportunity. But, we currently talk more about government giveaways and tax cuts. Why don’t we want to talk about opportunity? For starters, opportunity does not fit neatly into either side of our bipolar political landscape. A candid discussion about opportunity points out that financial incentives to create jobs, buy equipment, etc. will flow to wherever on the planet opportunity is, and not necessarily to the US domestic economy at all. Opportunity is based on a creative and competitive labor force, and US voters do not enjoy being told that they might have to work harder.
Second, unless one wants to create a communist state, the government’s direct opportunity is short-term. The government’s jobs and other stimulus is a bit like the old joke about Chinese food. A half hour after finishing, you are hungry again. Real opportunity requires a long-term perspective. Unfortunately, the majority of voters currently instead prefer to hear about short-term relief and short-term give-aways.
Third, opportunity is fickle. It is capturing lightning in a bottle. It is telling the difference between fads and trends. What actually creates it? How do you go about helping create it? These answers are dangerous, require long-term vision, and do not often provide short-term results. These attributes are often not rewarded by voters who make decisions based on campaign promises in an every two-year election cycle.
Looking at (i) the characteristics of world businesses that are rushing at new opportunities and (ii) the times of US history when the US exemplified being the “Land of Opportunity”, the following are key:
- Opportunity is assisted by a healthy and expanding middle class. The middle class (i) has a voracious appetite for new products and services, and (ii) is the breeding ground for the next generation of entrepreneurs.
- During periods of opportunity, both individuals and society as a whole were optimistic about a vision for the future and eager to make the investment in technology and infrastructure to make it happen. Currently there seems to be too much thinking that everything would be great if we just went back to the way things were in ’76, with the only dispute as to whether it is 1976, 1876, or 1776.
- The government is only moderately good at creating opportunity. However, the government can be either a facilitator or inhibitor. Westward expansion was a matter of individual initiative, but driven by the Homestead Act (arguably the biggest government giveaway in US history). The transcontinental railroad was built by private industry but with the federal government setting routes and providing cash incentives. The Apollo Program created direct opportunities in aerospace, but more importantly drove innovations in technology and electronics that assisted US dominance in the electronics age. Most recently, a small government program to facilitate communications between companies and universities doing unclassified military projects became the internet.