What did the newly elected Democrats promise during their campaigns?
1. What did the newly elected Democrats promise during their campaigns?
The newly elected Democrats’ election campaign had hovered around fiscal restraint and containing the budget deficit. The promise to minimize government spending will be implemented though curbing the government expenditure in unnecessary programs which includes the highly publicized war against terror and the Iraq war. During the campaign Nancy Pelosi while addressing an audience in Washington compared the government expenditure with that of a common American family and called for a need to restrain government expenditure so fiscal deficit can be reduced and manage all future spending in the same way the mentioned family manages. The democrats stressed on boosting national savings leading to lower the interest rates, increased private investment and creation of more jobs.
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2. “If the value of a family’s home goes way up, but its income dips a bit, is the family better or worse off?” Why?
This US economy has seen extremely fast growth with value of non-movable assets have moved a very upward growth. The household wealth which includes family’s home has attained the highest history value. But the real wages have not seen same result. In real sense, the wages have not risen in last five years. Now looking at the whole scenario, the family is at loss. The wealth in form of asset value is very much dependent on current state of the market and making it very much tentative and the actual growth of the family can be achieved only with higher income which can easily be translated into other forms of investment. This fear is very much substantial because of the rise in trade deficit with apprehensions on the ability of US’s continued ability to compete. The impact of cheap products have made further dent to the local manufacturing sector and has actually caused a loss to the household income of a common American family.
3. “If a U.S.-based company opens up an R&D (research & development) facility in India or China, does its employment of American workers go up or down?” Why? “Does its overall contribution to U.S. growth increase or decrease?” Why?
The economic change of 1990s was the result of innovation and technological change and boost in associated R&D work. But this economic change could not get translated into extraordinary rise in number of jobs newly created. The reason behind this lower growth of job opportunities is due to the rise of investment in R&D facility by U.S. based companies in places like China and India. And this trend is on rise despite the fact that the sector is now facing resource scarcity. So outsourcing of research and development to other countries has actually failed to create any favorable condition for general public which includes American Workers. The rate of rise in new jobs in R&D industry is an all time low. Though this sort of outsourcing has actually helped the US economy in earlier phases of reform process but the condition will not be the same in future. The outsourcing of R&D work is slowly eroding the advantage the US high tech economy used to possess in the last century. With the loss of high tech jobs in the field of computers, electronics and other engineering sectors, the students who are also the workforce of the future, are losing interest in engineering courses. So the loss is not only in form of job opportunities for youngsters but actually is getting translated into the loss of scientific intelligentsia which can affect the scientific environment of US not only in current scenario but is dangerous enough to dispose US from a state of world superpower in research and innovation. US without its high tech economy cannot retain its superpower status in future.
4. What is the importance of the health care industry to the American economy? What does Mandel propose as a new idea for economic policy? What do you think of his proposal?
Health care has always been a major economy booster in America. It is also a very big source of private sector jobs. Apart from this, this sector has often termed as the most advance sectors of American economy. The extra conscious approach of American public towards individual and public health has been a reason for continuous growth of this sector. Any expenditure in health care is taken as an investment which actually gives result in form of better health and hence an individual can generate more revenue by working for longer duration.
Mandel flayed the claims of politicians and economists who actually called this sector as a reason for long term deficits in federal, state and local budgets. He has actually projected this sector as a force of growth rather than a cause behind fiscal deficit. The healthcare sector needs a different approach to get viewed and be termed as an industry providing better workforce to other sectors through its service and the same time is being a sector of high investment, the sector has successfully provided jobs to a large number of persons.
The Mandel proposals are very much revolutionary in concept and are very much applicable. The health care industry should be promoted as a wellness industry and should be given parallel consideration along with sectors like agriculture and FMCG products. Investment by an individual for better health should be treated as policy to boost the output of other sectors while considering the humans at par with capital investment. It’s just like expenditure in oil pipeline which later become a major source for economic development.
5. What would you propose to improve the U.S. economy if you were a member of Congress? Justify your recommendation using economic concepts and reasoning.
The need of the hour is to implement a reform the way the U.S. is outsourcing its work. The offshoring has caused most of the work to get out of U.S. and this outsourcing has been done in such a way that it can not be traced back. Those jobs could never be returned back to U.S. and if this rate continued more and more jobs will get out of U.S. shores. The change of policy should not only take this loss job as a point of concern but also the loss that the economy will have to incur in future. The high-technology industry requires more protection because continued loss of job from the sector will cause the labor force of tomorrow to quit the sector. So to promote participation of youth and students in technology and high tech sector, the job security factor should be introduced in the curriculum and the industry leaders should be made of this fact and for every job outsourced the company should create the same number of job within U.S. Job creation will actually enforce the growth of intellectual capital. The industries should be made aware of the fact that they are currently in position to take their money outside U.S. in form of FDI to developing countries only because of the economic and technological superiority of U.S. So any outsourcing of jobs should be considered only after satisfying this clause. The companies will have to work in such a way that super power states of U.S. should be maintained.