The government in Washington is trying to stimulate growth of industries such as solar energy, electric vehicles and forms of alternative energies, but without a long-term plan on the impact on employment, cost competitiveness and other factors. The level of technology and business planning in Washington is very low.
The result is that employment gain from government-supported projects is low, and many of the projects are not financially prudent.
The bailout of the US automobile industry was necessary, but it was not well-implemented. However, a positive step is better than no action at all.
A counter factor is that the cost of conforming to the government regulations is increasing rapidly for most corporations, which is an effective tax on business.
The government in Washington, however, has not established an environment that will stimulate corporations to accelerate hiring of employees in the US while maintaining global competitiveness.
Most of the US corporations are participating in highly competitive areas and need to be world-class.
The large US government deficits and also the large deficits in many of the states, for example, California, New York and even Texas, are resulting in consumers and corporations becoming very cautious regarding the future.
One of the critical requirements for the US economy to grow is for corporations to increase investments and hiring. This means large, medium and small companies.
The basic steps of what needs to be done are clear, but with no leadership in establishing priorities.
The political fighting in Washington at present is to try to win the presidential election in November 2012 rather than in addressing why the economy is not growing. Reductions in government social services spending need to be made so that stimuli can be provided to boost job creation within corporations. Political leaders are reluctant to take these steps because they are concerned about losing votes.
The brinkmanship regarding the liquidity of the government and raising of the national debt might give the political leaders television exposure for re-election but does not show the characteristics of a well-led country.
It is certain that taxes will be increased in the US in the next 18 to 24 months. President Barack Obama has publicly stated this.
When economies are weak, increasing taxes has historically amplified the weakness. The increase in taxes will reduce consumption, and it is likely that most of the money will be used to support the continuation of social programs.
The US is not recovering, and there is no clear leadership to drive the growth in employment. It is in a downward spiral, which will become worse. And it needs to start developing five-year plans for the growth of the economy, where spending by government must be based on achieving long-term financial goals rather than on how political parties can increase their power.
The author is founder and CEO of International Business Strategies Inc, an international consulting company based in Los Gatos, California. He also authored the book, Chinamerica: The Uneasy Partnership That Will Change the World.
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