World Economists Confirm America's Decline Under Obama
World Economists Confirm America's Decline Under Obama (Major Update: U.S. Downgraded Two More Positions Today)
U.S. voters are being barraged by claims and counter claims of how many jobs were lost or created under the Obama administration, did the Detroit bailout hurt or help, and whether Obama or Republican stonewalling are to blame for the feeble recovery. This partisan din kicks up a huge cloud of dust as self-appointed "independent fact checkers" and "nonpartisan" think tanks contradict each other. Large numbers of economists, some prominent and others less so, line up on both sides. Pity the harried undecided voters in search of non-partisan information.
American voters could well look above our political fray to the World Economic Forum'sGlobal Competitiveness Index (GCI). Every year starting in 2004, the GCI ranks the world economies by their "competitiveness," defined as "the set of institutions, policies, and factors that determine the level of productivity of a country," which, in turn, determines "the level of prosperity that can be earned by an economy."
Throughout most of its short history, the GCI ranked the United States first or second. At times, Switzerland, Finland, Singapore, Denmark, and Finland have given the U.S. a run for its money.
The GCI, to its credit, addresses what should be the core issue of any political debate in any country: How well have country leaders managed the economic and political institutions that create prosperity and growth? Obama should be re-elected or "let go" depending on how American voters evaluate his stewardship of America's political and economic institutions.
The World Economic Forum's motto is: "Committed to Improving the State of the World." Its annual winter meeting in Davos, Switzerland attracts the world's jet-setting political, business, and intellectual glitterati as they discuss issues de jure - the world economy, health and HIV, climate change, and globalization. Presidents, prime ministers, central bankers, queens and parliamentary/congressional notables rub shoulders with Bill Gates, Russian oligarchs, Henry Kissinger, Bill and Hillary Clinton, Al Gore, and Kofi Annan.
When George Bush passed the baton to Barrack Obama in January of 2009, the 2008-2009 edition of the GCI ranked the U.S. number one as it had since 2006-2007.
The 2008-2009 report gave the U.S. top ranking despite its ongoing financial crisis and shaky banking system because "the country is endowed with many structural features that make its economy extremely productive and that place it on a footing to ride out the business cycle and economic shocks." So, the GCI projected that America's relative strengths - its efficient product, labor and financial markets, higher education, innovation, and business sophistication - would allow the new administration to handily overcome its weaknesses - deficits, debt, and primary education.
Contrary to this upbeat assessment, America experienced the worst economic recovery of postwar history under the Obama administration.
Fast forward now to the 2011-2012 GCI report's explanation of why the mighty U.S. fell from first to fifth place during the three years of Obama:
"While many structural features continue to make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system...... On the other hand, there are some weaknesses .....that have deepened since past assessments. The business community continues to be critical toward public and private institutions (39th).... it remains concerned about the government's ability to maintain arms-length relationships with the private sector (50th), and it considers that the government spends its resources relatively wastefully (66th).... and regulation more burdensome (58th). A lack of macroeconomic stability continues to be the United States' greatest area of weakness (90th)."
While the efficiency and innovation of American business remain highly ranked, at third and fifth respectively, our public and private institutions' score (36) ranks us with Ireland, Spain, and Israel; our arms-length ranking (50) is matched by Ethiopia, Poland, and Jordan; our government-waste (66) equals Azerbaijan, Iran, and South Africa; and our regulatory-burden (39) ties with eight countries that include Panama, Trinidad, Mali, Ireland, and El Salvador.
The 2010-2011 GCI report warns that our lack of macroeconomic stability will "likely weigh heavily on the country's future growth." The U.S.'s government-deficit ranking (139) is matched by Greece, Botswana and Swaziland. (No surprise that the Europeans did not want to be lectured by Timothy Geithner).
UPDATE: The 2012 GCI report issued September 5 downgraded the U.S. two more points from fifth to seventh on the second day of the Democratic national convention (See today's Drudge Report).
The World Economic Forum's apolitical Global Competitiveness Index reinforces the "restore America's greatness" mantra of Mitt Romney and Paul Ryan. It confirms that the American free enterprise system suffered serious setbacks under Obama. The GCI shows that the very things that Conservatives criticize - wasteful government spending, unsustainable deficits, burdensome regulations, crony capitalism, lack of government transparency, and business mistrust of government institutions- are indeed dragging down the US economy and must be corrected and soon.
When candidate Obama promised the "people of the world" a more cooperative, humble, and carbon-free America in Berlin, his audience did not expect America's relative decline. Europe, like the rest of the world, needs an America of strong economic and political institutions, growth, and innovation.