Federal Government: Improve Efficiency of National Economy Term Paper

Pages: 6 (2066 words)  ·  Bibliography Sources: 5  ·  Level: College Sophomore  ·  Topic: Economics

Federal Government Improvement of the National Economy

Productivity has been a key driving force behind the United States' rapid economic growth, especially in recent years, and a key to future economic growth rates (White 2001). Governor Laurence H. Meyer stated that maximum sustainable growth was achievable by promoting both full employment and price stability. The past few years have shown the positive effects on the employment-price stability combination. Productivity has helped the Federal Reserve in maintain maximum sustainable growth level. Michael H. Moskow, president of the Federal Reserve Board of Chicago, said that maximum sustainable growth could be determined by adding growth in the labor force to growth in productivity. Many macro-economic factors influence the unemployment rate and inflation rate and their effects on maximum sustainable growth. These effects include monetary policy, fiscal policy and business cycles. Unemployment and inflation, along with other factors, create an impact on the economy as a whole. Chairman Alan Greenspan of the Federal Reserve and other economists observed a phenomenal acceleration of innovation in the American economy. This raised productivity, output, corporate profits and stock prices to levels never seen before. Exceptional growth was highest in the late 90s at 4.3% compared to a fifty-year 3.6% average. The three most prominent factors, which affect labor productivity, have been identified as capital deepening, labor quality and improvement, and multifactor productivity. Over the last year, however, economic growth slowed down and a threat of a recession loomed. In his February 28, 2001 testimony to the U.S. House of Representatives, Greenspan said that the pace of spending had to slow down. He reported that the labor markets were already quite tight and that a continuing disparity between growth demand and potential supply would result in disruptive imbalances. Imbalances would, in turn, create inflation in the economy's attempt to balance supply and demand. Imbalance would negate price stability. An increase in productivity would increase the maximum sustainable growth rate. The Federal Reserve Board is tasked with helping the economy achieve that maximum sustainable growth through the control of monetary policy (White).

Some sectors suggest that the real key to driving the economy forward does not consist only in offering financial incentives but also in encouraging human creativity (Florida 2003). The lure of financial gain may encourage innovation in many ways but can also stifle or waste it. This can and does often happen when creative energy is diverted to narrow channels, like high-luxury goods, or when investor greed is allowed to reign. Money has been erroneously considered and overrated as a basic motivator of human creativity. However, inventors and scientists like Thomas Edison, the Curies and the Wright brothers were driven by creative competition rather than financial gain. They engaged in a race to be first. These sectors thus believe that creative activity should receive priority preference and incentives. They believe that when more people do the good work they truly enjoy, wealth will necessarily follow and not otherwise. Expanding opportunities for creative work and establish a vision for it should be the direction and inspiration of the new century. Other countries have already assumed this direction. Ireland has become the world's second leading exporter of software. Finland has become a world leader in cell phone manufacture with Nokia. Japan's auto firms were the first produce hybrid and fuel-cell cars. India and Indonesia have been pursuing the high-tech fields, such as software and biomedicine. Studies show that creative activities in Toronto and Vancouver in Canada have surpassed those in U.S. cities. A framework has been suggested, which will pursue partisan competition and creative dialogue in rethinking America's economic future. This framework lists four priority goals. The first is an educational system, which develops and harnesses the creative talents of its people. The second is a guiding principle in the nation's economic policy to increase the number of creative jobs and opportunities. The third is the expansion of the role of the nonprofit sector in an envisioned creative economy, which will be free from market pressures to maximize investor returns. And the fourth is for the U.S. To remain an open society, especially to foreign-born talents and scientists, many of whom are being led away by tight security policies. While these policies may be the need of the hour, they can weaken competition when taken too far (Florida).

Innovation is the single critical factor in economic growth and the source of U.S. economic leadership as well as the foundation of its competitiveness in the global economy (Gates 2007).

If it must remain competitive, it must take two critical steps in creating and retaining a workforce of the world's brightest minds. One is to demand strong schools for Americans entering the workforce in the fields of math, science and problem-solving skills. The second is to make it easier for foreign-born scientists and engineers to work for U.S. companies. Businesses must advocate for strong educational policies in science and mathematics for education relevant to the needs of business. Meanwhile, government should work with educators to reform schools and improve educational excellence (Gates).

American economic competitiveness also requires immigration reforms to emphasize the importance of highly skilled foreign-born employees (Gates 2007). The demand for specialized technical skills has long surpassed the supply of native-born workers with advanced degrees. Scientists and engineers from other countries can fill this gap. Computer science employment, for example, has been growing at nearly 100,000 jobs yearly. Yet the number of students graduating with a degree in computer science has been declining. The government's allotment of 65,000 temporary H-1B visas every year to fill the need has not been adequate to fill open technical positions. It appears that permanent residency regulations have made the problem worse. Temporary employees must wait for five or more years in order to get a green card. In that span of time, they cannot change jobs. This limits their opportunities to contribute to their companies' success and overall economic growth. Reforming the green card program to make it easier to retain highly skilled professionals is thus a step to take. These employees are essential to U.S. competitiveness and should be welcomed to contribute to U.S. economic growth. If the U.S. is to remain a global economic leader, it must create an environment where each new generation of people can dream up of innovations, regardless of their places of birth (Gates).

The Government Accountability Office or GAO is an investigative arm of Congress (Hawkins 2007). It is an independent and non-partisan source of expert information and analysis. Senators and representatives often secure these data as references on pressing issues. One of GAO's recent findings was that commerce and State have yet to clearly determine which department has control over the export of certain missile technology items. The confusion increases the risk of these items' falling into wrong hands. Another was that the departments participating in the Committee on Foreign Investments in the United States or CFIUS lack a coordinated approach to two goals. One is defining what constitutes a threat to national security and what justifies an investigation to ensure that the risk of foreign ownership is mitigated (Hawkins). CFIUS' analyses of proposed and completed foreign acquisitions are limited by this lack of agreement among the members. Such lack of agreement has been intensified by continuing economic globalization (Hawkins). A third finding consists of the different interpretations among military services and programs on what constitutes military critical technologies. This condition can lead to different conclusions on what technologies need protection through the use of anti-tamper techniques. On account of its lack of systematic evaluations, commerce cannot readily identify the weaknesses in the confusion over the control of certain exports. It thus cannot undertake the necessary corrective measures, which can allow American companies to compete globally while minimizing risks to other American interests. And a last important finding was the lack of assurance of Defense that its oversight of foreign-owned or influenced contractors can be enough to reduce the risk of unauthorized access to U.S. classified information by foreign interests. In the battle between those who defend transnational commercial interests and officials responsible for national security, corporate lobbyists almost often win. National security should not be a partisan issue. However, the nation's security is the federal government's prime responsibility. Protecting it is the first duty of those who hold Federal office. GAO's report with these findings clearly indicated the need for legislative action to correct the lax oversight in the executive branch. That important step was taken when the House passed the CFIUS reform bill or HR 556, which tightened the oversight. But corporate lobbyists weakened the measure and almost killed on a procedural vote (Hawkins).

The present system is working, according to the Office of Management and Budget (Koskinen 1997). Pursuant to the Government Performance and Results Act, the Office obligates managers to justify their decisions to perform work by in-house, contract or inter-service support agreement. This is done through full and open competitions meant to achieve the best value but lowest cost to… [END OF PREVIEW]

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Federal Government: Improve Efficiency of National Economy.  (2007, April 15).  Retrieved January 15, 2019, from http://allstarrchiro.net/subjects/paper/federal-government-improve-efficiency/34514

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"Federal Government: Improve Efficiency of National Economy."  Essay.  April 15, 2007.  Accessed January 15, 2019.
http://allstarrchiro.net/subjects/paper/federal-government-improve-efficiency/34514.