1. Rebuilding the American Economy
Barry Bluestone
Center for Urban and Regional Policy
Northeastern University
Boston, Massachusetts
USA
Massachusetts Building Trades Council
May 12, 2004

2. U.S. Job Growth

5. How Do We Explain these Numbers?

6. Productivity is a “Two-Edged Sword”
When economy is growing rapidly, productivity growth boosts wages and living standards
But when productivity grows faster than demand layoffs result
2002 had fastest growing productivity since may have been even faster
Productivity now exceeding GDP growth = Rising unemployment – from 4% to 6% in last three years

9. An Overvalued Dollar
Rise in exchange rate of the dollar from 1999 through end of 2000, followed by high valued dollar through early 2002
Between 1996 and early 2002, dollar appreciated by 30 percent against currencies of industrialized nations
That means prices of U.S. exports were as much as 30 percent higher than similar products made abroad ... and imports became cheap
Dollar is still overvalued relative to the Chinese Yuan and Japanese Yen

11. The Import Explosion – 2004 Exports: $1.147 Trillion
Imports: $1.764 Trillion
TRADE DEFICIT: $617 BILLION

12. Exports/Imports - 2004 Goods Exports: $808 billion
Service Exports: $340 billion
Goods Imports: $1.473 Trillion
Service Imports: $291 billion

13. Imports – From Where? Western Europe 21% Canada 19% Mexico 12%
China %
Japan %
Pacific Rim (NIC) 6.9%
(Korea, Indonesia, etc.)

14. What Made Us Grow in the Past?

15. Answer: Investments in New Technology
Federal R&D Investment in Missile Technology and Space Exploration
Federal and State Investment in Public Infrastructure – Roads, Airports, Seaports, Internet Highway
Public Investments in Education after Sputnik

16. From the Moon to the Home
Investments in integrated circuits, computers and software for missiles and rockets
From DOD and NASA to the factory, office, and the home
From missile guidance systems to laptop computers, GPS, and Palm Pilots

20. A Model of Growth for the 21st Century

21. Sustaining Prosperity
Public Investment in Basic Research
Public Investment in Education
Public Investment in Infrastructure

22. Restoring Social Equity
Higher Minimum Wage
Expand the EITC
Labor Law Reform to Foster Unionization
Fair Trade
Invest in Public Schools
Universal Health Care Coverage
Expand Public Goods (e.g. Transportation, Day Care, Elder Care)

23. Policies for Sustaining Growth?
Tax Cuts for the Rich? (Bush)
Retire the Federal Debt? (Clinton/Gore)
OR ...
Investment in Public-sponsored Research, Education, and Infrastructure?