Unblock America!

If economic growth and job creation are to be restored in America, we must unblock the country and enable smart people -- innovators, creators, and entrepreneurs -- to unleash their creativity.
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There's a lot of discussion in France these days about whether the country is "blocked." Economic growth is too little, job creation is abysmal -- especially among 18 - 30 year olds for more than a generation -- and foreign direct investment plummeted dramatically in 2013. France has one of the highest debt-to-GDP ratios in Western Europe, and it also boasts an extremely high percentage of public servants per capita (almost twice as many as in Germany or the Netherlands). Trust in public institutions and public officials is exceptionally low.

By contrast, many people in France see the United States as a vibrant land of opportunity, characterized by boundless innovation, entrepreneurialism, and venture capital. Would that this French view of the United States were true. As it turns out, the United States may be just as "blocked" as France when it comes to the plethora of detailed rules and regulations that impede efficiency and innovation. To President Hollande's credit, he has recognized the problems and is moving to address the "blockages."

By contrast, Washington remains in gridlock, and few of our leaders are frank about the economic consequences of our growing regulatory state. We have developed a propensity in the U.S. to issue thousands of prescriptive rules, whereas other countries, such as Australia and Germany, regulate by broader principles instead of detailed mandates. Most Americans would probably be surprised to learn, for example, that the United States ranks behind 33 other countries when it comes to the ease of getting construction permits. We are 20th when it comes to the ease of starting a business. If economic growth and job creation are to be restored in America, we must unblock the country and enable smart people -- innovators, creators, and entrepreneurs -- to unleash their creativity.

An unresolved -- and most likely unresolvable -- issue among economists is whether the current slow pace of job creation in the United States is the result of cyclical or structural problems. Undoubtedly, there are aspects of each explanation at play here. A cyclical explanation suggests that there may be little that policymakers can do other than provide short-term stimulus to boost aggregate demand: over time the cyclical downturn will correct itself and life will get better. However, after five-plus years with interest rates near zero (and occasionally negative after considering modest inflation), a George W. Bush stimulus, an Obama stimulus, "cash for clunkers," subsidies for first-time home buyers, plus three rounds of Quantitative Easing ("QE") by the Federal Reserve -- all intended to counter the cyclical downturn -- one has to wonder why this economy isn't growing well above 4 percent annually, with durable goods orders way up, the housing backlog eliminated, and unemployment below 6 percent and possibly much closer to 5 percent. My belief is that the principal causes of this slow growth and lackluster job creation are now more structural than cyclical.

Many parts of the country and the economy are still deleveraging from 2008's financial crisis. Consumers have not returned to previous spending patterns and levels. Moreover, there is massive uncertainty throughout the economy that impedes the private-sector spending and investment needed to restore job creation. There is now uncertainty associated with the impact and timing of the Fed's gradual unwinding of its balance sheet after several rounds of QE; increasing regulatory uncertainty; uncertainty about immigration reform; uncertainty about implementation of the Affordable Care Act (health care, after all, represents some 17 percent of the GDP); and uncertainty over whether Washington can shake off its current political paralysis.

Globally, we face enhanced competition that places a premium on higher skills, but we lack sufficient numbers of people with those skills. As a result, companies like Manpower and Kelly Services report that thousands of well-paying jobs are going unfilled. Trade agreements would enhance competition and create jobs, but these much-needed efforts are now blocked by Congress (at least by the Senate). We are choking on a mass of regulations, complex and burdensome tax policies and tax rates, and excessive litigation.

Bestselling author Philip Howard has a new book out next month, The Rule of Nobody, that presents countless examples of such "blockages" in the U.S. economy. While the U.S. does not (yet) share the cultural hostility of some French to entrepreneurial success and wealth creation, if the recent attention devoted to income inequality is poorly handled, such a debate could actually impede the nation's ability to "grow the pie" first, before we decide how to divide it. Values and mindset are also a key aspect of unblocking America. As Columbia University's Nobel Laureate in Economics, Edmund Phelps, notes in his new book, Mass Flourishing, we also need to "restore the spirit of 'desire and dreams' that animated the West's best economies in their best times."

President Obama's 2009 stimulus program was well-intentioned. Billions of dollars were to be unleashed on "shovel-ready" infrastructure programs that were intended to boost local economies across the nation. As the President later acknowledged, there were few, if any, shovel-ready projects. The ultimate amount spent on infrastructure was, in fact, quite small due to the endless contracting delays, environmental reviews, and permitting requirements. When President Obama met with his Jobs and Competitiveness Council in Durham, North Carolina, on June 14, 2011, he said, "Shovel-ready was not as shovel-ready as we expected."

If we want to restore strong economic growth and job creation in America, we need to move quickly to identify and eliminate the structural impediments that are holding us back. No more task forces, no more studies are needed. We know where the blockages are. What we need are leaders who are impatient to get started.

Charles Kolb, a Lumina Foundation Fellow, is President of the French-American Foundation --United States in New York City. He served in the first Bush White House from 1990 - 1992 as Deputy Assistant to the President for Domestic Policy and at the U.S. Department of Education from 1986 - 1990. If economic growth and job creation are to be restored in America, we must unblock the country and enable smart people -- innovators, creators, and entrepreneurs -- to unleash their creativity. From 1997 until 2012, he was President of the Committee for Economic Development, a Washington, D.C.-based think tank. The views in this article are solely the author's.

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