The Business Horizon Quarterly (BHQ) is the Emerging Issues team's signature publication. Its purpose is to share informed insights on emerging issues facing the American business community. By asking questions like “what is growth?” and “what is innovation?”, we aim to inform and to spur debate.
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Federal policymakers have been consumed lately with various efforts—productive and foolish alike—to reduce the federal deficit and tame long-run debt projections. After the severe recession and a large amount of stimulus spending drove the deficit to $1.4 trillion in 2009, many lawmakers, economists, and concerned voters began a renewed effort to curb the size of government and put the federal budget on a sustainable path. Substantive, structural changes to federal health and retirement policies are necessary to achieve this goal.
Yet, such entitlement reforms are not the only changes necessary to improve the fiscal outlook and secure the well-being of future generations. A vigorous pursuit of strategies geared towards promoting economic growth is an important complement to any reforms to Medicare, Social Security, and other mandatory spending programs.
This article analyzes the economic growth prospects for tax reform in particular, offering a brief sketch of where we are today and an assessment of the potential impact that plausible, pro-growth tax reform could have on the federal fiscal outlook.
The near-term fiscal outlook has improved.
Innovation is vital to a U.S. economy desperately in need of job creation. University researchers are making breakthroughs across a range of subject areas, like renewable energy, material science, medical technologies, and Big Data. To ensure these innovations grow into job-creating commercial products and services, government, industry, and academia must collaborate throughout the innovation process.
Doing so will be a game changer for the country.
The federal government has a central role in funding basic research and aligning it with the public need, while universities and private industry share primary responsibility for delivering on the federal investment. For universities, moving the discoveries and ideas germinating on our campuses into the real world where they can do real good is critical to fulfilling our mission.
At the University of Washington (UW), it is our obligation as a public university to serve the community. Among the many important ways that we do this is by bringing to market innovations that can improve lives and change our communities for the better. Therefore, we set a goal a year ago to double the number of startup companies spun out from UW research over the next three years. We met our goal in one year. Achieving this goal brings economic benefits, to be sure, but much more important is the impact it has on the lives of real people—an impact that would only grow with improved collaboration among innovation stakeholders.
From where I sit, it feels like the study of the liberal arts and the culmination of that education—the liberal arts and sciences degrees—are being challenged like never before. State governors, top business executives, and parents are questioning the end products that come from liberal arts institutions. In a recent Washington Post article, a managing director of a major financial management company complained that a liberal arts education mainly created “incredibly interesting, well-rounded cocktail party guests” but not graduates who are likely to find jobs.
Unfortunately, I think that a too-narrow focus on first jobs for graduates has these folks missing the bigger point—liberal arts institutions educate for employment, but they also educate for success. That’s the “plus” in our system, our game changer, and I will come back to that later.
I must say that the frustration of critics is completely understandable: unemployment rates remain high, and college education, already shockingly expensive, is growing ever more so. Students are graduating with unprecedented debt. People are concerned about the value—the return on investment of a college degree. It’s no surprise to me when high school students and their parents approach our admissions counselors asking, “So, what kind of job will Susie be able to get with her bachelor of arts degree?” or more pointedly, “Do you offer STEM education?”
America has a competitive advantage in energy compared to the rest of the world. We have some of the most advantageous natural gas prices, resulting from the growth of shale gas production. This wasn’t always the case. In the mid-2000s, energy intensive industries reduced production and closed facilities. Manufacturing companies looked for opportunities to move facilities to regions of the world with more favorable energy costs. Today, shale oil and gas has changed the outlook for “Made in America.” Fifty new major industrial projects have been announced, including petrochemical, steel, and fertilizer manufacturing.
The American Chemistry Council estimates that growth in manufacturing will entail $72 billion in capital investment and construction activity and a 7.3% manufacturing expansion. This growth will contribute 662 thousand direct and indirect jobs and contribute $342 billion to the economy.
Several studies look at the direct economic benefit of energy production. The economic benefit of abundant energy goes far beyond the immediate benefit of production and beyond the political rhetoric of energy independence. Energy abundance offers real opportunity to renew America’s manufacturing base.
Energy in Manufacturing
We asked our Scholars and Fellows what they thought the ultimate game changer is for this year.
What do you think the ultimate game changer is? Tell us in the comments!
“The impact of Sheryl Sandberg’s “Lean In” movement on not only how both genders conceive of their roles at home and at work, but also how employers approach cultivating female talent and building flexible work policies.”
“Growing shale oil and oil sands production, along with improving energy efficiency and alternative transportation fuels, such as natural gas, will exert downward pressure on oil prices. Oil prices could fall by 20% or more in a few years.”
“The abundance of mobile connectivity and computing power available in your hand. The explosion of tablets and smart phones is changing the ways in which we work, learn, play, and run our businesses.”
“The realization that the Internet, already the greatest tool of knowledge diffusion, is exploding some of the worst and most stagnant features of formal education, setting the stage for lower-cost learning and higher-value teaching.”