What US policymakers can learn from other countries: new book

Aniket Shah, co-editor of the book ‘Learning from the World: New Ideas to Redevelop America’, is one of those clever people who try to help the world solve big problems. In this case, the problem is the US economy’s structural problems.

Shah and his co-editor have decided to show the US what it can learn from the rest of the world, rather than the other way around. Shah highlights some of the major concerns about the US economy on the CNBC Power Lunch show with Alec Hogg (Biznews publisher) and Gugulethu Mfuphi.

Viewers are warned: this book is not an easy read. If you get your teeth into it, though, you will learn – among other things – that the US is also grappling with a severe unemployment crisis.  The gap is widening between the rich and the poor.  Shah and his co-editor draw on countries as diverse as Bhutan and Finland to offer some suggestions to US policymakers. – JC

What US policymakers can learn from other countries

 

To watch this CNBC Power Lunch video click hereAniket Shah

GUGULETHU MFUPHI:  We’re on our way to Cape Town where we’re going to review the book ‘Learning from the World’.  Regarding new ideas and new ideas in particular, to redevelop America, co-editors Joe Colombano and Aniket Shah point out what has happened outside the borders of the United States.  Joining us from Cape Town now, is one of the co-authors Aniket Shah.  Aniket thanks so much for joining us.  If we can perhaps go through the research in compiling this book that has had a positive response from some of the reviewers that we’ve noticed.

ANIKET SHAH:  Thank you very much, for having me.  The premise of this book is that America has structural problems that have not been solved through the crisis and over the last five years.  The project started a few years ago when my co-editor Joe and I saw an increasing exuberance about the cyclical recovery in the United States, but less and less discussion about the structural problems that brought America into the 2008 crisis to begin with.  What’s new about this volume is there’s no book out there on the market that explains what America can learn from other countries.  We fundamentally believe that over the past 30 years, countries all around the world, whether it’s in Europe, Asia, or here in Africa have figured out certain areas of economic governance, social policy and health policy better than the United States.  This book seeks to provide new solutions to America’s problems based on those case studies.

ALEC HOGG:  It’s a rather dense book, Aniket.  I really worked hard and I tried hard to read it.  Are you aiming it at academics?  I can tell you that it’s soporific and you well know, that means it puts you to sleep.

ANIKET SHAH:  The book is meant for both an academic and policy-maker audience.  We’ve had fairly strong pickup amongst universities in the United States and overseas, and of course, we hope that the academic community takes these lessons to heart.  Our real goal however, is for policy-makers sitting in the United States, to open up their eyes and realise that the world is actually improving outside our borders a lot more than we think it is.  In addition, instead of bemoaning or begrudging these improvements, America should open up its eyes and its ears to these solutions and have them inform American challengers, much in the same way that America provided a key role model for countries around the world over the last 20 to 30 years.

ALEC HOGG:  A couple of the graphs you published in your presentation were very illuminating.  The one, corporate profits as a percentage of GDP – which is getting higher and higher, and the other one – wages as a percentage of GDP.  I suppose there are different ways of interpreting this, but the feedback I’m getting clearly, from the World Economic Forum and people at MIT, is that young people just don’t want to work for companies anymore.  They therefore start their own businesses and they actually start making more money than they would have done if they were working for wages.  Is that one of the themes you picked up?  I didn’t see it in your book.  Is it however, one of the themes you picked up in your research?

ANIKET SHAH:  I wish that were the case.  I think young people are actually suffering a lot in the United States because they’re unable to find employment.  They are unable to pay off their mounting student debt and as a result, some of them go into the start-up world in the technology space and small business.  The real challenge is how you employ a much larger group of people who have a higher wage structure in the United States, than in the rest of the world.  We – the financial media and press – therefore often picks up on the few wonderful case studies of Facebook, Twitter, and young entrepreneurs who make a lot of money.  In fact, the challenge in America is youth unemployment …and underemployment is approaching 50 percent for college graduates from the class of 2012.  We therefore need to figure out ways as a country to employ this generation of highly educated, highly determined young people in a global context that has changed remarkably, since their parents graduated from colleges.  That is a theme that we do pick up in this book and provide some insight from case studies around the world, whether it’s education policies in Finland, labour policies in Germany, or whether it’s actually a new way of measuring a country’s wellbeing and happiness from countries such as Bhutan.

ALEC HOGG:  It’s very interesting because I guess it’s extremely patchy.  The people in Silicon Valley – and I’ll give you an example – one of the guys who was presenting at Davos was saying that his daughter who has recently graduated, put down the phone after her 22nd job request.  She said no.  She’ll rather go into her own business.  This is a guy from a venture capital company.  He funded Facebook etcetera, so perhaps he has that reflection.  Is it patchy, then?  Is it just Silicon Valley where things are going ballistic and there are not enough jobs for the skilled people, or those graduates you talk about – the 50 percent who aren’t getting jobs – what did they graduate in that they are unemployable?

ANIKET SHAH:  There are a few interesting takeaways from this.  One is that America is becoming an increasingly unequal society and we’re seeing this, just in some of the data that’s coming out right now.  Even in the recovery over the last five years…over 90 percent of that economic recovery went to the top one percent of income earners.  From a labour market perspective, one must understand that many of these technology companies actually employ very few people.  WhatsApp for example, which recently sold for 19 billion Dollars actually employs less than 100 people.  You can actually figure out ways to have extremely high valuations with fewer and fewer workers.  Fundamentally, and one of the issues we discuss in our book, is what happened to America was actually informed by what happened overseas.  Nineteen-seventy-nine is probably the most important year in twentieth-century economic history because that’s when China opened up to the world and in the early 1990s, India opened up to the world.  That much additional labour for U.S. businesses, meant very high profits, but companies were able to do that with much fewer workers, especially much fewer workers in America.  We therefore have a significant employment challenge in the United States and this is something where you need a combination of public policy and private sector involvement to solve. American business and government need to start working more on the same side for the people, rather than just for pure corporate profit.

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