How to make America rich again

25th May 2012

In a nutshell: "save more, make more, sell more". That's according to Ron Kirk, the U.S. Trade Ambassador who held a recent talk at the London School of Economics to set out his plans for getting the American economy moving again.

Mindful Money went to the talk to find out what lay behind his mantra of  ‘more, more, more'.

Here's our summary of what Kirk had to say:

 

America needs to: Protect intellectual property to boost creativity

Kirk argued that ‘Intellectual Property theft saps the life blood out of any market in which it occurs and puts consumers at risk around the world.'

No surprise then that he supports the controversial Anti-Counterfeiting Trade Agreement. The agreement, whose aim is to prevent counterfeit goods from being exchanged between nations is no panacea.

Critics believe that some of the measures proposed by ACTA such as monitoring Internet behavior is  ‘highly intrusive' and interferes with personal liberty, but Kirk strongly disagrees. He argues that ‘piracy destroys the creative spirit that is crucial to financial growth, and since no single government can tackle the challenge of privacy, implementing this act should be a case of shared leadership."

 

America needs to: Promote full access to global markets

Advocating for drastic trade liberalization in order to promote free market flow, Kirk argued that the US-EU partnership has worked to expand WTO membership to a wider variety of countries. As a result, he said, "… there are more opportunities at the multilateral negotiation table as well as higher expectations for these economies [that] have benefitted from the opening of markets at the multilateral level."

Kirk cited India, China and South Africa as examples of countries that have seen the positive impact of multilateral trade organization, and the entry of Russia into the rules-based WTO system-a move supported by President Obama-stands to benefit all other countries involved.

 

America needs to: Invest in Small Business

Kirk lauded President Obama for his commitment to investing in medium and small businesses to assist with worldwide growth. Indeed, he cited Washington and Brussels as two markets that are working to support small business who wish to expand to international markets, especially in the Middle East and North Africa.

"We're eager to increase our trade and investment links with MENA countries in transition," Kirk argued, pointing out that anywhere from 93-97% of international exporters are defined as small or medium size. Because small businesses will not outsource a la corporations, Kirk cited education, financing-and the simplification of trade-as a means of supporting small businesses, although specifics regarding how to support education were not offered.

 

America needs to: Go Shopping

In addition to saving more, making more and selling more, lay the obvious implication that America needs to, buy more.  Kirk wants to increase both trade with Europe and to new and emerging economies, but cautions that ‘we need to find a proper balance between our ambitions and being the worlds biggest consumer. One way we do that is by encouraging trade, either through lateral or multilateral efforts.'

 

A Trade off

During a time when many Americans view trade with suspicion, blaming it for the loss of domestic jobs, Kirk, rather unsurprisingly (he is Trade Ambassador after all) strongly believes that it's only through assisting in the growth of other nations and partnering with them through trade agreements that the US will grow it's own economy.

So it was a message of shared prosperity then, of what's good for the world will also be good for America, that all boats rise with the tide of growing global trade. But as Warren Buffet famously said of risk: "It's only when the tide goes out that you learn who's been swimming naked." 

There's no such thing as a free lunch then, or for that matter, a free trade agreement.

 

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