Rana Foroohar, TIME Assistant Managing Editor in charge of economics and business, weighs in on the economic messages in the State of the Union address:
Factory jobs for life are gone. We should worry about China eating our lunch. Education is the way to a bigger paycheck. Clean energy is good; Big Oil is bad (so are greedy bankers). We need better teachers. We need better bridges and railroads. Corporations better pay their taxes. Kids need to study harder. We all need to spend less.
Those were some of the key economic takeaways from Obama’s State of the Union speech, but what struck me most weren’t the top line items (all of which are true), but whether we have the right ideas about what our strengths are, and whether we can still leverage them quite as well in an era in which wealth and power are shifting quickly from West to East.
Take for example, innovation – sure, we’ll need it in spades to create jobs. But how to encourage it? While I have been skeptical of the administration’s green industrial policy, something pretty much every country from China to Germany to Denmark is pursuing (and believe me, we’ll never make green batteries better or more cheaply than China), I thought it was great that the president announced a goal to have 80% of America’s energy coming from clean sources by 2035. Markets like certainty, not dictates – to the extent that we can green the entire economy, rather than pushing a particular industry that might eventually move abroad anyway, it’s a good thing.
Another historic strength Obama cited was immigration; as he put it, “centuries of pioneers have risked everything to come here.” As the president hinted, stapling a green card to every highly educated immigrant’s diploma would be a great idea. But it still won’t make America the hot spot for talent that it once was. The majority of the world’s new growth – and new jobs – will be abroad. China pays top-notch engineers hundreds of thousands in cash to come home. Given all this, we’ll need to accept that there’s simply more competition for the best and brightest, even with much needed immigration reform.
The good news is that they’ll still come here to study. We worry about Chinese kids beating us in math and pretty much everything else (witness the Tiger Mom phenomenon) but the Chinese themselves worry about how to get their kids into Harvard (the title of a recent bestseller in the Middle Kingdom) and also want to emulate our liberal arts educational system, because they worry that their rigorous but rote system won’t turn out people who can invent the next iPod. Indeed, the last time I was in China, I noticed Montessori schools springing up in rich neighborhoods. Higher education in particular will continue to be an edge we can build on – and don’t forget, it’s also a growing export.