Similarly, unlike Canada, which shares many of the same demographics shaping U.S. labor markets, the United States has chosen to outsource—not reduce—environmental risks associated with petroleum development by shutting down or curtailing production on the Atlantic and Pacific Coasts, the Gulf and Alaska.
Those policies are responsible for a $475 billion trade deficit, which easily suppress growth from 3.4 to 1.9 percent. Just the lost R&D, so prevalent in manufacturing and energy but now captured by foreign competitors, could boost U.S. economic growth by 2 percentage points a year.
Also, dysfunctions in banking, higher education and health care imposed by misguided regulations and government subsidies permit professionals to earn inflated incomes but harm the availability of credit, workers with the skills employers need and affordable health care and insurance. Along with the inefficiencies imposed by the excessively complex corporate and personal income tax systems, those lower productivity, investment and growth dramatically.
Emerging from a long recession, the economy should grow at 4 or 5 percent and create the needed jobs, but misguided and abusive government policies do not permit the economy to accomplish takeoff speed and raise wages.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. He tweets @pmorici1