Long Term Economic Growth of the USA, Essay Example

While the United States is still one of the largest and most influential economies in the globalized world, it has recently lost its economic competitiveness over developing countries, therefore, many authors question whether or not future long term growth is even possible.

The third industrial revolution (Gordon, 2012) has created a more competitive global environment and advanced collaboration technologies that enable sharing knowledge, outsourcing processes, and more effective production of goods. According to Gordon (2012, p. 7), the productivity of the US labor force only grew by 1.33 percent in the United States between 2004 and 2012, and this means that the country itself is losing out on one particular competitive advantage: productivity. While in the second half of the century many females entered the job market, today the country faces with the mass retirement of baby boomers. On the other hand, the new generation’s academic attainment is declining, and developing countries’ youth are becoming more productive and skilled than American Generation Y members. However, the main reason why long term economic growth cannot be maintained in the United States is the fact that – in order to remain competitive – many American companies choose to outsource services and entire operations to countries where labor and operation expenses are lower. Finally, the large amount of household and government debt built up during the economic crisis calls for systematic intervention from the government.

While Gordon (2012, p. 10) states that “can be reduced by a mix of higher taxes, lower expenditures, and lower entitlement benefits”, these government interventions would further squeeze family budgets, and reduce the population’s disposable income that is necessary for the growth of the national economy. Therefore, it is evident that without an advanced, comprehensive strategy that targets all the above problematic areas, long term economic growth cannot be achieved in the United States.