Finding America's recovery in a resource-based past
Through most of the early part of the last century, America was considered a manufacturing powerhouse. But surprisingly, the author notes, the resource sector was a major contributor to the economy. And it was not just being blessed with rich natural deposits, but rather it was the U.S. applying business know-how to maximize production.
For over a century, the U.S. produced more oil than any other country, and even today we are still the third biggest oil producer in the world. The U.S. today is the world's leading producer of items such as lumber, corn and poultry, number 2 in coal, oranges, soybeans, and gypsum, and third in cotton and lead. Our abundant natural resources have always been an important advantage for America, and are still an important advantage today.
Remember that the U.S. was the home to Big Muskie in the mid-1900s, the biggest dragline ever built.
The report notes a number of instances where regulation may be hampering investment and new jobs, rare earths being one where the U.S. gave the market to the Chinese due to environmental regulation and high labour costs. However, the authors find that it is demand, not problems with regulations, that is the main cause of the ecnomic slump.
Obviously what we need to do is weigh the costs of regulation against the benefits. Just because the costs are higher in a recession, that does not mean that new regulations during a recession are always a bad idea. But I do believe Americans need to acknowledge that, both because of the current economic weakness, and because of the longer-run challenge in finding a basis for future economic growth and current-account balance, we are poorer than we used to be.