We Need More than Competition

President Obama’s push this weekend to make competitiveness the goal of his administration’s push for job creation did not impress Paul Krugman.

It’s OK to talk about competitiveness when you’re specifically asking whether a country’s exports and import-competing industries have low enough costs to sell stuff in competition with rivals in other countries; measures of relative costs and prices are, in fact, commonly — and unobjectionably — referred to as competitiveness indicators.

But the idea that broader economic performance is about being better than other countries at something or other — that a companycountry is like a corporation –is just wrong. I wrote about this at length a long time ago, and everything I said then still holds true.

We can be “more competitive” than other countries and still have hideous unemployment. It is not likely that our competitiveness is going to put 8 million people back to work. The problem won’t be solved until we increase consumer demand, which will only happen when household debt decreases, or when more people go back to work, which won’t likely happen because Congress is not going to authorize more stimulus. The GOP actually wants to cut government spending which will only shrink the economy even more.