America will be back

Even a casual student of history finds that in almost every period of our history contemporaries decried the dissention in the Senate or the House. (In recently read biographies of Lincoln, Coolidge and Lyndon Johnson – 50, 90 & 150 years ago seem very much like today.) But the strength of America comes from the bottom, not the top and most of the innovation comes from outside the Beltway.

The president and congress might sometimes suck, but they are not all there is to America. The “Economist” has a survey of the America that works – the states and the American people. Articles start at this link. States are the laboratories of democracy and their ability to experiment has been one of the open secrets of America’s success for more than 200 years.

Others are indeed catching up, and this is good. It is about time those freeloaders started to pull their own weight, but biggest research nation in the world. We account for a full 31% of all the research done in the world. This is down from an astonishing 38% in 1999 and the absolute dollar amount of research dropped a little in the last five years, but we still are clearly #1 in research.

Research shows the effectiveness of the U.S. mixed system. Government supplies around 31% of research dollars. But the private-public interface is important. For example, one of the greatest innovations of recent decades is fracking for gas. This is a mixture of government-funded basic research, made practical business. The Department of Energy since the 1970s, it only started to work in the 1990s when the private sector made it work.

Shale gas is another big plus for America. The Marcellus already supports over 100,000 jobs in Pennsylvania and this expected to reach to over 220,000 in 2020. Shale gas gave the local economy a $14 billion boost in 2012. Economists at Citibank estimate that shale gas by itself will add a half percentage point to the U.S. GDP EACH year for the next couple of years. Unconventional oil and gas accounted for $238 billion in economic activity, 1.7m jobs and $62 billion in taxes in 2012. Now that is a true stimulus. link

We don’t give up on the federal government, but we need to understand that it will usually be more the consumer than the creator of innovation or wealth. And the Feds can get in the way. The “Economist” has a way of making fun of things in very clever ways. I like this one:

“Proliferating red tape is causing tangles everywhere, from the 400 subsidiary regulations of the Dodd-Frank law on the financial sector to the 140,000 codes the federal government requires hospitals to use for the ailments they treat, including one for injuries from being hit by a turtle.”

Good to know there is a protocol for man-turtle encounters, but imagine the time that went into writing and promulgating those regulations.

But America will go ahead. I have confidence that America will outlast the current hard times. We will be back … again.