Fixing the US and Getting to Higher GDP Growth

by

The US economy should have 4-5% GDP growth.

Matching Korea’s Broadband would be a 2.5% GDP boost

Arthur D. Little and Chalmers University of Technology study shows that doubling the broadband speed for an economy increases GDP by 0.3%. A 1000 times increase in broadband speed should mean a 3.0% boost in GDP.

If the US were to build out 1 gigabit per second internet, there should be a one time boost of about 2.5% in GDP.
This would be $375 billion each year and increasing with further GDP increases. The US has an average broadband speed of about 4-5 mbps.


Since 1991 to 2010, the telecom companies have pocketed an over $320 billion — that’s about $3,000 per household. This money was supposed to be used to keep the communications network up to date.

In 2009, the FCC’s National Broadband plan claimed it will cost about $350 billion to fully upgrade America’s infrastructure.

South Korea, a country of 48 million people, spent $24 billion to rollout gigabit per second internet that is completing this year. It is gbps in large cities while rural areas have 50-100 mbps.

Other Infrastructure

The American Society of Civil Engineers (ASCE) estimates the U.S. needs $2.2 trillion dollars of infrastructure spending during the next 5 years, of which $1.18 trillion has not been budgeted.

The US has been underspending on roads and other infrastructure.

The United States now ranks twenty-third overall for infrastructure quality between Spain and Chile; government expenditures on infrastructure have fallen to just 2.4 percent of GDP; in contrast Europe invests 5 percent of its GDP on infrastructure and China 9 percent; U.S. infrastructure investment has fallen behind largely as a result of the highway trust fund’s declining revenues, which are generated from gas and vehicle taxes.

Deteriorating surface transportation infrastructure will cost the American economy more than 870,000 jobs and suppress the growth of the country’s gross domestic product by $3.1 trillion by 2020.
That’s according to the report “Failure to Act: The Economic Impact of Current Investment Trends on Surface Transportation Infrastructure,” released July 27 by the American Society of Civil Engineers.

Fixing the infrastructure would be about a 10% GDP boost over 10 years or about 1% per year in GDP growth.

The report finds that, in 2010, deficiencies in America’s roads, bridges, and transit systems cost American households and businesses more than $129 billion. That includes vehicle operating costs, delays in travel time, and safety and environmental costs.

A detailed analysis of public infrastructure spending. (A 2012 paper from the Federal Reserve Bank of San Francisco for the National Bureau of Economic Research)

Shocks to federal highway funding has a positive effect on local GDP both on impact and after 6 to 8 years, with the impact effect coming from shocks during (local) recessions. However, we find no permanent effect (as of 10 years after the shock).

Energy

The Energy Sector in the United States is a $1 trillion portion of the economy (7.7% of US GDP and 5% of employment) and impacts the rest of the economy.

Energy policy and plans could be adjusted to double energy by 2025 or 2030.

Existing nuclear reactors can have conventional extended uprates to increase power by up to 20%.
Annular fuel could be developed to increase power by 20-50%.

Natural gas and oil is already increasing again and policies in California, Alaska and other states could enable more oil and gas.

There are possibilities for energy breakthroughs with nuclear fusion and modular deep burn nuclear fission.

Medicine, Healthcare and Public Health

The US spends about 16.0% of GDP on healthcare. Other OECD countries are spending about 7.5% to 10.0% of GDP. The US is not getting more value for this extra spending in terms of life expectancy.

Here is a 125 page report on preventing healthcare problems (2011)

National Prevention Strategy :

The seven Priorities are
• Tobacco Free Living
• Preventing Drug Abuse and Excessive Alcohol Use
• Healthy Eating
• Active Living
• Injury and Violence Free Living
• Reproductive and Sexual Health
• Mental and Emotional Well-Being

Research from the Milken Institute suggests that a modest reduction in avoidable risk factors could lead to a gain of more than $1 trillion annually in labor supply and efficiency by 2023.

Closing the Education Gap would be Worth up to $2.3 trillion

A persistent gap in academic achievement between children in the United States and their counterparts in other countries deprived the US economy of as much as $2.3 trillion in economic output in 2008, McKinsey research found

The Organisation for Economic Co-operation and Development (OECD) found that in 2006, America ranked 25th out of 30 industrialized countries in math and 24th in science. Moreover, cross-country comparisons of US students at two different ages—9–10 and 15—suggest that the closer they get to joining the labor force, the further they lag behind their international counterparts in reading, math, and science. The gap’s impact is startling: if the United States had closed it by 1998 and reached the level of the top performers, such as Finland and South Korea, the US GDP could have been $1.3 trillion to $2.3 trillion higher in 2008. To put the facts another way, the gap imposes a higher recurring annual economic cost on the US economy than the current recession does.

International experience confirms that it is possible to make progress in closing these gaps: not only have two dozen countries made substantial progress in overall achievement, but 17 countries that exceed US performance levels also have a narrower gap among children of divergent socioeconomic backgrounds.

California and Texas, for example, are two large, demographically similar states. But in educational attainment, students in Texas are, on average, one to two years ahead of California students of the same age, even though Texas has a lower per capita income and spends less per pupil than California does

Finland has an education reform success story

Leaders in Finland attribute the gains to their intensive investments in teacher education—all teachers receive three years of high-quality graduate level preparation completely at state expense—plus a major overhaul of the curriculum and assessment system designed to ensure access to a “thinking curriculum” for all students. A recent analysis of the Finnish system summarized its core principles as follows:

Resources for those who need them most.
    High standards and supports for special needs.
    Qualified teachers.
    Evaluation of education.
    Balancing decentralization and centralization

The process of change has been almost the reverse of policies in the United States. Over the past 40 years, Finland has shifted from a highly centralized system emphasizing external testing to a more localized system in which highly trained teachers design curriculum around the very lean national standards. This new system is implemented through equitable funding and extensive preparation for all teachers. The logic of the system is that investments in the capacity of local teachers and schools to meet the needs of all students, coupled with thoughtful guidance about goals, can unleash the benefits of local creativity in the cause of common, equitable outcomes.

“The Finns have worked systematically over 35 years to make sure that competent professionals who can craft the best learning conditions for all students are in all schools, rather than thinking that standardized instruction and related testing can be brought in at the last minute to improve student learning and turn around failing schools.”

By the mid-1990s, the country had ended the highly regulated system of curriculum management (reflected in older curriculum guides that had exceeded 700 pages of prescriptions). The current national core curriculum is a much leaner document—featuring fewer than 10 pages of guidance for all of mathematics, for example—that guides teachers in collectively developing local curriculum and assessments. The focus of 1990s curricular reform was on science, technology, and innovation, leading to an emphasis on teaching students how to think creatively and manage their own learning.

There are no external standardized tests used to rank students or schools in Finland, and most teacher feedback to students is in narrative form, emphasizing descriptions of their learning progress and areas for growth.

Prospective teachers are competitively selected from the pool of college graduates—only 15 percent of those who apply are admitted—and receive a three-year graduate-level teacher preparation program, entirely free of charge and with a living stipend. Unlike the United States, where teachers either go into debt to prepare for a profession that will pay them poorly or enter with little or no training, Finland made the decision to invest in a uniformly well-prepared teaching force by recruiting top candidates and paying them to go to school. Slots in teacher training programs are highly coveted and shortages are virtually unheard of.

Teachers’ preparation includes both extensive coursework on how to teach—with a strong emphasis on using research based on state-of-the-art practice—and at least a full year of clinical experience in a school associated with the university. These model schools are intended to develop and model innovative practices, as well as to foster research on learning and teaching. Teachers are trained in research methods so that they can “contribute to an increase of the problem-solving capacity of the education system.

Military and Defense

The US spends 4.6% of GDP on defense (not including the operating costs of the wars). The UK only spends 2.6% of GDP. China only spends 2.0% of GDP. If the US reduced spending on defense to 2.6% of GDP, the US would still stay ahead of any other military well into the 2020s. By using the money to develop the economy would mean that the US would have a larger economy in the 2020s and 2030s and would be a stronger position.

This is not like before WW2 where there was a buildup of Nazi Germany and the Allies underspent. The US has built up a military lead that is beyond what Russia, China or other powers have or will have for a couple of decades. There are also nuclear weapons. The big powers will not have a war. There is deterrence. The real competition is economic. The US is losing the economic competition.

The US should divert $300-500 billion per year from militarism to nation building the United States.

If you liked this article, please give it a quick review on ycombinator or StumbleUpon. Thanks

Fixing the US and Getting to Higher GDP Growth

by

The US economy should have 4-5% GDP growth.

Matching Korea’s Broadband would be a 2.5% GDP boost

Arthur D. Little and Chalmers University of Technology study shows that doubling the broadband speed for an economy increases GDP by 0.3%. A 1000 times increase in broadband speed should mean a 3.0% boost in GDP.

If the US were to build out 1 gigabit per second internet, there should be a one time boost of about 2.5% in GDP.
This would be $375 billion each year and increasing with further GDP increases. The US has an average broadband speed of about 4-5 mbps.


Since 1991 to 2010, the telecom companies have pocketed an over $320 billion — that’s about $3,000 per household. This money was supposed to be used to keep the communications network up to date.

In 2009, the FCC’s National Broadband plan claimed it will cost about $350 billion to fully upgrade America’s infrastructure.

South Korea, a country of 48 million people, spent $24 billion to rollout gigabit per second internet that is completing this year. It is gbps in large cities while rural areas have 50-100 mbps.

Other Infrastructure

The American Society of Civil Engineers (ASCE) estimates the U.S. needs $2.2 trillion dollars of infrastructure spending during the next 5 years, of which $1.18 trillion has not been budgeted.

The US has been underspending on roads and other infrastructure.

The United States now ranks twenty-third overall for infrastructure quality between Spain and Chile; government expenditures on infrastructure have fallen to just 2.4 percent of GDP; in contrast Europe invests 5 percent of its GDP on infrastructure and China 9 percent; U.S. infrastructure investment has fallen behind largely as a result of the highway trust fund’s declining revenues, which are generated from gas and vehicle taxes.

Deteriorating surface transportation infrastructure will cost the American economy more than 870,000 jobs and suppress the growth of the country’s gross domestic product by $3.1 trillion by 2020.
That’s according to the report “Failure to Act: The Economic Impact of Current Investment Trends on Surface Transportation Infrastructure,” released July 27 by the American Society of Civil Engineers.

Fixing the infrastructure would be about a 10% GDP boost over 10 years or about 1% per year in GDP growth.

The report finds that, in 2010, deficiencies in America’s roads, bridges, and transit systems cost American households and businesses more than $129 billion. That includes vehicle operating costs, delays in travel time, and safety and environmental costs.

A detailed analysis of public infrastructure spending. (A 2012 paper from the Federal Reserve Bank of San Francisco for the National Bureau of Economic Research)

Shocks to federal highway funding has a positive effect on local GDP both on impact and after 6 to 8 years, with the impact effect coming from shocks during (local) recessions. However, we find no permanent effect (as of 10 years after the shock).

Energy

The Energy Sector in the United States is a $1 trillion portion of the economy (7.7% of US GDP and 5% of employment) and impacts the rest of the economy.

Energy policy and plans could be adjusted to double energy by 2025 or 2030.

Existing nuclear reactors can have conventional extended uprates to increase power by up to 20%.
Annular fuel could be developed to increase power by 20-50%.

Natural gas and oil is already increasing again and policies in California, Alaska and other states could enable more oil and gas.

There are possibilities for energy breakthroughs with nuclear fusion and modular deep burn nuclear fission.

Medicine, Healthcare and Public Health

The US spends about 16.0% of GDP on healthcare. Other OECD countries are spending about 7.5% to 10.0% of GDP. The US is not getting more value for this extra spending in terms of life expectancy.

Here is a 125 page report on preventing healthcare problems (2011)

National Prevention Strategy :

The seven Priorities are
• Tobacco Free Living
• Preventing Drug Abuse and Excessive Alcohol Use
• Healthy Eating
• Active Living
• Injury and Violence Free Living
• Reproductive and Sexual Health
• Mental and Emotional Well-Being

Research from the Milken Institute suggests that a modest reduction in avoidable risk factors could lead to a gain of more than $1 trillion annually in labor supply and efficiency by 2023.

Closing the Education Gap would be Worth up to $2.3 trillion

A persistent gap in academic achievement between children in the United States and their counterparts in other countries deprived the US economy of as much as $2.3 trillion in economic output in 2008, McKinsey research found

The Organisation for Economic Co-operation and Development (OECD) found that in 2006, America ranked 25th out of 30 industrialized countries in math and 24th in science. Moreover, cross-country comparisons of US students at two different ages—9–10 and 15—suggest that the closer they get to joining the labor force, the further they lag behind their international counterparts in reading, math, and science. The gap’s impact is startling: if the United States had closed it by 1998 and reached the level of the top performers, such as Finland and South Korea, the US GDP could have been $1.3 trillion to $2.3 trillion higher in 2008. To put the facts another way, the gap imposes a higher recurring annual economic cost on the US economy than the current recession does.

International experience confirms that it is possible to make progress in closing these gaps: not only have two dozen countries made substantial progress in overall achievement, but 17 countries that exceed US performance levels also have a narrower gap among children of divergent socioeconomic backgrounds.

California and Texas, for example, are two large, demographically similar states. But in educational attainment, students in Texas are, on average, one to two years ahead of California students of the same age, even though Texas has a lower per capita income and spends less per pupil than California does

Finland has an education reform success story

Leaders in Finland attribute the gains to their intensive investments in teacher education—all teachers receive three years of high-quality graduate level preparation completely at state expense—plus a major overhaul of the curriculum and assessment system designed to ensure access to a “thinking curriculum” for all students. A recent analysis of the Finnish system summarized its core principles as follows:

Resources for those who need them most.
    High standards and supports for special needs.
    Qualified teachers.
    Evaluation of education.
    Balancing decentralization and centralization

The process of change has been almost the reverse of policies in the United States. Over the past 40 years, Finland has shifted from a highly centralized system emphasizing external testing to a more localized system in which highly trained teachers design curriculum around the very lean national standards. This new system is implemented through equitable funding and extensive preparation for all teachers. The logic of the system is that investments in the capacity of local teachers and schools to meet the needs of all students, coupled with thoughtful guidance about goals, can unleash the benefits of local creativity in the cause of common, equitable outcomes.

“The Finns have worked systematically over 35 years to make sure that competent professionals who can craft the best learning conditions for all students are in all schools, rather than thinking that standardized instruction and related testing can be brought in at the last minute to improve student learning and turn around failing schools.”

By the mid-1990s, the country had ended the highly regulated system of curriculum management (reflected in older curriculum guides that had exceeded 700 pages of prescriptions). The current national core curriculum is a much leaner document—featuring fewer than 10 pages of guidance for all of mathematics, for example—that guides teachers in collectively developing local curriculum and assessments. The focus of 1990s curricular reform was on science, technology, and innovation, leading to an emphasis on teaching students how to think creatively and manage their own learning.

There are no external standardized tests used to rank students or schools in Finland, and most teacher feedback to students is in narrative form, emphasizing descriptions of their learning progress and areas for growth.

Prospective teachers are competitively selected from the pool of college graduates—only 15 percent of those who apply are admitted—and receive a three-year graduate-level teacher preparation program, entirely free of charge and with a living stipend. Unlike the United States, where teachers either go into debt to prepare for a profession that will pay them poorly or enter with little or no training, Finland made the decision to invest in a uniformly well-prepared teaching force by recruiting top candidates and paying them to go to school. Slots in teacher training programs are highly coveted and shortages are virtually unheard of.

Teachers’ preparation includes both extensive coursework on how to teach—with a strong emphasis on using research based on state-of-the-art practice—and at least a full year of clinical experience in a school associated with the university. These model schools are intended to develop and model innovative practices, as well as to foster research on learning and teaching. Teachers are trained in research methods so that they can “contribute to an increase of the problem-solving capacity of the education system.

Military and Defense

The US spends 4.6% of GDP on defense (not including the operating costs of the wars). The UK only spends 2.6% of GDP. China only spends 2.0% of GDP. If the US reduced spending on defense to 2.6% of GDP, the US would still stay ahead of any other military well into the 2020s. By using the money to develop the economy would mean that the US would have a larger economy in the 2020s and 2030s and would be a stronger position.

This is not like before WW2 where there was a buildup of Nazi Germany and the Allies underspent. The US has built up a military lead that is beyond what Russia, China or other powers have or will have for a couple of decades. There are also nuclear weapons. The big powers will not have a war. There is deterrence. The real competition is economic. The US is losing the economic competition.

The US should divert $300-500 billion per year from militarism to nation building the United States.

If you liked this article, please give it a quick review on ycombinator or StumbleUpon. Thanks