By most counts, the U.S. economy started growing in the middle of last year. For many Americans, though, it does not feel as if the Great Recession has ended—unemployment and underemployment are still alarmingly high, and job growth is weak. Many causes have been suggested for both the economic collapse and mediocre recovery, but one that is hardly ever mentioned is income inequality. This is a mistake. Growing income inequality in the United States and the policy responses it has spawned have done tremendous damage to our economy. And because we continue to ignore this underlying problem, the risks of our policies leading to another calamity will not go away, no matter what we do to reform the financial sector.

Since 1968, income inequality has been steadily increasing in the United States. I am not referring to the Croesus-like income of a John Paulsen, the hedge fund manager who in 2008 netted over $3 billion, about 75,000 times the average household income. I refer to a more worrying everyday phenomenon that confronts most Americans, the disparity in income growth rates between a manager at the local supermarket and the typical factory worker or office assistant. Since the 1970s, the wages of the former, typically workers at the 90th percentile of the wage distribution in the United States, have grown much faster than the wages of the latter, the typical median worker. Or consider the table below, which shows that the wages of occupation groups that are paid more than the national average in 2002 have grown much faster since then than the wages of occupation groups below the average:

[SNIP]

Here’s what I’d like to see instead: the United States improving the capabilities of all of its working-age population and then providing exactly the creative and knowledge-based services that growing emerging markets need. As the demand in these markets expands, the dynamic U.S. economy will grow alongside, banishing current fears about unsustainable debt and unfunded entitlements. But to reach this future, America needs to accept it has more than a cyclical problem. It has to give more Americans the ability to compete in the global marketplace. This is much harder than doling out credit or keeping interest rates really low, but it will pay off in the long-run.

Full article @ TNR.com

==========================

In sacrificing global competitiveness, the country's entrepreneurs have grown from the riches from within.  Instead a model of development -- global development -- was possible with increasing global competitiveness. That of course having not been achieved, the investment needs to take place in completely different ways than we are seeing today. That's the essence fo the article... I wish the author had expanded beyond the last paragraph and gone into specific suggestion.

I believe the focus on education that we have seen in the last couple of weeks -- which seems more genuine than all the rhetoric we have heard last year --- if that continues is a great thing for the US.  We really lag way too far behind countries like India and China in our K-12 education in depth and rigor... (but not in breadth where we do far better).  For the present world, we really need depth and rigor in science and math... and those core subjects are really lacking the focus in US education.

There are many other ways US can spur global competitiveness of US firms... but somehow it has been unable to extend that support thus far.