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New book claims it’s do-or-die time for U.S. economy

The United States will jump start its economy or lose to China by 2040, says Gallup CEO and chairman Jim Clifton in his new book “The Coming Jobs War.”

Clifton says the biggest problem facing the world is an inadequate supply of good jobs. Based on Gallup’s worldwide polling, a good job is the global dream for all citizens and world’s new No. 1 social value.

>> The Coming Jobs War By Jim Clifton, chairman and CEO of Gallup

How are jobs created? The answer is small businesses. Authentic, organic and sustainable good jobs are created through start-ups and shoot-ups, Clifton says. Job growth does not occur in big businesses, which are defined as organizations of 10,000 or more employees. The United States has approximately 1,000 “big” businesses, and they actually decrease in net gained employees annually.

For all-important start-ups and shoot-ups to occur, government must get out of the way. New business don’t occur because of new legislation, new rules, more free money, or government tweaking. They occur during moments of unusually high inspiration and confidence.

It’s safe to say Clifton isn’t a fan of President Obama’s $445 billion jobs bill, which failed in the U.S. Senate this month. Among various provisions, the bill includes temporary payroll tax cuts and temporary tax credits for employers who hire additional workers. But no employer will invest much in new jobs based on an unstable tax system. Employers need certainty.

There will be no surge in start-ups and shoot-ups until leaders change the environment from its current state of no confidence to high confidence. When it does, America will come back, new good jobs will hatch, he says.

If America doesn’t figure it out soon, however, the danger is the country will lose to China.

The Chinese GDP threat

The United States, which has historically been the world’s super power, has a total GDP of about $15 trillion and is growing at 2.5 percent. China has a $6 trillion GDP but is growing at 10 percent. This means that by 2040, the United States will have a $30 trillion GDP, and China will have greatly outpaced us with a $70 trillion GDP. (Are India and Russia threats? Not so much: they each have a GDP of $1.5 trillion.)

By 2040, “China will be the new leader of the world,” Clifton says. “All decisions between countries on the subjects of peace, trade, environment, borders, laws, and human rights would defer to China. … And that’s the end for the American experiment in democracy. The history books will say it worked from 1776 to 2040 and then was overwhelmed by Chinese market-based communism.”

He describes Detroit — which lost its automotive competitive edge to Japan and Germany — as the preview for what the rest of the United States could become of we don’t get our economy out of stall mode.

The only hope is an “economic miracle” of new technological innovation combined with entrepreneurship.

What America needs to know

>> Entrepreneurship is more important than innovation. The United States has a massive shortage of successful business models. Innovation is key, but “the good money and the good jobs comes from the business model, not the invention.”

>> America must declare war on its high school dropout rate, which is approximately one-third. The fate of a nation rides on the financial literacy and entrepreneurial energy of its kids.

>> As exports go, so goes the coming jobs war. The United States must drastically increase its exports. America cannot win the coming jobs war by selling more products to its own consumers. Exporting is the next U.S. man-on-moon moment.

>> America will reduce its healthcare costs or surrender world leadership. No other country carries healthcare dead weight like the United States. Every leader must put health at the core of every decision. Unless the healthcare system is drastically changed, soaring healthcare costs will be the thing that wipes out our nation. Nothing else will matter.

To put it in perspective, America’s healthcare bill for its 300 million people is $2.5 trillion. The U.S. subprime disaster, which caused the Great Recession, cost about $3 trillion, he says.

The surest way to reduce healthcare costs is to promote healthy lifestyle changes in our culture:

“The Centers for Disease Control and Prevention (CDC) reports that more than 75 percent of the total $2.5 trillion healthcare spending is on people with chronic, and in most cases preventable, conditions such as diabetes, heart disease, and obesity. If Americans just took newfound individual responsibility for their own health, lifestyle and well-being, the looming healthcare disaster would be miraculously fixed,” Clifton says.

This is the reason the Mississippi Business Journal has recently featured nutrition-focused stories and plans to include more in the future: it’s an economic issue affecting all businesses that offer health insurance.


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About Amy McCullough

One comment

  1. We need a better trained workforce in this country to compete with China. The U.S. needs more resources in education even if taxes increase to pay for it. Innovators and start ups cannot prosper if there is no trained workforce.

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