In his State of the Union address two years ago, President Obama promised to double American exports over the next five years. At the time critics called this an unrealistic political promise, one that voters would forget by the 2012 election. But America is currently on track to meet that goal. As of early 2012, exports measure in at about $180 billion each month, whereas two years ago it was $140 billion per month. The growth rate of exports is about 16 percent per year, a trend that at least conceivably could get us to Obama’s target.
Since the recession officially ended, exports have accounted for about half of the nation’s economic growth. They are 14 percent of GDP and rising, reflecting a decades-long trend.1 To some extent, the vagaries of American economic growth inhere in the nature of the increasingly globalized international economy.
American manufacturing employment has been badly hurt by the mobility of capital seeking lower production costs abroad, but the growing wealth of foreign populations in rising economies is creating new demand for imports, including imports U.S. workers can supply. As is well known, America was the world’s leading exporter virtually every year during the latter half of the 20th century, losing that title to Germany only in 2003, and later falling behind China. New circumstances thus prompt the question: Might we someday regain that honor? If so, how will this shape American foreign policy, jobs, education, politics and poverty?
Three Causes for Optimism
Let’s first take a step back and see where these new American exports will be coming from. At least three forces are likely to combine to make the United States an export powerhouse.
First, artificial intelligence and computing power are the future, or even the present, for much of manufacturing. It’s not just the robots; look at the hundreds of computers and software-driven devices embedded in a new car. Factory floors these days are nearly empty of people because software-driven machines are doing most of the work. The factory has been reinvented as a quiet place. There is now a joke that “a modern textile mill employs only a man and a dog—the man to feed the dog, and the dog to keep the man away from the machines.”2
The next steps in the artificial intelligence revolution, as manifested most publicly through systems like Deep Blue, Watson and Siri, will revolutionize production in one sector after another. Computing power solves more problems each year, including manufacturing problems....MORE
We usually link to Prof. Cowen via his Marginal Revolution blog.