Page last updated at 00:00 GMT, Friday, 6 February 2009

Obama stimulus package questioned

Lesley Curwen
Presenter, Business Daily, BBC World Service

President Obama
Will the US stimulus package target the right areas?
Professor Michael Porter is boyish in his enthusiasm. His work may be taught at most business schools in the world, but he's no ivory-tower pedant.

Professor Porter, who sweeps his hands expansively through the air while talking at a hundred miles a hour, has been called "the doyen of living management gurus", a pillar of Harvard Business School and author of textbooks on competitive advantage and strategy.

Professor Porter has also advised various governments on economic policy and in the past was picked out to lead a presidential commission by Ronald Reagan.

So when he expresses concern that the US government's economic stimulus package has not targeted the right areas, it's worth listening to his arguments.

Short-term jolt

Professor Porter concedes that America does need something to stimulate its ailing economy.

But he is not impressed with the shape of the package presented to the US Congress - leaving aside the controversy over the "Buy America" clause.

We're falling into the trap of taking an enormous amount of money that we really don't have right now, and not necessarily spending it well
Michael Porter

The current package includes almost $300bn (205bn) of tax-cuts and twice that in extra government spending, which would extend unemployment benefits, and increase spending in some areas of healthcare, education and transport.

It is all meant to give a short-term jolt to the economy and set in motion projects that will create jobs over the longer term.

Self-interest

The plan has left Professor Porter frustrated.

In his opinion, much of it displays "the usual pork-barrel, favourite projects" and he insists that America ought to be identifying the fundamental challenges facing its economy and the country and investing in those.

The country, he says, ought to focus on "issues which would be critical constraints to our future".

In Professor Porter's view, those include the problem of access to higher education, and a dearth of spending on research and development.

He accepts that some parts of the stimulus package addresses those subjects, but not enough; much of it is about the politics of local self-interest, he believes.

'Washington is broken'

Asked why the plan from the Obama team is being rushed through, Professor Porter considers for a moment, before saying:: "I don't think it's so much their plan.

President Obama has an ability to break the pattern - it will be interesting to see if he can use his tremendous amazing popularity
Michael Porter

"It's a plan that's come out of the political process in Washington," he adds.

That's the trouble.

In his view "Washington is broken".

"It's not good at strategic thinking and it's become a circus that jumps from issue to issue and soundbite to soundbite."

Professor Porter believes the US has never dealt with any of the real issues that affect its competitiveness, such as healthcare and public education.

Any suggestion that these are major problems that need time and thought for wholesale reform, time that America's economy does not have, are met with a reminder that there are short-term things that could be done immediately.

House for sale in Centerville, Virginia
Billions of dollars have already been spent helping suffering homeowners

One example would be providing better access to higher education.

Increasingly, Professor Porter insists, university is unaffordable.

America's educational attainment in terms of university education has "not gone anywhere in 20 years".

The stimulus could provide student loans and grants to support kids going to college, and grants to allow people to re-train, he suggests.

"This kind of activity does put money into the economy. It helps the short-term problem, but it's investing behind a fundamental priority, and if we don't address that priority, the country's not going anywhere."

'Nip and tuck'

Professor Porter's is not the only voice raised in criticism of the existing stimulus package.

Any number of politicians and economists have expressed a range of concerns, but his centre on America's long-term competitiveness.

He still hopes though, that the plan may yet be adjusted.

"President Obama has an ability to break the pattern", he muses.

"It will be interesting to see if he can use his tremendous, amazing popularity to start to nip and tuck on this stimulus package and get more of it aligned with the nation's real agenda."

He professes to have enormous respect for President Obama's economic team, but tempers that with a concern that he "would like to see some more business expertise and credentials in his people".

But could the United States manage to re-invent itself?

Professor Porter sighs and talks about his tremendous faith in the resiliency and dynamism of the US economy "which over and over again, takes its hits and moves on".

People across the world should not be pessimistic about the US, he insists, though there is a "but".

With the current stimulus plan, he says, "we're falling into the trap of taking an enormous amount of money that we really don't have right now, and not necessarily spending it well".



Print Sponsor




FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific