A Flight Plan for the American Economy

Growth is back, but jobs still aren't. Here are five ways to bring unemployment down

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Photograph by Stefan Ruiz for TIME

U.S. manufacturing could surge on the back of products like Pratt & Whitney's new lean, green jet engines

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The German path is simple to describe but harder to follow. Focus on technical education, technical institutes and polytechnics, as well as apprenticeship programs. Specialize in high-end, complex manufactured products that can command a premium price. Call it the BMW model. Or, for that matter, the Pratt & Whitney model.

Retraining. There are millions of Americans in industries like automobile parts in which lost jobs are unlikely to ever come back, certainly not at the pay they once commanded. That means people — many in their 40s or 50s — need to find new jobs. We need to create retraining programs for an entire generation of workers. Nothing we have done so far matches the scale of the problem. We need a program as ambitious as the GI Bill, which put returning veterans through college after World War II and prepared a generation of Americans for good jobs. Like the GI Bill, it would have to be a program in which government paid a large share of the costs while educational institutions provided the services. The private sector should also get involved by identifying what jobs the economy needs and creating apprenticeships and internal training to match up with national efforts.

Growth industries. A huge part of any effort to create jobs should be to simply look at where jobs already are being created and to double down in these areas. America is the world's greatest exporter of culture: movies, TV programs, songs. Why can't we increase these exports dramatically? One obstacle is that foreign governments often block cultural imports or fail to protect intellectual-property rights. The Obama Administration should make it a priority to press governments like China's, which has adopted an extremely restrictive policy toward U.S. entertainment products.

Our contentious health care debate aside, the U.S. is a destination for people around the world who seek top-quality medical care. Why not try to double or triple the number of people who go to the U.S. for treatment? Similarly, tourism accounts for millions of jobs, yet we have no plan to think about it as an industry and to increase its size. Unlike almost every other major country, the U.S. has no department of tourism, no growth plan, no coordination, no national ad campaigns. Far from trying to get more people to visit America, we spend a great deal of time, energy and effort scaring them away. It works. In surveys by the U.S. Travel Association, an industry group, foreigners said the most important deterrent to traveling in the U.S. is an unfriendly visa and immigration process.

Small businesses. The Kauffman Foundation has found that from 1980 to 2005, nearly all net job creation in the U.S. occurred in firms that were less than five years old. That suggests that we should focus on improving the ecosystem for start-ups and small businesses by funding basic research, streamlining the patent process, limiting regulation and encouraging venture-capital and private-equity companies that fund new ventures. Perhaps the single biggest boon for small companies would be to let in more skilled immigrants. We train the world's best and brightest at our universities (often at taxpayer expense), and then, just when they will begin to file patents, make inventions, start companies and create jobs, we throw them out. Our loss is China and India's gain.

Jobs for now. While all the policies I have outlined above are important, they will take years to develop and take effect. The crisis, however, is with us now, and we need a short-term policy too. The bulk of the job losses in the past few years have been in construction and housing. We have armies of unemployed or underemployed workers in these fields. And we know America's infrastructure is crumbling. The American Society of Civil Engineers gave U.S. infrastructure a grade of D and estimated that we need to spend $2.2 trillion to fix our airports, bridges, highways and train systems. Senators John Kerry and Kay Bailey Hutchison have made innovative proposals that would fund infrastructure projects through a national bank, allowing the private sector to participate, as it does in many countries.

Our entire economic conversation these days is about the country's debt, which is understandable and appropriate because our debt is unsustainable in the long run. But we also need to find ways to solve the unemployment problem, or everything else, including the debt problem, will get much worse. Without more workers, we will never have the tax revenue we need to fund even limited government. Right now we have our priorities badly skewed. We spend far too much on retirement and health care programs for the elderly, the Defense Department and tax exceptions and deductions for the middle and upper classes. But we spend far too little on the investment programs that will create good new jobs for the future. We need to do both in a grand national rebalancing — and we need to do it fast.

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