The Popular Vote: Competitiveness in US not like it used to be

Last week the World Economic Forum released their Global Competitiveness Report. The United States, which had topped the list for the 2007-2008 report, dropped to No. 2 during the 2009-2010 cycle.

How did it come to this?

Government spending and government regulation are to blame. In this report, the United States ranks 68th in government waste and 53rd in government regulation. To give this some perspective, China ranks 21st in government regulation and 35th in government waste. Here we see the first effects of the Bush administration bailouts that were continued and expanded with the Obama administration's further bailouts and the $787 billion stimulus package.

Government waste was an inevitable repercussion of the stimulus package. Government simply isn't as efficient as the private sector in just about any facet. For proof, try to find a government organization that works efficiently (with the exception of the Army). The major government organizations of inefficiency that come to mind are the National Postal Service and the Department of Motor Vehicles. That said, it's a no brainer to expect some sort of government waste when $787 billion is in question - basically the stimulus package is just a magnification of government inefficiency present already. Government regulation has made its way into the mainstream political discussion recently through the bailouts, and the subsequent response by the government in the treatment of the companies that were bailed out.

For example, General Motors, which indeed is one of these said corporations, is being encouraged to take their car development in a specific direction - essentially toward more fuel-efficient cars (that also yield a lower profit margin, which might not be the best business decision).

If that's not enough, the Obama administration has decided that bailed out companies were going to be under the discretion of the government with regard to salaries and executive bonuses.

From a common sense perspective, it makes sense that the government wouldn't want companies taking taxpayer money, intended to get them back on their feet, and paying their employees large bonuses with it.

From an economics perspective, though, this type of policy yields less incentives for the employees of these companies. In effect, this is creating employees who are less efficient than their inter-industry counterparts who have a greater incentive. Furthermore, according to the report, there are four very problematic factors for doing business in the United States: access to financing, tax rates, tax regulations and inefficient government bureaucracy.

All of these problems, with the exception of access to financing (which is there because of the financial crisis), run the risk of only increasing with some of the plans that the Obama administration and the Congress are putting forward.

Tax rates and tax regulations haven't eased up during the Obama administration and are bound to increase in the U.S. down the road, either because of possible new government programs, like cap and trade, or because of the need to finance the increasing deficit of the country.

Cap and trade, if passed, would essentially be a tax used to encourage environmental behavior in line with what the Obama administration wants.

The deficit is bound to come back to bite America. With such a large national deficit and overall debt, there are only so many options down the road for paying off the debt. There's a possibility that another bubble like what we saw in the late '90s with the dot-com's would propel us out of our debt situation, but that's not the likely solution. Entitlements and the debt are going to force the government's hand at some point in the future, very likely resulting in painful, but at that point necessary, tax hikes.

The blame for this entire situation does not lie solely on the Obama administration. The broken path the country is headed down started with the Bush administration setting the precedent for bailouts and government intervention into the private sector. The problem is that while the Obama administration is trying to fix the economy, they are decreasing our economic competitiveness through government intervention, government spending and government inefficiency.

If Republicans don't use these types of statistics and arguments as jumping off points for the 2010 elections and the 2012 presidential race, they don't have much of a political future.