Despite dire predictions to the contrary, it is not true that automation and innovation will cause permanent unemployment shortages and declining wages. While automation may reduce minimum wage assembly line jobs, it creates compensating higher paying jobs in the innovation, design, production, operation, maintenance and installation of sophisticated machine tools, and robots, and their related services (marketing, distribution, clerical, accounting, education, training, etc.). There is also a trend toward the development of educational partnerships and apprenticeship programs between industry and school and community college systems to develop an educated, sophisticated, high-tech middle-class workforce. This workforce will be more prosperous, productive and globally competitive in both high and low tech manufacturing and services to provide full employment, a positive balance of trade, and produce the revenues to fully fund the government, its agencies, and programs, and reduce the debt.
Re-industrialization could be accomplished by requiring all recipients and beneficiaries of government basic research, development grants and/or other incentives to produce the created products in the U.S. for three to five years. After that period, these goods would likely become generic and could be offshored through patent, copyright, and/ or joint venture arrangements, making room for the next generation of innovation. All research and development would be required to be done in the U.S. Domestic insourcing must be promoted. Also, sovereign high tech and financial investments would be strictly regulated to prevent industrial theft. This is not protectionism.
Our prosperity is dependent upon the expansion of markets and demand. While innovation creates its own global markets (especially with advanced nations), the developing countries in South America, Africa, the Middle East, South East Asia and Russia offer the greatest trade potential.
It is essential to cultivate and dominate these developing markets through mutually beneficial trade agreements. The major portion of our foreign aid policy should be the exchange of U.S. produced goods, equipment, and know-how for raw, semi-finished, and low-tech goods and materials. This would create jobs in both donor and recipient nations, increase the economic value of the recipient's natural resources, provide needed education, skill training, and technical assistance, and boost their GDP.
To achieve fiscal and social viability, our cities, states, and businesses must be saved from the unaffordable and crippling burdens of their health and pension obligations both of which are rightfully the responsibility of the federal government. Consequently, it is necessary to (1) implement universal healthcare incorporating well known reforms and expanding Medicare to cover all citizens, (thus eliminating the need for Medicaid) and (2) reforming Social Security on a need basis. Both systems could be financed by a new progressive flat tax code that would eliminate all tax havens, loopholes, and deductions (legitimate business capital investments would be expensed in accordance with IRS schedules and/or an increase in FICA). Existing pension and 401(k) accounts would be automatically switched, on a pro rata basis, into either Roth IRAs or a special inflation protected issue of U.S. government bonds (any resulting bond revenue surplus to Social Security needs would be dedicated to debt reduction). Repatriation of foreign business profits at a fixed lower tax rate would be mandatory. There would be separate tax surcharges (and/or FICA increases) for healthcare, and Social Security, as well as, the military creating an effective taxpayer watchdog check on government spending, waste, inefficiency, and military adventurism other than national security. There would be modest progressive estate taxes and no deduction for mortgage interest on vacation or any non- primary home.
These are some of the basic requirements for U.S. prosperity. They are also applicable to the UK.