Jeremy Lin and America's 'New Exports'
By AUSTAN GOOLSBEE
Linsanity swept the nation last week. The undrafted Harvard graduate Jeremy Lin seemed to transform himself from benchwarmer to MVP candidate in a matter of days. New York Knicks #17 jerseys became the biggest seller in the NBA and interest in Mr. Lin surged world-wide.
That same week we learned that China's president-to-be, Xi Jinping, is an NBA fan. After meeting President Obama at the White House, Mr. Xi traveled to Iowa and then attended a Lakers game in Los Angeles. Mr. Obama, for his part, visited a Boeing 787 plant to tout exports as an engine of growth.
Though seemingly unrelated, these three events together highlighted one of the more promising ways out of our economic doldrums: growing exports—with exports broadly defined to include things like entertainment royalties, tourism, travel and services.
While U.S. economic conditions have improved in recent months, anxiety lingers and the slumps in housing and consumer spending remain. Exports, however, have grown impressively and have plenty of room to keep expanding.
During our last economic expansion, we focused on the home market while the other advanced economies' exports grew three times faster than ours did. Big emerging markets grew even more.
Today, growing exports are a natural opportunity for us and one of the last areas of bipartisan agreement in Washington. And exports are not confined to traditional manufactured goods.
When a foreign visitor comes to America on vacation and, like Mr. Xi, buys an NBA ticket in Los Angeles or a lunch in Muscatine, Iowa, those count in official statistics as exports. If a fan in Indonesia watches an NBA game or buys a Jeremy Lin jersey, the royalties count as an export. Many services increase our exports: tuition paid by foreign students, fares paid on U.S. airlines by foreign fliers, ad sales on Google from foreign companies.
These things add up. Last year, according to the Bureau of Economic Analysis (BEA), the U.S. exported $2.1 trillion of goods and services (the most ever) and more than $600 billion of that came from services.
Jeremy Lin, right, of the New York Knicks playing against Sundiata Gaines of the New Jersey Nets at Madison Square Garden on Monday.
Think of them as the New Exports. We already export far more of them than any other country. We export more educations than computers and more tourism than aerospace products or machinery. Unlike our massive trade deficit in goods, we run major trade surpluses in the New Exports—$179 billion of surplus in 2011 and probably more in 2012, according to the BEA. This supports millions of jobs across America.
Promoting the New Exports requires more than just the conventional prying open of foreign markets and reducing tariff and regulatory barriers to our goods. It involves fighting restrictions on Internet commerce and enforcing intellectual-property rules. It also involves some less confrontational (and often easier) strategies such as improving foreigners' opinions of America so they want to come visit or send their children to school here, and then expanding student and tourist visas to enable them to do so.
Modest investments can facilitate major private-sector economic gains. Take tourists coming from countries like Brazil. In a recent survey, 94% of Brazilians said it was either difficult or nearly impossible to get here. To obtain a visa, they must undergo a multi-stage ordeal that includes traveling to a personal interview in a city with a U.S. consulate—of which there are only four in all of Brazil. Start to finish, the process can take up to five months.
Last month President Obama called for speeding up the visa process to promote tourism here. The U.S. Travel Association estimates that adding a consular official costs, with overhead, around $280,000 per year. Since the average Brazilian traveler to the U.S. spends around $5,000, the association estimates that a single official can generate as much as $50 million of travel exports for U.S. business (not to mention more than $1 million in visa fees to the U.S. government).
Supporting New Exports doesn't require diplomatic battles with China or shepherding new trade agreements through Congress. These are exports that other countries want us to have and that we have missed by our own short-sightedness. Last week we extended the payroll tax cut to help the economy. We have given tax incentives to encourage companies to invest. Why not also use short-run government incentives to encourage New Exports, such as limited-time discounts on airline taxes, visa-application costs and airport-landing fees?
As a Chicago Bulls fan, I find the resurgent Knicks irritating. Still, I will root for more Linsanity because with every game watched in Asia, jersey sold in Europe or visit to an NBA game by a foreign tourist, this young man is doing more than just helping his team. He's demonstrating a way for our economy to grow. Playing for a .500 team, Mr. Lin probably won't be up there cutting down the nets in celebration at the end of the year. He was an economics major, though, so if it's any consolation to him, he's already helped cut down the trade deficit.
Mr. Goolsbee, a professor of economics at the University of Chicago's Booth School of Business, was chairman of President Obama's Council of Economic Advisers from 2010 to 2011.