For a depressed economy, exports function as a magic elixir. Demand—and with it jobs—appears from outside, generating new income that cycles through the economy, This is why President Obama, as part of his recovery strategy, has set a goal of doubling exports over five years.
Talk of exports normally conjures up images of factories and container ships, but many of America’s exports are services. The nation’s biggest service export is in some sense not an export at all—it’s travel and tourism, an industry begging for respect on National Travel and Tourism Week. I’m pleased to report that America’s international travel export sector is healthy, with nominal revenues reaching an all-time peak last year of $153 billion—about 1 percent of GDP. Still, despite recent successes, it’s not clear that American tourism has ever really recovered from the tough blow it took after 9/11, suggesting there’s plenty we could do to further boost the industry.
As far as the national balance sheet goes, tourism functions exactly like an export. Foreigners come here and spend money, leaving extra funds in American hands, with which we can purchase oil and Chinese toys. It’s an export realm in which the United States has very strong fundamentals.
For starters, our country is large and diverse. We’ve got beaches, we’ve got snowcapped mountains, we’ve got deserts, and we’ve got cities. We’ve got great art museums and we’ve got the Grand Canyon. Wide open spaces and Manhattan. In other words, there are American destinations to suit any taste. The diversity of the country and open-mindedness of the national palate mean a major American city is one of the best places to sample a wide array of global food. A Chinese visitor to Chicago will find neither the world’s best tacos nor its best pasta, but a dramatically better mix of the two than you’d find in Mexico or Italy. A trip from Rio de Janeiro to New York or Los Angeles will grant you a wider variety of Asian cuisines than just about any Asian city.
Tourism also benefits directly from the structure of the American economy. Whether you like the European welfare state model or hate it, there’s no doubt that it has a powerful impact on relative prices. By using tax dollars to finance social services, Finns obtain cheaper health care and education while paying much more for almost everything else. But nobody deliberately goes to the doctor on vacation, and visitors to Helsinki don’t benefit from the first-rate public schools. The United States, with its low taxes and plentiful land, is one of the cheapest of the rich countries to visit.
Tourism ought to be one of the main ways in which the United States benefits from global growth. With per capita GDP surging in China and generally on the up in India and Latin America, more people than ever can afford to travel. But American public policies are not helping foreign visitors as they could. Everyone knows American transportation infrastructure is in many respects subpar, but few acknowledge the direct link this has to a key element of our international trade. Upgrading our airports, air traffic control, and rail and highway links would make it easier for visitors to come and spend. National parks and public lands, also facing major budget pressure, are critical elements in maintaining America’s appeal as a destination.
And we ought to reassess some of the security measures implemented in the wake of the 9/11 attacks. Workaday U.S. airport security is an enormous pain for everyone, and its national security value is dubious. The increased scrutiny given to people seeking tourist visas is hidden from most Americans but very annoying for potential tourists. The 36 countries that participate in the Visa Waiver Program that lets people make short-term visits without applying for special permission account for 65 percent of visits to the United States. But major Latin American countries, including Brazil, Argentina, and Chile, aren’t on the list. Even where it’s not viable to expand the Waiver Program, we should try to make the process more convenient. A January Obama administration executive order has succeeded in drastically reducing wait times from Brazil and China. But there are logistical issues beyond wait time. China, a nation of 1.2 billion people, has just five locations where visas can be obtained. Harbin, a metro area about the size of Philadelphia’s, is an almost eight-hour drive from the nearest spot where you can interview.
America is a great place to visit, and rapid growth in historically poor countries means more people than ever can come to see it. We need to do what we can to roll out the welcome mat.
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