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Walter Ellis: America’s economic decline is inevitable, but that doesn’t mean it can’t fight back


US President Barack Obama

US President Barack Obama

US President Barack Obama

BOOKS on the decline of America are coming thick and fast. The latest, Time to Start Thinking: America and the Spectre of Descent, by The Financial Times’s chief US commentator Edward Luce, is published this week.

Luce doesn’t hate America. On the contrary, he loves living here, and wishes the country only well. He was a speechwriter for Larry Summers when the latter was the US Treasury Secretary under Bill Clinton. He returned to Washington in 2006.

His thesis, to judge from an extended essay on the same subject in last Saturday’s FT, is not startlingly original. He is certainly not the first to allude to the nature, or extent, of the problems facing the United States in the 21st century. But his argument is cogent, stylishly written and persuasive. America should take note.

In summary, he concludes that global economic dominance, having quit Europe around the end of last century, moved west to the United States and now, after another hundred years, is relocating to Asia. Nothing can be done about this, he says. It is just the way it is. China and India (and he throws in Indonesia for good measure) are simply too big and too industrious not to fight it out for the soon-to-be vacated Number One slot.

But – and this is where it gets interesting – Luce is frustrated by the way in which the US, outside of rhetoric, is capitulating to the inevitable, giving up almost without a fight. Were its leaders to defy history, he suggests, they would quickly regain the world’s respect and write a new and valuable interpretation of the American dream.

What does he mean by this? He means that the country could rebuild its wealth, equip its labour force for the challenges to come and, most importantly, redress the imbalances of wealth and opportunity that are starting to rival the inequities of the Third World.

This year, in his State of the Union address, President Obama said that anyone who says America is in decline doesn’t know what they’re talking about. Luce's view is that, in fact, such critics are, if anything, underestimating the steepness of the downwards trend.

He identifies two of his principal concerns as education and the torpor of a demoralised and deskilled labour force. The other is what has become known as the 1 per cent/99 per cent divide.

America’s public schools – ie state schools – are in deep, deep trouble. Millions of young Americans leave high school each year unable to write coherent English. Many can barely add up. Their knowledge of the world is so limited that many would be unable to point to Iraq or Afghanistan on a map. Neither Democrats nor Republicans seem to know what to do about this. All they know is that it would cost a great deal of money to put right and that the money is earmarked for war and social welfare.

As a result, America is steadily slipping down the league table of educational achievement. Its proportion of students graduating college fell to 38 per cent in 2010, well behind most of its rivals, and only 16 per cent of degrees awarded were in science, maths or technology, compared to 23 per cent in Britain and 28 per cent in France and Germany.

It remains the case that a majority of the world’s most highly rated universities are American, but these are almost all private and, by their nature, contain only a small proportion of the overall student body. They are, in addition, increasingly geared towards foreign scholars, who pay for the privilege, then return to their own countries.

As things stand, the substantial lead that the US currently enjoys in the key information technology sector is threatened not only by a fall in the number of the most highly trained graduates, but by a diminishing level of investment as hedge funds and others concentrate more and more on short-term, even minute-by-minute, gratification.

The yawning, and still widening, gap between the super-rich and the rest is the other area in which strides must be made if America is not to revert to a postmodern version of the Old South. It used to be that most Americans were either comfortably off or prosperous. Some, of course, languished in poverty, and a few at the top were extremely wealthy. But society could live with that. In fact, it was the measure of a healthy, go-getting society.

Today, eight million citizens of the Republic are out of work and at least another 100 million are either seriously underpaid or else dependants of the underpaid. Large numbers of school-leavers can’t afford to go to college. Some 50 million can’t afford basic medical insurance. Home ownership has plummeted. In many cities across the country, the only work available is part-time or unskilled, without pension provision or health cover.

So many manufacturing jobs have been exported overseas, principally to China, that the down-table skills associated with high-technology are in chronic short supply. This is why it isn’t feasible for companies like Apple to repatriate production even if they wanted to. American workers in 2012 couldn’t do what Chinese workers do routinely – and I don’t just mean work long hours for little pay. Not only would they have to be taught new skills and procedures; in many cases they would have to go back to school.

Meanwhile, at the top end, America’s multi-millionaires are fast turning into multi-billionaires. Luce quotes the fact that the Walton family, owners of Walmart, have as much money as the bottom 150 million Americans. In parts of the country, servicing the needs of the rich, for a pittance, has become the principal activity of the poor.

Politicians exist to improve and protect society and build on its wealth. America’s politicians, Republicans in particular, seem to have forgotten why they were elected. All Republicans do these days is block legislation aimed at reform while promoting the interests of the wealthy, themselves included. Just last week, they refused to reduce the substantial tax breaks given to the oil and gas industry, despite the fact that these bloated corporations strike gold every time they strike oil and plainly need no help from anyone, least of all hard-pressed US taxpayers.

Why do House members and Senators do it? They didn’t used to. In part it is because the Right is hopelessly in thrall to the mantra that less tax means stronger corporations, and stronger corporations mean more jobs. But it is also because almost every single Republican member of Congress is bankrolled by Big Oil. For every one million oil dollars that go to Democrats, three million are assigned to the other side of the aisle.

It was my fellow countryman Louis MacNeice who wrote: “The glass is falling hour by hour, the glass will fall forever, but if you break the bloody glass, you won't hold up the weather.” That doesn’t mean giving up. A start has to be made. It isn’t good enough to claim that America is the greatest country in the world and always will be. That’s the way the British felt on January 1, 1901, and we know how that turned out. The time to wake up is now.