America’s Outlook: Looking Ahead or Looking Back?

 

The debate on America’s global position between geopolitical analyst Fareed Zakaria and journalist David von Drehle in this week’s Time characterizes the typical dichotomous perspective in current political polemics: One is forward-thinking, while the other looks back.

For quite some time Zakaria has questioned America’s commitment to maintain economic dominance, as written in the recent Time article:

…we have a political system that has become allergic to compromise and practical solutions…We have an electoral college that no one understands and a Senate that doesn’t work, with rules and traditions that allow a single Senator to obstruct democracy without even explaining why. We have a crazy-quilt patchwork of towns, municipalities and states with overlapping authority, bureaucracies and resulting waste. We have a political system that geared toward ceaseless fundraising and pandering to the interests of the present with no ability to plan, invest or build for the future. And if one mentiones any of this, why, one is being unpatriotic…

He argues that countries as China, Germany, India, and those in Northern Europe have (or are investing in) systems and structures that will provide a global edge, such as flexible governments, dedicated research and development, and even social and cultural capital (e.g., work ethic, positive dispositions about standard of living). He believes that America’s success has made it arrogant and insular to the world at large, and that it needs to adapt and meet that challenge. I have made similar argument in my post, More Evidence of American Decline?

On the other hand, Drehle maintains that these same pundits have perennially bemoaned a national decline, and that this message is overstated:

…how come we’re so much stronger than we were 50 years ago? Somehow, in the 235 years since we got started, Americans have weathered…Soviet science prodigies, violent lyrics and sex out of wedlock. We’ve survived a Civil War, two world wars and a Great Depression, not to mention immigrant hordes, alcohol, Freemasons and the “vast wasteland” of network television. (See Drehle’s full article)

This at a time when emerging powerhouse China is averaging an astounding 10% annual economic growth by investing in education and infrastructure (compared to about 3% U.S. growth) and just recently revealed an ambitious five-year economic plan “to raise ordinary people’s income, rein in pollution and energy use, and build advanced-science industries in fields like biotechnology and environmental protection” (See article on China’s five-year plan).

I am not necessarily questioning Drehle’s data; some of which are probably true. It is more the reactionary mindset that troubles me, because he represents a sizable bloc that glorifies what had worked for America in the past. There is an inherent satisfaction about America’s current position, as opposed to a hunger to improve: It’s worked so far, so why change?

In business, such resistance to change and adapt usually results in failure. Steve Jobs, Apple’s irrepressible CEO, revolutionized the music industry ten years ago with Apple’s iPod player (and iTunes digital music store), yet the company has not relied on its success to maintain its industry lead. In the fast paced technology world, Apple has remained at the top by consistently and aggressively seeking opportunities that no other organization has successfully capitalized on. It soon added the game-changing iPhone in 2007 and the iPad tablet last year. The competition have barely kept up, let alone out-innovate. Microsoft, much like the U.S., has taken the more complacent attitude, and its tenuous grip on market dominance has been exposed. No doubt its employees have worked hard and sacrificed too, but I don’t detect that same sense of urgency. And it shows. In the world of geo-politics, Zakaria has sounded the alarm while Drehle has been content to say “…the U.S. will do just fine in the world it has shaped.”

Look at history. FDR, Eisenhower and Kennedy quickly reacted and adapted American priorities after WW2 to stimulate economic growth and to counteract perceived foreign threats with the New Deal, the interstate highway system, renewed investment in science, technology, and public education. Since enacting these changes, America has gained political, economic, and military hegemony.

Zakaria summed up America’s current state with the word sclerotic. It means becoming rigid and unresponsive — losing the ability to adapt.

Want to see scleroticism at work? Let’s look at the issue of high-speed internet development: While South Korea leads the world in broadband access for all families, and while China has plans to expand its technology to smaller cities and rural areas, America continues to lag behind with 40% of its citizens without any access at home, and even higher in rural households. Part of the problem stems from the sluggish response of the Federal Communications Commission (FCC) to make regulatory changes that would allow telecommunication companies to share the cost of laying down fiber into the ground. Another part involves the monolithic stronghold of big companies like Verizon to allow fertile competition that would drive down the price and help breed innovative solutions.

Not that FCC is dragging its feet; they are actually making policy recommendations towards universal broadband for 100 million U.S. households with speeds of 100 megabits per second (mbps) by 2020. That is several times faster than current speeds in most households — anywhere from 3 to 20 Mbps. Unfortunately, those projections won’t come even approach what Hong Kong has done recently.

1,000 megabits per second (1 gigabit). All for only $26 per month.

To compare, Verizon’s fastest service for residential customers can download 50 mbps (20 for uploading) for about $150 per month (it does offer 150 mbps for small businesses for $195/month). See full article comparing HK and U.S.

What’s the big deal? Well, nothing if all you do is check email and surf the internet, but a lot if you’re consuming entertainment, developing new applications, or using telemedicine, for example. In other words, universal broadband is the key to driving economic development by creating job and luring business opportunities. How long have we talked about doing this? But it won’t happen without decisive changes by politicians and the FCC.

Scleroticism.

One last thought. For thousands of years, China was notably insulated while Western Europe was the opposite; it aggressively sought new opportunities through expansion and innovation. China has changed much since then, due in part to Deng Xiaoping’s open door policy on international trade; more recently, it created substantial economic growth through international partnerships with Africa, Germany, New Zealand, and South America. On the other hand, American exports account for only 10% of its economy — not the picture of globalization. With its aggressive modernization, China is the one looking forward, ironically, while America is looking back.

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