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Given certain discomfiting facts, can the U.S. continue to lead as an economic giant?

I’m going to cite a half-dozen sets of sobering facts and then ask a simple, discomfiting question: What in the world is keeping the United States afloat as the planet’s economic leader?

Mitch Pearlstein
Mitch Pearlstein

Here goes:

• The United States now ranks 16th among industrialized nations in college completion rates. It ranks 20th in high school completion rates. We used to be No. 1 in both.

• The number of foreign students studying engineering and physical sciences in U.S. graduate schools is actually greater than the number of American students doing so. Something called the World Economic Forum ranks the United States 48th in quality of mathematics and science education.

• Moving from educational problems to entwined family matters: Marriages are more fragile in the United States than virtually anywhere else in the world. In one study, children born to married parents in this country were more likely to experience their parents’ breaking up than were boys and girls born to cohabiting parents in Sweden.

• As for out-of-wedlock births, about 40 percent of all American children are born outside marriage, with the proportion reaching 80 percent and higher in some neighborhoods.

• In regard to business, physical infrastructure and the like, 51 percent of new patents awarded in the United States in 2009 went to non-U.S. companies. Only four of the top 10 companies receiving U.S. patents were American that year.

• No new nuclear plants and no new petroleum refineries have been built in the United States in a third of a century. Of the 60 new nuclear plants under construction around the world, a grand total of one is in this country.

As dirty as these half-dozen are, they say nothing about entitlement, debt and other crises. So how and why — beyond the fact that no major country is free of very large problems — does the United States still lead the world in real ways?

My favorite two-word answer remains “American exceptionalism,” both obvious and ineffable.

A more practical explanation

Faith in our uniqueness has never required any leap on my part. I’ve always been one with Abraham Lincoln, who believed that the United States (at a far rougher moment) was the planet’s last, best hope. Nevertheless, if forced to offer a more practical explanation for American economic leadership, and to do so in two words, they’d be “innovation” and “entrepreneurship,” about which more in a moment.

But what about coming decades?  Can the United States continue doing as comparatively terrifically as it has historically if it continues to slip into mediocrity and worse in critical comparisons with other nations?  “Almost certainly not” is the only honest answer, for no other reason than the emergence of immensely tougher worldwide competition.

The rhetorical risk here is sounding like a Time or Newsweek cover story in which a handful of data are transmuted into a New Biggest Threat Ever — a mega-explanation for what’s wrong and dangerous and on the edge of doing us in. Still, the signs of slippage compel attention.

Witness the fact, for example, that if the United States is to continue leading the world economically, it will have to rely on something other than the educational wherewithal of its rank-and-file citizens. A mega-tonnage improvement in K-12 schools’ results might change matters, but given how little a generation of “reforms” has accomplished so far, there’s no reason to believe American elementary and secondary education will get adequately better anytime soon.

But is it possible that this matters less than we think?  What if economic performance is really much more dependent on a comparatively small number of exceptionally creative men and women than on the average abilities of the population overall? What if we can continue getting by as an economic giant primarily through the talents of a handful of entrepreneurs, computer scientists and stem cell mavens (along with a few social scientists and art historians thrown in for broadening spice)?

Economic and social cleavages

Or, nonfacetiously getting to a fearful core, and focusing specifically on the powerful ways in which family fragmentation depresses academic achievement: Is it possible that our biggest worries might wind up pertaining not to overall economic growth but to economic and social cleavages that are bound to grow between different social classes and groups with radically different childbearing and childrearing patterns?

How might this be the case?  The connections are direct.

If enormous numbers of Americans continue having children outside of marriage — and lower-income men and women do so far more frequently than more-affluent ones — we know that their sons and daughters will not do as well, on average, as children born within marriage. The research on this is overwhelming and applies to educational achievement just as it does to poorer health, more drug use, more crime — every measure you can think of.

In other words, a commonwealth in which different groups routinely raise their children in differently fortified homes risks further morphing into a place where wealth is even less-well-shared, with inequalities of all sorts guaranteed to feed on themselves.

Yet despite such trends (and as teased), it’s entirely conceivable that our GDP can remain the biggest in the universe, but only as long as that handful of entrepreneurs, computer scientists and stem cell mavens keeps working like crazy. I recently read that a key indicator in whether an economy flourishes is the number of startups doing a billion dollars worth of annual business by their 20th anniversary — the very kinds of enterprises born of a remarkably talented few.

But how will those of too few skills fare in the midst of this economic success?  No answer is needed.

How do we thrive?
What do we need to do as a nation to thrive rather than decline?  Feel free to choose from a slew of things, both inside and outside of government, some of which (as friends on the left like to say) might be called “investments.” I’m thinking especially in this regard of adequate and consistent federal funding for scientific research.

But here are two rudiments which follow from everything above:

From the public sector, think of all the free-market policies that can maximize the number of businesses doing a billion dollars in sales within 20 years — then pass and implement them.

More private — intimately and keenly so — is to somehow revive marriage in places where it has nearly evaporated, thereby affording many more young people much better chances to share in what will remain our country’s enormous bounty.

Mitch Pearlstein is the founder and president of Center of the American Experiment in Minneapolis.

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Comments (5)

  1. Anonymous Submitted by Anonymous on 12/03/2010 - 08:05 am.

    Hmmmm…didn’t I just read this in the Strib the other day?

  2. Submitted by Greg Kapphahn on 12/03/2010 - 08:55 am.

    Sorry, Mitch, but this is the worst, most pop psychology style of “free market” supportive analysis I’ve read from you in a long time. I usually expect better.

    You barely scratch the surface of the issues you’re addressing and absolutely ignore the underlying causes of why we are the way we are and how we got here.

    Cause number one: the way Wall Street requires business to operate (if their stock is going to be worth more than a penny) which makes your first suggestion and your second mutually exclusive of each other.

    Any publicly held business doing a $billion in sales is under tremendous pressure to use it’s clout to extract far more “productivity” out of its workers than it is healthy for those workers (and their families) to provide.

    Any privately held business which treats its workers too well becomes a target for hostile buyouts since the big money boys and girls always think they can wring profits sufficient to pay off the (usually far too much) money they’ve borrowed to accomplish that buyout by screwing the workers and customers, increasing hours, lowering compensation and benefits, driving out unions, reducing the quality of the raw materials going into the goods and the making more careless the processes by which those goods are produced. The Strib makes and excellent case in point as does what happened to Northwest Airlines beginning with Al Checchi.

    Furthermore, the way such businesses far too often divide their profits gives massive compensation to the management class and as close as possible to poverty wages to the rest of their employees – hours far too long and wages and other benefits far too low to support stable, middle-class families.

    The practices demanded by Wall Street are antithetical to healthy, stable, families and well-funded, well-functioning educational institutions, as well, (since those institutions MUST be tax supported in order to offer to all citizens what you say is required).

    Until businesses begin to support, by their policies and practices, the health and well being of the families of their employees and the education of their children, they will continue, as they are so rampantly doing now, to destroy the very families and marriages you are so concerned about.

    These are the glories the “free market” has already brought us (and I haven’t even mentioned the strong desire on the part of so many business leaders, especially Wall Street Investment firms to damage or steal from customers and destroy the environment with impunity). Can you spell “torte reform?” The approach you encourage would simply bring us far more and far worse of the same.

    Finally, it is unjust to simply decide that those who grow up in broken homes are simply out of luck. It is possible with considerable effort to assist those youngsters, to give them appropriate counseling which would help them recover from the wounds inflicted by their families of origin (which might be useful for those across the entire economic spectrum, by the way) as well as a hand up or stairways and ladders by which they can move into healthier, more stable (less angry) lives.

    Perhaps we should start in the red states where divorce rates and psychological dysfunctions and the angriest victims of the “free market” they so rabidly support are the highest.

  3. Submitted by Glenn Mesaros on 12/05/2010 - 07:54 am.

    A fourteen year old boy named Homer Hickham looked up in the sky from mountainous West Virginia in October, 1953, and saw Sputnik! Did he immediately start a small business selling tee shirts saying, “I saw Sputnik” ? Did the US government create a free trade agreement with Russia so they could buy some satellites cheap? No, mountains of tax payer dollars financed NASA so Werner Von Braun could attain his life long dream of space flight for his new country. When WE landed on the moon in 1969, a US flag was planted on the moon landing site. Millions of kids were encouraged by US grants to study math and science. Then, the free market kicked by producing and selling various satellite technology products that were pioneered by Nasa, such as dopplar radar. Homer Hickham won a regional science fair sponsored by public schools. He became a Nasa engineer and trained astronauts. And who started the American Economic System, a name that “free market” Austrian Economists hate to this day: Alexander Hamilton.

  4. Submitted by Richard Schulze on 12/05/2010 - 06:05 pm.

    Problem today is that people are going in the other direction.

    1. You can read any number of columns – which more than implicitly argue that growing income disparity is ok because no one can prove it is caused by bad behavior, meaning that it is a natural shift and natural is somehow good because that is what the markets produce. There is more than an element of religiosity in that kind of thinking. You can’t argue rationally with people who hold fixed beliefs – often of an unacknowledged religious quality – in the truth of markets.

    2. Many people hold a delusional belief that we can compete with China, India, Malaysia et al by reducing costs. If only we get rid of unions, if only we get rid of environmental rules, if only we get rid of all taxes, then our companies can compete with these up & comers. That’s insane unless you think that lowering American standards of living by a factor of 10 or 100 is a good idea. You can’t argue rationally with people who hold irrational beliefs, especially when they seem to believe that they’ll prosper even as the “undeserving,” whomever they are, are punished.

  5. Submitted by Karen Sandness on 12/10/2010 - 04:07 pm.

    The decline in marriage rates and out-of-wedlock births, beginning in the African-American community a few decades ago and now spreading among poor whites and other groups, is a RESULT, not a cause of economic disparities.

    Note that this behavior spread along with the disappearance of blue collar jobs.

    I strongly suggest that everyone who is so intent on advising poor people about their lifestyles ride public transit and listen to conversations on the bus.

    When I lived in Portland, I traveled exclusively by public transportation, and I heard young men talk about the impossibility of finding a job that paid enough to let them move out of their parents’ homes. Yes, in their early twenties, they had to live with their parents or live with roommates in dumpy apartments as they worked in fast food joints, convenience stores, gas stations, and janitorial services, if they could even get such jobs.

    Under such circumstances, would getting married make economic sense?

    In contrast, one of my relatives, who lived from about 1905 to 1990, spent his working life as a school janitor. He got married, bought a house, and sent two children to college. So did many other blue collar workers of his generation. Their wages and the cost of living were in balance.

    We have to get over this right-wing nonsense that says that corporate executives and major shareholders absolutely require king-like compensation “or else they won’t be motivated,” while everyone else is reminded that they’re competing with the Third World and had better work longer hours for lower pay and reduced benefits.

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