America’s two-speed economy
A sunny July day in Aspen, Colorado, with Dvorak’s Symphony Number 8, courtesy of the Aspen Music Festival, lilting in the background, is a pretty good definition of the American dream.
Yet one of the most interesting threads running through the conversation Tuesday, the first full day of the Aspen Ideas Festival (underwritten in part by Thomson Reuters, where I work) is the fear that America’s days as the land of opportunity, particularly for the middle class, may be numbered.
The first warning came at 7:45 am – a typical start for the wonkish crowd assembled here – from Michael Splinter, CEO of Applied Materials. Splinter was full of Silicon Valley enthusiasm for his company and its prospects: “it very much is the frontier … this really is rocket science.”
But he wasn’t nearly as cheery about the state of his nation. Asked by moderator David Bradley, chairman of Atlantic Media and one of the festival’s hosts, how many of his employees would be in America if he were starting with a blank slate, Splinter said just 20 per cent. “90 per cent of our sales will be outside the U.S.,” he said. “The pull is to be close to our customers. The challenge is how to get jobs in the U.S.”
Splinter said he was worried about America’s deficit and the tax increases he believes will inevitably be required to pay it off. He was tough on the Obama administration – even though he is among the favored CEOs who have been invited to the White House to offer advice.
Splinter had good things to say about corporate sessions with the President. He said that behind closed doors CEOs “were quite honest” in expressing their views, and that the president was “forthcoming.” But, asked a visibly frustrated Splinter, “what are the results?” He wants more R&D spending, a better educational system and – the familiar CEO lament – a more pro-business attitude from Washington.
Yet Splinter’s critique contained its own contradictions: on one hand, he called on the government to spend more on R&D and education, but his chief complaint was that “frankly, our tax rate is not competitive” and that it was likely to increase.
The prospects for the American dream were addressed directly in an afternoon session which asked “Is America Still the Land of Opportunity? Taking a Hard Look at the Middle Class.” This was one of the day’s hot tickets: An overflow crowd spilled into a picnic-style sprawl on the carpet at the back of the room and in the aisles – one sign we were not in New York or Washington.
For the question asked in the afternoon session, Arianna Huffington had an unambiguous answer: “the upward mobility that has been at the heart of the American dream is a mirage for millions of Americans,” she said, especially for the millions of unemployed, or underemployed.
Coming from the dynamic diva of the Huffington Post, that verdict wasn’t much of a surprise. What was interesting was how her views were echoed by the other panels, and how, together, they told a story of a two-speed America, in which one group is flourishing, while another part of society is falling behind.
Journalist and Newsweek columnist Ellis Cose pointed out that the dividing line between the two Americas is starting to cut across racial lines. He is studying black Harvard MBAs and has found that they are confident that their future and their childrens’ future is bright.
Tom Wilson, the CEO of Allstate (another underwriter of the festival), made the essential — and brave — point that the fates of American business and American society may be starting to diverge. “I’ll get them [workers] anywhere in the world,” Wilson said. “It is a problem for America, but it is not necessarily a problem for business. I have workers in Belfast, I have workers all over the world. American business will adapt.” Like Splinter, Wilson urged more investment in education.
What frightened me most about today’s discussion was a possibility endorsed by Ron Brownstein, political director of Atlantic Media, and the panel’s moderator, that America’s two-speed economy may not be anyone’s fault (as Huffington insisted it was) but might, instead, be the inevitable consequence of the twin revolutions of globalization and technological change.
Wilson was certainly right about one thing: one of the great success stories of our age is how dynamically American companies have adapted to globalization and the technology revolution. But, as Huffington pointed out, the political consequences of a two-speed America might not be pretty: “America cannot be America without a middle class … we will become Brazil and all live behind gates to protect our children.”
The irony of this thread in today’s discussions, of course, was that most of the people who steadfastly turned their backs on the sunny alpine meadows in favor of geeky debates in lecture halls are members of the America which is winning in the world of globalization and technological change.
The festival’s crowd is an earnest and studious elite. Mercedes Benz, another conference underwriter, had such a hard time getting takers to test drive its cars that I overheard one rather desperate company representative offering her zippy convertible as a shuttle-bus –- and that is surely one of America’s saving graces.
One other small sign that the fabric of American middle class culture may not be fully rent. Ideas festival-goers were offered the sorts of foods you would expect the health-conscious-outdoorsy, super-elite to consume: protein-enriched smoothies, non-alcoholic wine (all the health benefits, none of the fun!), edamame and celery sticks to dip into peanut and almond butters. But the sell-out nosh? Hot dogs.