America’s relative rise
Since midway through George W. Bush’s tenure, there’s been a steady hum from the pundit class that America’s best days are behind it. An overreaching foreign policy, rising public debt, and a growing wave of outsourced jobs means that America will soon lose its status as the world’s preeminent power. America was quickly on its way to becoming Rome.
But the American Decline is now over (if it ever really began in the first place).
Compared with other major powers, America’s future is looking brighter than before the financial crisis. The dollar remains remarkably attractive relative to other currencies. This resilience extends to American companies. In a March report, Goldman Sachs found that foreign investors owned a larger percentage of the U.S. equity market than at any time in the 68-year history of the study. The housing market is picking up, and dependence on foreign energy is falling.
Gridlock remains the order of the day in Washington, and Congress still has record-low approval ratings. But there are policy bright spots. Congress and the administration are not standing in the way of America’s energy revolution. The Keystone XL pipeline will likely be approved. The pipeline, along with the Obama administration’s emphasis on energy independence, helps strengthen the domestic economy.
On trade, the administration has managed to convince Japan to join Trans-Pacific Partnership talks. Should the trade consortium of countries ranging from the United States and Chile to Canada and Mexico to Singapore and Vietnam get off the ground, it will liberalize trade between members that represent nearly 40 percent of global GDP — and boost American trade and manufacturing. Then there is the nascent transatlantic equivalent that Obama mentioned in this year’s State of the Union.
The third major policy positive: the forward movement in Washington on immigration reform. If that effort is successful, it could entice millions of illegal immigrants to pay U.S. taxes for the first time — and it could provide the labor force, skilled and unskilled, that many companies desperately need to ensure growth. A recent study by the Center for American Progress found that immigration reform could inject more than a trillion dollars into the U.S. economy.
So at a time when recession-riddled Europe is muddling through, and major developing economies like China have huge looming question marks, the United States is looking pretty good from the top down.
Now for the bad news: Things don’t look as good from the bottom up, because an empowered minority at the top of American society will reap most of the benefits of this resurgence. The number of Americans who have participated in the rebound is smaller than in the past. Corporate profits remain high, but so does unemployment. According to a new study by a pair of economists at Northeastern University, those unemployed for more than six months have an especially tough time returning to the workforce.
It’s not easy for a country with such disparities to maintain prosperity and domestic tranquility, but there is no guarantee that the benefits of even an extended rebound will narrow the growing wealth gap.
America’s decline is a myth. The United States’ relative position in the world is improving, and Washington won’t stand in the way. Some of the gains we see will improve the U.S. standard of living at every level: Cheaper energy means less pressure at the pump, and a comprehensive immigration reform bill could empower many yet-to-be Americans who deserve a voice. But for still-jobless and underemployed Americans, it’s the recovery that’s a fiction.
Welcome to America’s relative rise: Wall Street is back. Main Street? Maybe not.
This column is based on a transcribed interview with Bremmer.