American dream hanging by a thread

Edward Luce argues that America’s decline is rooted in cuts in public spending. Maura Adshead is convinced by the argument

Time to Start Thinking: America and the Spectre of Decline

Edward Luce

Atlantic Monthly Press, €26.40;

Kindle, €12.99

PRESUMABLY, as a staff contributor to the Financial Times, Edward Luce has more opportunities than most to talk to leading American politicians, policy makers, business-leaders and thinkers and this, together with nine months of research, writing and reflection, provides the basis for his thoughtful and gently polemsical book on contemporary American society.

I say ‘gently polemical’, by way of noting that notwithstanding the strong arguments within, there is little that is not referenced, evidenced or cited — making it something much more convincing than the regular rants directed at American politics and society. Moreover, it is an engaging read, filled with anecdotes, stories and character vignettes that make the main arguments easy to follow and interesting to read.

The introduction to the book charts, in a number of ways, the shifts in emphasis that have occurred in American governance — away from models of economic growth and domestic strength historically associated with manufacturing, economic growth and welfare — and towards models of growth centred around financial and tertiary trade and contemporarily associated with lower employment and much higher levels of income inequality. The view that is revealed, from a range of experienced and unexpected quarters, including business and military elites, and Ivy League professors, is that this new trend in government is not good for the US economy and it is not good for the US.

Since 2000, America has lost five million manufacturing jobs, roughly one third of all it had left in this sector. The new service economy jobs do not fully replace those lost in manufacturing, they do not pay the same rates, and they do not usually come with healthcare benefits or pensions. Ordinary Americans are becoming worse off. They are more and more disillusioned and their political system is becoming more and more inflexible in dealing with these issues. It is only a matter of time before the tipping point is reached. The premise of the book is that, before then, America needs to start thinking about how it might reverse this decline in fortunes.

Luce repeatedly points out that the increasing economic insecurity of ordinary Americans reflects a problem that is much more than the sum of its parts. In other words, aside from the widespread individual difficulties caused by economic recession, together, these represent a much larger problem for the US economy as a whole. What is happening, Luce argues, is a shift away from an economy based on investment, to one driven by consumption. As better-paid, longer-term, manufacturing jobs decline and are replaced by lower-paid, shorter-term, service jobs, the engine of American growth is deprived of the fuel it needs to keep driving forward. It is argued that the shift in economic orthodoxy — against the importance of manufacturing — has come at a high price, where more jobs in the service sector, create less income, depriving the economy as a whole of investment resources and income stability. The decline of manufacturing, it is argued, means more than a loss of production because if America does not make goods, it is in a worse-off position to innovate.

This is not to diminish the significant consequences of current economic decline. Using figures from the Economic Security Index, Luce demonstrates that since Ronald Reagan’s tenure as President, the number of Americans who have experienced a decrease in their annual income of 25% or more has doubled to almost one-in-five. This brings with it all kinds of associated difficulties, for individuals and for the economy as a whole. Loss of earnings suppress personal spending (in the economy, on health care and on education) and savings — stifling entrepreneurial activity and investment.

According to Luce, the fact that the US as a body politic seems unwilling or unable to identify these problems, because there is an ‘ideological hegemony’ over what is currently ‘the received wisdom’, has stifled constructive critique of, or engagement with, alternative proposals for economic growth. This lack of interrogation of current certainties is problematic in other areas also. In education, for example, despite spending twice as much per student (in real terms) than it did in 1973, there has been no improvement in performance. In one generation the US has fallen from first to ninth in the proportion of young people with graduate degrees.

In a thought-provoking chapter, Luce argues that the contemporary shifts in educational approaches have begun to lose sight of the higher purpose of education altogether. The impact of Bill Gates and his fellow educational philanthropists (who have between them funded almost every advocacy group involved in US education) has been to mistakenly apply the business-oriented approaches they are most familiar with to education, in the hope that schools will turn around. This has led to an emphasis on competition, choice, incentives, deregulation and performance testing — of both students and teachers. As teachers increasingly ‘teach to the test’ to improve metric ratings, the value of thinking and learning as useful activities in their own right has largely been lost.

There has been a similar rigidity of approach towards innovation. The idea that ‘the market will provide’, Luce argues, is demonstrably untrue. Using a range of interviews, with prominent venture capitalists, inventors, IT wizards, NASA scientists and senior bureaucrats, Luce offers evidence for a strong consensus that government support is necessary for significant innovation. Still, however, the ‘received wisdom’ prevails that government is a hindrance, not a help. Notwithstanding the very real diminished capacity of the federal level of government to impact on state-level policies, carried out by a plethora of agencies that often duplicate and replicate each others work; still ‘Tea Party’ activists encouraged like-minded politicians to send back the limited stimulus money sent by Washington, resisting the idea of publically-funded infrastructure as ‘unacceptably European’. They have even coined a new word — ‘boondoggle’ — to refer to unnecessary government spending on nonsense.

Luce argues convincingly that this extreme political view is not shared by those professionals responsible for innovation. In 2011, the American Society of Engineers estimated that the US would need to spend almost $450bn a year, for five years, just to maintain the existing quality of infrastructure. In the current political climate, however, this simply will not happen. Meanwhile, as China spends 9% of its GDP on infrastructure, with the European average around 5%, the US figure of just 2.3% is looking increasingly inadequate. An interview with Vint Cerf, the man who, together with Robert Kahn, wrote the first internet protocols and so literally invented the internet, quotes him asking: “Do they think Google would exist without public research?” The answer is that it would not. Or at least, not first in the US. Without long-term public funding from the Pentagon, the internet, which was first conceived of as a technology for communication in the event of a nuclear attack, would never exist.

Now, however, the stringent and stifling accounting procedures for research contracts preclude such discoveries. Increasingly cost-conscious, shorter-term and managerial evaluative mechanisms, which measure performance in terms of what the contract promised (not what might have been explored or discovered along the way) are restricting the developmental potential to innovate and make new scientific discoveries. It is a sad irony that attempts to decrease the size of government, resulting in many more agencies and boards to whom government work is contracted out, have resulted in a larger, more unwieldy and much less accountable bureaucracy. Now, the increasing bureaucratic and political gridlock in Washington makes a bad situation worse. The answer, Luce argues, is neither ‘big’ nor ‘small’ government, but responsive and flexible government. The kind, in fact, underpinned by the politics that Obama argued for in his first election. The fact that he has been unable to deliver this is but one more example of why it is America really does need to start thinking and yet more evidence also, that the radical rethink that is needed is unlikely to occur.

* Maura Adshead is Head of the Department of Politics and Public Administration at the University of Limerick


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