For the last ten years, economists have wondered whether the world could succeed without the U.S. But today, with Europe collapsing and Asia slowing, what if it's still the other way around?
The financial crisis robbed Americans of many tangible assets, but it also took from us something more subtle: our worldclass self-confidence. We're worried that the next generation won't be better off, that China will replace us atop the economic pyramid, and that American exceptionalism is now just a historical artifact. Call it our Benjamin Franklin moment: We're not sure whether our economic sun is rising or setting. We shouldn't be so unsure.
The 2000s were a golden age for economic buzzwords (and not all of them were Tom Friedman's fault). Among the more embarrassing catch-phrases not inspired by conversations with cab drivers was "decoupling." The gist was that as emerging markets like China, and even developed ones like Europe, made up a greater share of the world economy, they would rely less on the United States for their own growth. Even if the United States fell into recession, these economies would "decouple" and power through -- or so the story went.
This description of an increasingly post-American world sounded plausible enough. But if the past few years have proven anything -- other than that it might be a good idea to actually regulate the shadow banking system -- it's that the United States is still the world's economically indispensable nation. The below chart from Reuters shows a survey of manufacturing activity from across the world's biggest economies since 2008. (A reading above 50 means conditions are improving, while one under 50 means they are deteriorating). Notice how Europe and China move in complete sync with the United States.
This isn't a celebration of our ability to tank the global economy. If anything, it might be the United States that is decoupling from the rest of the world. While Europe's interminable debt crisis has thrown it back into recession, and China's growth model is slowing, a slew of positive economic data in the United States the past six months has made a genuine recovery actually look possible. Job growth has accelerated -- enough for unemployment to finally start coming down. Car sales have surged to their highest level since February 2008. And with housing starts picking up, it's not crazy to think the real estate market might begin to rebound too. The U.S. economy is practically wearing blinders to block out the swarm of bad news from abroad -- so far this year, at least.
Despite our squabbling politicians -- and the possibility that the economy's acceleration over the last two quarters is a mirage -- the outlook might be even better over the long-term. The future will be about the war for talent. It'll be about who can educate, attract, and give smart people the best opportunities to build great things. We certainly need to improve on that front. But when it comes to being a place where people want to come, we have built-in advantages that others struggle to replicate. A recent Gallup poll of would-be emigrés makes the case: 23 percent of respondents want to come to the United States versus anywhere else in the world. (That dwarfs the 7 percent who wanted to move to the second-place United Kingdom). Being a nation of immigrants is our comparative advantage -- at least as long as we're not so dumb as to chase away smart people who come here for school.
Of course, that's not to say our relative position won't recede. It almost certainly will. (China and India together have eight times as many people as the United States.) But that's a good thing. As people in Asia and Brazil and Russia grow richer, there will be richer markets for our goods and services. But as long as the United States is the destination for people who want to start a business, I wouldn't bet against us remaining first among equals. It's not halftime in the American era. It still might only be the second quarter.
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