Over the last several years, many have asked this question: Is America in decline? There is no doubt these are uniquely challenging times. Collectively, the country has gone through a lot over the last several years. However, for various reasons, perceptions regarding the state of the nation may not always reflect reality. With the Fourth of July holiday fast approaching, it is an opportune time to look at what is going on in the United States of America.
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Reasons for pessimism
There are many reasons why people may feel uncertain and pessimistic about the future. After all, the U.S. barely regained all of the nearly 9 million jobs it lost during the Great Recession. The economic contraction took a toll on American household and government finances alike. Trillions of dollars in net worth were lost and headlines last fall showed the national debt surpassing $17 trillion. Adding insult to injury, partisan gridlock has prevented policymakers from fully addressing these issues and many others. On top of all this, the rapid rise of China and challenges to U.S. policies abroad fuel the sentiment that America is in decline.
The Great Recession was not only deep, but it was accompanied by a financial crisis. Work done by Harvard economists Carmen Reinhart and Ken Rogoff concludes that such scenarios take longer to recover from, helping to explain some of the economic challenges of the last several years. With regard to the national debt, it is no doubt large and problematic. Still, it is at a manageable level and the Congressional Budget Office expects annual deficits to continue falling for the next couple of years. While the long-term drivers of deficits and the debt have not been fully addressed, there is reason to be optimistic that the worst of partisan gridlock could be behind us — for now. The Murray-Ryan deal of late 2013 reduced the likelihood of disruptive governance.
What’s right in America
While it’s evident that the U.S. has several challenges to deal with — now and in coming years — there is much that is right in America too. In fact, consider this: a survey published in November 2012 conducted by the state-run Bank of China stated that 60 percent of participants with assets worth $1.6 million or more were thinking about leaving the country or actively taking steps to do so. The No. 1 destination for survey participants was the United States.
Why would citizens benefitting from high growth rates in the world’s second largest economy want to leave to the United States? Reasons vary from the ability to retain wealth to considerations such as education for children and environmental concerns. Wealthy Chinese citizens are not the only people in the world who still look to the U.S. for leadership and believe in its ability to solve problems and prosper. The Economist magazine published a piece in late 2013 stating that, “it is time to cheer up” and went on to say that, “America’s strengths are as impressive as ever. On every measure of power it remains dominant.”
Outside of the country, people see impressive and often unexpected developments that occur with some regularity in America. Companies such as Apple, Google, Microsoft, Facebook, Twitter and countless startups represent the tremendous innovation and creativity that is possible in this country. As the world adopts the technology produced at such firms, jobs and wealth are created. The tech sector is a major driver of growth in many areas across the country.
Energy is another example of how American ingenuity can upend prevailing wisdom. According to Citi, the U.S. will surpass both Russia and Saudi Arabia as the world’s largest oil producer. Perhaps one of the most insightful statements regarding the U.S. energy boom came from the firm’s global head of commodities research, Ed Morse. He said that it is “very much a ‘made in America’ phenomenon. In no other country can landowners also own mineral rights. In only a few other countries is there a tradition of an energy sector featuring any independent entrepreneurial companies. … And in still fewer countries are there capital markets able and willing to support financially risky exploration and production.” In essence, it would be hard for other countries to accomplish what the U.S. has under the same circumstances.