Saturday, July 7, 2012

What happened to America

America was once an amazing country. It was populated by optimistic, hard working people, who dreamed of better ways of doing business and living life. This was the reason people flocked to get into the country, and other countries changed policies to try and keep up with the pace of American innovation.

Somehow last century America lost its edge. When I say that, I don't mean that America has lost its position as a world leader in any particular sphere of human endeavour, what I mean is that America now trundles along on autopilot. The present successes of America are due to the momentum generated in the middle of the twentieth century, rather than being the product of good governance in the present day.

America has an enormous domestic economy, and a global economic position largely based on its reserves of intellectual property. Yet the resources that it uses to maintain that position are partly externally derived. The US attracts many of the best and brightest students from abroad to come and study and work. More so than any country in the world, America derives a proportion of its intellectual capital from these foreign reserves.

In recent times the world has witnessed the extreme volatility of American political life. The country routinely has elections that hinge on anachronistic social concerns like abortion or gay rights. They have recently come out of a period where they elected one of the most illiterate and openly moronic leaders in living memory, and they turned it around to elect the first president of African ethnicity, who is the most eloquent politician in living memory. At the same time America has been responsible for an enormous global financial crisis, largely due to their insanely ridiculous banking policies regarding the regulation of home loans and the creation of derivative investments.

In spite of all of this, large proportions of their population cling ideologically to the notion that market regulations are destructive communist devices. Somehow, an international crisis is not enough empirical evidence for some people to adjust their theories of good governance.

At present many Americans are rallying around a political movement with slogans like "take our country back". From whom you might ask, and the answer is likely to be a confusing mish mash of cartoon politics and implied racism.

As we watch this from the outside it is hard to understand how it happened. How did America go from being the center of the world's envy and inspiration, to being a country ruled by ideology and predjudice? How was a century of economic advantage squandered to create a nation of religious zealots addicted to credit and fast food ? Why is the current political debate in the US not
"What are the best fiscal stimulus methods?"
 but instead
"Should gay people be allowed to marry?"

More importantly, can they ever escape this quagmire ?

According to some sources, the stars of the developing economies: Brazil, China and India have just reached the point where their collective domestic economies have overtaken the developed world. This means a lot for America, it means that its position as the economic super power is nearly over. The relative economic stability enjoyed by Americans will change as the currency is subject to the same fluctuations as other nations. It means their debts might be called on, and funding will continue to become harder and harder to find.

Perhaps more importantly, it means that fewer foreign students are going to view an American education as a ticket to success. Opportunities will grow inside their country of origin and the instability of America will seem less appealing. When this happens America will find that the stream of new intellectual property it relies on to be globally competitive, is suddenly less bountiful.

This will be America's great long term challenge for the coming century. America needs to improve its internal education system so that it can sustain its intellectual property based position in the global marketplace without a stream of foreign students working in labs around the country.

They just have to solve their debt problem first.