How Long Will America Lead the World?

Posted by on June 07, 2006

Newsweek columnist Fareed Zakaria is always enlightening, but this week's column will be particularly interesting to urban leaders.

Although there are legitimate and growing concerns about America's competitiveness, he points out that GDP growth remains strong, averagng just over 3 percent over the past 20 years, productivity growth has been over 2.5 percent for a decade, America ranks as the second most competitive economy in the world and produces 29 percent of world output (up from 22 percent in 1980). The U.S. also invests more of its GDP in higher education, and spending on R&D continues to outpace that of Europe. Americans are especially good at converting technologies into products people will buy, and, thanks to immigration, the U.S. is the only industrialized country that is not expected to suffer a workforce loss (although workforce gains from immigration do not equal college-educated workforce gains).

Despite these trends, Zakaria warns that Americans should "be scared, be very scared." Our problem, he says, is that we are not really that scared. The best evidence is that "no one is willing to tallk about any kind of serious solutions that impose any pain on society." The political proposals we get are "small potatoes" compared with our entitlement programs.

"Our entitlement programs are set to bankrupt the country, the health care system is an expensive time bomb, our savings rate is zero, we are borrowing 80 percent of the world's savings and our national bill for litigation is now larger than for research and development," he writes.

"They are products of government policy. Different policies could easily correct them. But taking such steps means doing something that is hard and unpopular."

Who will administer the pain Zakaria calls for? When will it happen? And will local leaders, once again, get left holding the bag?

Now that is a painful thought...