In his latest book, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back, Tom Friedman argues that the US needs to catch up significantly in areas like modern infrastructure, education, scientific research, energy efficiency, political effectiveness and fiscal responsibility. Part one provides a brief overview of this legacy, Part two highlights Friedman’s views of current job market trends, and Part three explores leadership in alternative energy sources.
Part 4: Darkest Just Before the Dawn
We have previously discussed the growing fiscal dilemma the nation faces as the baby boom generation retires over the next two decades. This decade, Medicare spending is projected to rise 79% and social security by 70%.1 The gap between what is expected to go out in spending and what is likely to come in from tax revenues is enormous (into the many tens of trillions of dollars) if serious steps are not taken in the coming years. The essential question is, “What is the borrowing capacity of the United States of America?”2
Unfortunately, it is impossible to predict the point at which the lenders to the US Government (US citizens, banks, corporations and foreign governments and institutions) will start to demand higher interest rates in return for lending to a country that is taking on so much additional debt. We need look no further than the case of Greece for an example of what happens when a country exceeds its borrowing capacity. Since it is impossible to know the precise level of debt that will force the US over the edge, we must, according to Friedman, rely on the basics on of common sense, responsibility, and sound planning. Friedman continues, “The right strategy is to have a strategy—a strategy for long term American growth and nation-building at home. That will require us to cut spending, to raise taxes, and to invest in the sources of our strength, all in a coordinated way.”3
American leadership is essential for the world– there still is no country that can take its place. We have already mentioned how China, though operating close to its potential, is still an authoritarian state where political freedom is repressed. The Europeans are still figuring out how to unify their union; the Arab world is in political turmoil; and Japan is still suffering from its own economic, demographic and natural disasters. Parts of Latin America and the rest of Asia have made tremendous progress, but they are still just emerging onto the world stage.
We’ll conclude this series of Tom Friedman’s perspectives by noting that he optimistically believes that the United States, with its system, culture, and way of life, is the nation best-suited to thrive in today’s world:
In a world in which individual creativity is ever more important, America supports individual achievement and celebrates the quirky. In a world in which technological change and creative destruction take place at warp speed, requiring maximal economic flexibility, the American economy is as flexible as any on the planet… In an age in which even the cleverest inventors and entrepreneurs have to try and fail, sometimes repeatedly, before finding the business equivalent of the mother lode, the American business culture understands that failure is often the necessary condition for success.4
Will that be the US again? It’s hard to say. We are in quite a mess. Our infrastructure once led but now lags many other nations; our education system needs a major overhaul; and our energy sources need to be more diversified to ensure long-term stability and affordability. Our deficits and debt need to be addressed decisively and quickly before they test our capacity to borrow. However, there is no better remedy for curing the nation’s ailments than its very own strengths. It’s time to think big and act big.