Can the US Stay Competitive?

Fareed Zakaria has a challenging piece in Newsweek on the economic threats facing the USA in the new millenium. He notes that America has for more than a century, through enormous political, economic, and cultural upheavals, consistently maintained its position as the most dynamic society in the world. That, Zakaria argues, is because the US has traditionally been the most open, welcoming society in the world. He worries that we are beginning to change in that regard.

Our greatest danger is that when the American public does begin to get scared, they will try to shut down the very features of the country that have made it so successful. They will want to shut out foreign companies, be less welcoming to immigrants and close themselves off from competition and collaboration. Over the past year there have already been growing paranoia on all these fronts. If we go down this path, we will remain a rich country and a stable one. We will be less troubled by the jarring changes that the new world is pushing forward. But like Britain after Queen Victoria's reign, it will be a future of slow, steady national decline. History will happen to us after all.

Read it here.

My response would be that history already has happened to us, many times over. Over the course of the past 120 years -- the time identifies as the era of American dominance -- we have experienced barriers to foreign investment, immigration restriction, racism, exclusion of entire segments of our population, collapse of capital markets, massive unemployment, xenophobic paranoia, socialism, widespread civil disruption, labor warfare, participation in two global conflicts, the erection and maintenance of a state on war footing for decades on end, and all the other horrors he fears. And, I might add, we have paid a heavy price for all of these things. But despite them we have still prospered to a greater extent than any other people in the history of the world.

The wellsprings of American growth would seem to be sufficient to address and overcome all the problems he outlines. What is more, the one factor Zakaria points to as being the key to our success -- our national paranoia -- is also, in his account, our greatest weakness.

The United States has a history of worrying that it is losing its edge. This is at least the fourth wave of such concerns since 1945.

Fear has stimulated creative responses to perceived challenges.

The concerns in each one these cases was well founded, the projections intelligent. But the reason that none of these scenarios came to pass is that the American system—flexible, resourceful and resilient—moved quickly to correct its mistakes and refocus its attention. Concerns about American decline ended up preventing it. As Andy Grove puts it, "Only the paranoid survive."

But then he fears that our fears will lead us to shut down the sources of our economic health. Zakaria is a wonderful writer, and occasionally an insightful thinker, but this time he is merely incoherent and in that respect he resembles our policy makers.

But, not to worry. There have been few times in our nation's history when our policy elites have been agreed on much of anything. Incoherence has been the norm and perhaps it has also our greatest strength. A lack of clear focus leads us to try all manner of contradictory things, some of which actually work. The few times when he have actually had clearly focused national leadership, we have been led into disaster.

The great affliction of smart guys like Fareed Zakaria who spend most of their time talking to other smart guys is that they tend to over-value smartness. They think that they -- the best and the brightest, to use a term once thought of as derisory -- are capable of rationally charting a coherent course into the future. But as the experience of history shows us, such hopes are delusional.

It is good to be worried about the nation's future. And it is better to have a vigorous and open debate on what we should do; a debate that gives full weight and a respectful hearing to principles and positions that some might find distasteful, scandalous, or even loathsome. Such uninhibited debate has proven to be a useful guide in our nation's past. There is no reason for us to suppose that it will fail us in the future.