By Hirsh, Michael
Newsweek , Vol. 156, No. 09
Byline: Michael Hirsh
America may be declining, but don't despair.
Like the summer heat, fear of America's impending decline is weighing on Washington these days. Has the United States lost its oomph as a superpower? Even President Obama isn't immune from the gloom. "Americans won't settle for No. 2!" Obama shouted at one political rally in early August. How about No. 11? That's where the U.S.A. ranks in NEWSWEEK's list of the 100 best countries in the world, not even in the top 10. And as the worst recession since the '30s festers on, along with the wars in Afghanistan and Iraq, no number of legislative triumphs--financial reform! health care!--seem capable of lifting the nation out of its doldrums.
Now the president is turning his attention to improving education. "We've flatlined while other countries have passed us by," Obama's education secretary, Arne Duncan, said in early August, referring to another grim milestone: a report by the College Board that showed an "alarming" decline in young American adults who have completed college; once a global leader, the United States now ranks 12th in the world by that measure. "The country that out-educates us today will out-compete us tomorrow," Duncan warned. That's not just rhetoric. A recent study by the McKinsey Global Institute showed that the growing gaps in educational achievement between the United States and other leading nations "impose the economic equivalent of a permanent national recession--one substantially larger than the deep recession the country is currently experiencing."
On any number of indicators, according to the NEWSWEEK list, the United States is not the worldbeater it was a decade ago. "On economic fundamentals such as GDP growth, household consumption, industrial production, and trade, the U.S. was ahead on most metrics 10 years ago," says James Manyika, director of the McKinsey Global Institute. Today, he says, America barely makes the top quartile, and it's fallen to the bottom quartile in R&D.
China and Germany, both export superpowers, have surged ahead economically while the United States faces what some fear could be a Japan-like descent into deflation and long-term slow growth. China, the putative future superpower, now has a much higher rate of patent creation than the United States, as well as a higher number of engineers being graduated. And because most American R&D spending comes from a handful of U.S. multinationals, some experts fear the companies will eventually shift their funding to China. "The picture of the U.S. that emerges is 'way ahead 10 years ago, still ahead today, but not as far ahead,'?" says Manyika. "If you did nothing you would see the Chinese catch up."
Beyond that, America hasn't recovered from the serious blows to its stature delivered by nearly a decade of policy debacles. As Obama never tires of reminding the American public--which is listening less and less, judging by his poll ratings--he inherited a Herculean task: the Augean-stable-size mess left behind by George W. Bush. First there was the diversion of military resources and attention from Afghanistan to Iraq--a draining, misdirected war and occupation that many believe never should have been launched. Then there was the long period of fiscal, regulatory, and financial recklessness that contributed to the worst-ever downturn since the Great Depression. Finally, Washington squandered its chance to lead on climate change. The "aughts," The Washington Post wrote last January, were really for naught: the 2000s were "a lost decade," the paper said, with economic output rising at its slowest rate of any decade since the 1930s and an unprecedented net job growth of zero. It's no wonder other countries started to catch up faster.
Nor does anyone seem to be looking at the United States as a model any longer. Despite the initial flurry of worldwide enthusiasm about Obama's election--has anyone ever won a Nobel Peace Prize with less effort? …