After digesting a steady diet of stories about weak employment growth in the U.S., political gridlock over the debt crisis, calls to raise the minimum wage, blight in urban centers and the inexorable rise of China, a typical American might be fairly pessimistic about her country’s future.
The reality of America’s situation is much better, due to four broad forces of change that overwhelm the many real and tangible difficulties with which the nation is grappling. Joel Kurtzman, an economist, writer and thinker explains what they are in his new book, Unleashing the Second American Century.
Far from being forced from the world’s center stage by its problems, the U.S. probably is more firmly at the forefront than at any time since World War II. Kurtzman said he was inspired to write his book after hearing for the umpteenth time that “we don’t make anything anymore,” a phrase he attacks as pervasively and demonstrably “untrue.” (The data on this subject are alone worth reading.)
In the gloom following the 2008 global financial disaster, many analysts and media have overlooked: 1) “Soaring levels of creativity” leading to scientific, technological and other innovations from Apple’s (AAPL) iPhone to Google’s (GOOG) driverless car. 2) Massive new energy reserves that will make the country energy independent, if it chooses to be, by 2020 and a net exporter by 2025. 3) Enormous pools of unspent capital, including $5 trillion in the coffers of large companies. 4) Unrivaled manufacturing depth, which will be exploited more and more as businesses move to the U.S. to take advantage of its creativity, energy and capital.
The American Century was a phrase coined by Henry Luce, publisher of Time Inc., in the 1930s. The U.S. took over the role played by Great Britain in the 19th century, becoming the world’s first “superpower” after the demise of the Soviet Union, in part because it controlled so much of the world’s energy reserves.
Things looked bad for a while in regards to the U.S.’s dependence on imported energy, following the OPEC oil embargo of 1973-74 and a run-up in the price of crude. But geologists have always known that the U.S. has vast untapped reserves of natural gas, much of which has become more cheaply and easily recoverable today due to technological advances.
The expense of energy has perversely forced many foreign manufacturers that want to sell goods in North America to build factories here – where energy is cheaper. Besides, why “burn $100 a barrel oil to ship goods from Europe to America” when you can produce in your customer’s front yard?
Lots of economic realities on the ground get overlooked by quick, facile and often wrong predictions about China overtaking America, just as many thought in the 1980s that Japan would overtake America. China has lots of difficulties of its own to overcome, such as polluted air and the paucity of water in areas that need it to exploit its natural gas reserves.
Kurtzman spins out many of these insights in his new book, as he did in numerous presentations before Congress or in sessions at the Milken Institute, an economic think tank where he serves as a senior fellow. He doesn’t over look many obstacles, such as a poor K-12 educational system that needs reform. But he also doesn’t fail to see many obvious advantages that will keep America economically powerful for a long time.