Wednesday, January 7, 2015

The rise of China - A new chance for the US

Let's do it again!
With the rise of China, the US will have to find itself a new role

The US is now officially #2. According to the International Monetary Fund, China overtook the USA's GDP this year, calculated in terms of the purchasing power parity, PPP. This remained largely undocumented by the media.
Why that?! Isn't that a dramatic change?

Well, China has just kind of overtaken the US. What really counts in the global economy is the so called 'nominal' GDP, the 'raw' GDP. It is how much a country's economy is worth on the global market, taking currency rates into account. In our globalized world, this is what it all comes down to in the end.
In this aspect, the US' GDP is still way above China's, more than 70 %.

Nevertheless, the day will come, when China will overtake the US economy. And not only China. India as well has the potential to surpass the US on the long term.

As we know, money is power. A new largest economy has always caused a change in the global power situation, as lastly, when the US became the largest world economy during WWI, surpassing the British Empire. Almost simultaneously, the British Empire's steady decline began, opening the doors to an 'American century'. This could soon come to an end, since new powers are on the rise. Therewith, the political landscape is about to change again.

The United States has a long derived much of its pride from being the number one, the world's largest economy. Americans often talk about an American exceptionalism. They believe that their country is special in terms of military, economy and culture. They believe that their country has been so powerful because of a special set of values, most importantly freedom and Christianity. It is true that the US has been very influential: There has probably never been a country before that influenced the history of a whole century to such a large extent and, remain, at least for a short period, as the only superpower. When it comes to global politics, it is almost always the US who finally decides what to do. Recently, this was the case with Syria and the IS.

However, as already stated, the situation is about to change and the US' power about to decline. Of course, the US will continue to play an important role. Its influence and economic power will still be tremendous. But some of its peculiarity will be gone. It won't be able any more to name itself the number one economy and power in the world. From an outside perspective, it will become more like any other country. Hence, if the USA wants to stay special, it has to find new ways to prove its that it is exceptional.

How can America exceed as a post #1 country? What does it need to do to remain special even when it hasn't the biggest economy?

In order to decide that, we have to ask ourselves where except its economy the US is exceptional and where it isn't. It is necessary to analyze the overall situation of the country. We have to consider multiple aspects, not only its GDP per capita.

There are many aspects where the US still exceeds. For instance, it is still the number one place for higher education. Also, it is fifth on the Human Development Index, HDI. And last but not least, the US is still among the most innovative countries in the world and especially when it comes to digital technology, as with the Silicon Valley, it is unprecedented.

But in many aspects, the US is now rather mediocre, if not even worse. Last April, the New York Times published an article declaring: We're Not No.1! We're Not No.1!
They say the US is far from being the number one. For example, it only ranks 16th on the 'Social Progress Index'. The index measures the overall situation of the citizens in a country. In some categories of the index, as the foundations of well-being, the US scores even worse. There, the US is only #36 out of 132. And when it comes to energy innovation, the US is lagging far behind.

But that's not everything. According to the Washington Post, out of 31 high income countries, the US is only ranking 27th in life expectancy, 29th in infant mortality and 30th in income equality. This comes together with results from the international PISA student comparison tests, who aren't good for US students. US students just score at the bottom line in international comparisons. Even countries as Vietnam, who have a larger percentage of economically disadvantaged students, outperform the US.

It is not to say that the US has ever been outstanding in any of those areas. In fact, the US has always had a bad stand when it comes to education, health but also social progress. Regarding health and education, the results are likely to be a cause of its rigorous free-market system. It has left many people without the access to proper medical aid and poor people often disadvantaged by the education system. Social progress has always been a struggle in the US. The difficult fight of black people for equality is just one example. But also, many states in the US are still reluctant to bring marriage equality to same sex couples, a right that has already been granted years before in most European countries.

Be that as it may. We could say that's how it is. We could say this is the cost people in the US have to pay for freedom and the divide that runs through states and people. Let's leave it there for now. Actually, there are way more concerning developments in the US, that obfuscate its prospect as a post-no.1 country.

Recently, a book with the title 'Political Order and Political Decay' by the political scientist Francis Fukuyama has been published. It explains why some countries are more successful, rich and sustainable as others. In his book, Fukuyama praises Western democracies for bringing all necessary factors together which create sophisticated orders. But he says it is a long way to create those orders and the same way they can be constructed and improved, they can also be destroyed. They can go through a decay. And the country he takes as an example for political decay is … right: The United States of America! Just to say: this scientist is not a conspiracist. He is a professor at Stanford and a respected intellectual. We can take him serious. Obviously, America is worsening. That does not sound that good if it wants to be a #1 country, does it? But: How and why is it worsening?

Fukuyama claims that the US government has become less efficient and more corrupt. According to him, one problem is that the US government has alienated its citizens. Also, there is more of a 'vetocracy', a gridlock in American politics. The two big parties block each others ideas. And, last but not least, there is more and more a concentration of power on the rich, in the form of lobbyism and income inequality. As a consequence, it could happen that politicians do only listen to people who are willing to pay a price for that and that politicians get more susceptible to corruption.

All those results can be seen from different points of view. One could say that Fukuyamas findings are nothing new. That the US have always been a country of income inequality and that we've always done quite well with that. And about the bad rankings, we could say: Well, that's freedom! It is the fault of the people on the bottom, right? They don't work hard enough! Everybody is responsible for himself.

But one might also say that those rankings and Fukuyamas's findings indicate something else: America has to change.
It is undeniable that things go wrong in the United States. Things that could cause the country to fall even deeper. Under current circumstances, the US will definitely not become again the number one in other aspects than the sheer size of its GDP.

Am I an America-hater? Definitely not: America is exceptional! It has lead the world in the last 300 years. It has promoted human rights, democracy and freedom across the world. It has defeated vicious despots as Hitler and, in a way, Stalin. Whereas, in other countries, radicals could subject and tyrannize ordinary people, the US has always been a country of justice. Also, its culture has been exported all over the world, what means it can't be that bad. And, last but not least, the US is still the land of opportunity, a country millions look up to.

However, the US seems kind of stuck. Society and politics are divided as never before. Because of three words: freedom, principles, constitution.
There is an ongoing debate whether some policies undermine American principles. Whether new projects, for example health care, interfere with the American idea of self-responsibility. And, whether the country has moved too far away from how the Founding Fathers intended it to be. Does it? I don't know. The only thing I know is that things need to fulfill the aims that Americans set themselves.

America wants freedom. America wants a strong economy. It hopes that one thing causes the other. That is right. America is strong because of its free-market. Because everybody can create a business easily and enter the market without any obstacles. He can get cheap, flexible labor and educated workers. Not like in other parts of the world, as Southern Europe, where too much bureaucracy kills all entrepreneurial spirit.

But sometimes, the whole free-market argumentation makes no sense. Take the debate over health care as an example. Many politicians argued that health care subsidized by the government would be inefficient. But the current system is inefficient. The health expenditure in the US' 'free-market' health system is with 18% of the GDP almost two times as much as that of the UK with 10 %. It had been on that level already before Obamacare. Just for our information: in the UK, the health system is run entirely by the government. The effect? The UK pays half and the average UK citizen lives about one year longer than its counterpart in the US.

Freedom should not inflict with reason. We have to ask ourselves what is reasonable in terms of economic well-being but does not interfere with our values.
So, why shouldn't there be a governmental health care? If run effectively, as in the UK, the US could halve its health expenditure. Also, better education for everybody would be great, since it would give the economy more educated workers. As well, America could invest more in its infrastructure, as roads and railroads, since that's valued highly by enterprises. And lobbying should be controlled, since the current control of lobbyists in Washington is unacceptable for a people's democracy.

America should stick to its beliefs, which indeed make it exceptional. But it has to move on. It has to do what needs to be done in order to reclaim the position as the world's most innovative and educated country. The credo of a #2 America must be: Quality, not Quantity. 

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