The Post-American World: Release 2.0 (24 page)

I went to elementary, middle, and high school in Mumbai, at an excellent institution, the Cathedral and John Connon School. Its approach (thirty years ago) reflected the teaching methods often described as “Asian,” in which the premium is placed on memorization and constant testing. This is actually the old British, and European, pedagogical method, one that now gets described as Asian. I recall memorizing vast quantities of material, regurgitating it for exams, and then promptly forgetting it. When I went to college in the United States, I encountered a different world. While the American system is too lax on rigor and memorization—whether in math or poetry—it is much better at developing the critical faculties of the mind, which is what you need to succeed in life. Other educational systems teach you to take tests; the American system teaches you to think.

It is surely this quality that goes some way in explaining why America produces so many entrepreneurs, inventors, and risk takers. In America, people are allowed to be bold, challenge authority, fail, and pick themselves up. It’s America, not Japan, that produces dozens of Nobel Prize winners. Tharman Shanmugaratnam, until recently Singapore’s minister of education, explains the difference between his country’s system and America’s. “We both have meritocracies,” Shanmugaratnam says. “Yours is a talent meritocracy, ours is an exam meritocracy. We know how to train people to take exams. You know how to use people’s talents to the fullest. Both are important, but there are some parts of the intellect that we are not able to test well—like creativity, curiosity, a sense of adventure, ambition. Most of all, America has a culture of learning that challenges conventional wisdom, even if it means challenging authority. These are the areas where Singapore must learn from America.”

This is one reason that Singaporean officials visit U.S. schools to learn how to create a system that nurtures and rewards ingenuity, quick thinking, and problem solving. As the
Washington Post
reported in March 2007, researchers from Singapore’s best schools came to the Academy of Science, a public magnet school in Virginia, to examine U.S. teaching methods.
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As the students “studied tiny, genetically altered plants one recent afternoon, drawing leaves and jotting data in logbooks,” the Singaporean visitors “recorded how long the teacher waited for students to answer questions, how often the teenagers spoke up and how strongly they held to their views.” Har Hui Peng, a visitor from Singapore’s Hwa Chong Institution, was impressed, as the
Post
noted. “Just by watching, you can see students are more engaged, instead of being spoon-fed all day,” said Har. The Post article continued, “[In Singapore], she said, the laboratories are fully stocked but stark, and the students are bright but reluctant to volunteer answers. To encourage spontaneity, Hwa Chong now bases 10 percent of each student’s grade on oral participation.”

While America marvels at Asia’s test-taking skills, Asian countries come to America to figure out how to get their kids to think. Top high schools in Beijing and Shanghai are emphasizing independent research, science competitions, and entrepreneur clubs. “I like the way your children are able to communicate,” said Rosalind Chia, another Singaporean teacher on tour in the States. “Maybe we need to cultivate that more—a conversation between students and teachers.” Such change does not come easily. Indeed, Japan recently attempted to improve the flexibility of its national education system by eliminating mandatory Saturday classes and increasing the time dedicated to general studies, where students and teachers can pursue their own interests. “But the Japanese shift to
yutori kyoiku
, or relaxed education,” the
Post
says, “has fueled a back-to-basics backlash from parents who worry that their children are not learning enough and that test scores are slipping.” In other words, simply changing curricula—a top-down effort—may lead only to resistance. American culture celebrates and reinforces problem solving, questioning authority, and thinking heretically. It allows people to fail and then gives them a second and third chance. It rewards self-starters and oddballs. These are all bottom-up forces that cannot be produced by government fiat.

America’s Secret Weapon

America’s advantages might seem obvious when compared with Asia, which is still a continent of mostly developing countries. Against Europe, the margin is slimmer than many Americans believe. The Eurozone has been growing at an impressive clip, about the same pace per capita as the United States since 2000. It takes in half the world’s foreign investment, boasts labor productivity often as strong as that of the United States, and posted a $30 billion trade surplus in 2009. In the WEF Competitiveness Index, European countries occupy six of the top ten slots. Europe has its problems—high unemployment, rigid labor markets—but it also has advantages, including more efficient health care and pension systems. All in all, Europe presents the most significant short-term challenge to the United States in the economic realm.

But Europe has one crucial disadvantage. Or, to put it more accurately, the United States has one crucial advantage over Europe and most of the developed world. The United States is demographically vibrant. Nicholas Eberstadt, a scholar at the American Enterprise Institute, estimates that the U.S. population will increase by 65 million by 2030, while Europe’s will remain “virtually stagnant.” Europe, Eberstadt notes, “will by that time have more than twice as many seniors older than 65 than children under 15, with drastic implications for future aging. (Fewer children now means fewer workers later.) In the United States, by contrast, children will continue to outnumber the elderly. The U.N. Population Division estimates that the ratio of working-age people to senior citizens in western Europe will drop from 3.8:1 today to just 2.4:1 in 2030. In the U.S., the figure will fall from 5.4:1 to 3.1:1. Some of these demographic problems could be ameliorated if older Europeans chose to work more, but so far they do not, and trends like these rarely reverse.”
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The only real way to avert this demographic decline is for Europe to take in more immigrants. Native Europeans actually stopped replacing themselves as early as 2007, so even maintaining the current population will require modest immigration. Growth will require much more. But European societies do not seem able to take in and assimilate people from strange and unfamiliar cultures, especially from rural and backward regions in the world of Islam. The question of who is at fault here—the immigrant or the society—is irrelevant. The political reality is that Europe is moving toward taking in fewer immigrants at a time when its economic future rides on its ability to take in many more. America, on the other hand, is creating the first universal nation, made up of all colors, races, and creeds, living and working together in considerable harmony.

Surprisingly, many Asian countries—with the exception of India—are in demographic situations similar to or even worse than Europe’s. The fertility rates in Japan, Taiwan, Korea, Hong Kong, and China
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are well below the replacement level of 2.1 births per female, and estimates indicate that major East Asian nations will face a sizable reduction in their working-age population over the next half century. The working-age population in Japan has already peaked; in 2010, Japan had three million fewer workers than in 2005. Worker populations in China and Korea are also likely to peak within the next decade. Goldman Sachs predicts that China’s median age will rise from thirty-three in 2005 to forty-five in 2050, a remarkable graying of the population. By 2030, China may have nearly as many senior citizens sixty-five years of age or older as children under fifteen. And Asian countries have as much trouble with immigrants as European ones. Japan faces a large prospective worker shortage because it can neither take in enough immigrants nor allow its women to fully participate in the labor force.

The effects of an aging population are considerable. First, there is the pension burden—fewer workers supporting more gray-haired elders. Second, as the economist Benjamin Jones has shown, most innovative inventors—and the overwhelming majority of Nobel laureates—do their most important work between the ages of thirty and forty-four. A smaller working-age population, in other words, means fewer technological, scientific, and managerial advances. Third, as workers age, they go from being net savers to being net spenders, with dire ramifications for national saving and investment rates. For advanced industrial countries—which are already comfortable, satisfied, and less prone to work hard—bad demographics are a killer disease.

The native-born, white American population has the same low fertility rates as Europe’s. Without immigration, U.S. GDP growth over the last quarter century would have been the same as Europe’s. America’s edge in innovation is overwhelmingly a product of immigration. Foreign students and immigrants account for 50 percent of the science researchers in the country and, in 2006, received 40 percent of the doctorates in science and engineering and 65 percent of the doctorates in computer science. Experts estimate that in 2010, foreign students received more than 50 percent of all Ph.D.’s awarded in every subject in the United States. In the sciences, that figure is closer to 75 percent. Half of all Silicon Valley start-ups have one founder who is an immigrant or first-generation American. America’s potential new burst of productivity, its edge in nanotechnology, biotechnology, its ability to invent the future—all rest on its immigration policies. If America can keep the people it educates in the country, the innovation will happen here. If they go back home, the innovation will travel with them.

Immigration also gives America a quality rare for a rich country—hunger and energy. As countries become wealthy, the drive to move up and succeed weakens. But America has found a way to keep itself constantly revitalized by streams of people who are looking to make a new life in a new world. These are the people who work long hours picking fruit in searing heat, washing dishes, building houses, working night shifts, and cleaning waste dumps. They come to the United States under terrible conditions, leave family and community, only because they want to work and get ahead in life. Americans have almost always worried about such immigrants—whether from Ireland or Italy, China or Mexico. But these immigrants have gone on to become the backbone of the American working class, and their children or grandchildren have entered the American mainstream. America has been able to tap this energy, manage diversity, assimilate newcomers, and move ahead economically. Ultimately, this is what sets the country apart from the experience of Britain and all other historical examples of great economic powers that grow fat and lazy and slip behind as they face the rise of leaner, hungrier nations.

The Macro Picture

Many experts, scholars, and even a few politicians worry about a set of statistics that bode ill for the United States. The savings rate is just 5 percent, and was closer to zero for many years. The current-account deficit, trade deficit, and budget deficit are high. Median income is flat, and commitments for entitlements are unsustainable. These are all valid concerns and will have to be addressed by Washington. If America’s economic system is its core strength, its political system is its core weakness. But the numbers might not tell us everything we need to know. The economic statistics that we rely on give us only an approximate, antiquated measure of an economy. Many of them were developed in the late nineteenth century to describe an industrial economy with limited cross-border activity. We now live in an interconnected global market, with revolutions in financial instruments, technology, and trade. It is possible that we’re not measuring things correctly.

It used to be a law of macroeconomics, for example, that in an advanced industrial economy there is such a thing as NAIRU—the nonaccelerating inflation rate of unemployment. Basically, this meant that unemployment could not fall below a certain level, usually pinned at 6 percent, without driving inflation up. But for most of the 1990s and 2000s, many Western countries, especially the United States, had unemployment rates well below levels economists thought possible. The same economists once thought that America’s current-account deficit—which in 2007 reached $800 billion, or 7 percent of GDP—was supposed to be unsustainable at 4 percent of GDP. The current-account deficit is at dangerous levels, but we should also keep in mind that its magnitude can be explained in part by the fact that there is a worldwide surplus of savings and that the United States remains an unusually stable and attractive place in which to invest.

Harvard University’s Richard Cooper even argues that the American savings rate is miscalculated, painting an inaccurate picture of massive credit card debt and unaffordable mortgages. While many households did live beyond their means in the decades before the financial crisis, and many continue to do so today, the picture looks healthier at the aggregate level, Cooper argues. In 2005, when the personal saving rate was just 2 percent, corporations saved 15 percent of their income. The decrease in personal saving, in other words, was largely offset by an increase in corporate saving. (That fact helps explain today’s fractured economy, in which many families struggle with debt and foreclosure while the stock market soars upward, gaining nearly 13 percent in 2010.)

More important, the whole concept of “national saving” might be outdated, not reflecting the reality of new modes of production. In the new economy, growth comes from “teams of people creating new goods and services, not from the accumulation of capital,” which was more important in the first half of the twentieth century. Yet we still focus on measuring capital. The national accounts, which include GDP and traditional measures of national saving, were, Cooper writes, “formulated in Britain and the United States in the 1930s, at the height of the industrial age.”
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