That Used to be Us (2011)

That Used to be Us is a sober and honest assessment of the Unites States’ decline from being the world’s premier superpower (post WWII) to a country short on intellectual capital and overdrawn on political stagnation and budgetary deficits. 

The book is co-authored by Thomas Friedman and Michael Mandelbaum (both American before I get any flak for being anti-American).  Having written popular titles such as, The World is Flat and Hot, Flat and Crowded (see previous review), Friedman expands on his previous work in which he so astutely describes the major trends influencing economic and environmental change around the globe, while Mandelbaum lends ever more credibility to the book with his wealth of experience in nuclear disarmament treaties and international diplomacy.

Strictly speaking, this is not an environmental book.  However, both the following problem and solution are inextricably connected to environmental issues and policy, so I hope we can agree that it is a pertinent continuation of the blog’s goals.

The book offers a lucid picture of the distractions that have led to America’s economic (and somewhat cultural) downfall.  The authors argue that the turning point was after the victory in the Cold War when America lost a common enemy that united its citizens.  But more importantly, the authors argue that America’s leadership misunderstood the world they were creating when Capitalism ‘triumphed’ over Communism.

The book depicts an America resting on its laurels, borrowing too much from future generations and overreacting to the threat of terrorism post 9/11.  The world in which Capitalism ‘won,’ the world in which 

we now live, is now centred on four factors:  

(1) Globalization: The spread of capitalism and the ability to source cheap labour all over the globe has created a hyper-competitive world in which no country or city has an inherent right to be the leader of any given economic sector.

(2) The IT Revolution: The power of technology to automate jobs while increasing productivity is destroying blue-collar jobs and increasing the demand for highly educated and creative employees.  Furthermore, the IT Revolution has created a hyper-connected world in which scenarios play out much more quickly than in the past.

(3) Debt and Deficits: The authors describe this as a “war on math[s].”  Never before in America’s history has the country been as fiscally irresponsible as in the presidency of George W. Bush in which two wars were waged while at the same time taxes were cut.  The author’s argue that the political entrenchment of Republicans refusing to raise taxes and the Democrats’ refusal to cut spending has fuelled the largest budget deficit in U.S. history (a deficit which is now worryingly being financed by borrowing from China).

Lastly, (4) Energy and the Environment: (“The war on physics”) The U.S. has refused to face up to the reality that it must reduce its dependence on foreign oil and make significant investment in the great industry of the future, clean energy, and also impose a carbon tax (though President Obama has recently given a speech pledging to refocus his administration’s efforts on addressing such problems).

At this point many readers would be forgiven for thinking that this is a depressing and America-centric read.  Both assumptions would be wrong.  The book is wilfully optimistic in recounting the formula that made America so exceptional.  The authors argue that America once thrived using the following formula, but has fallen away badly in recent decades:

• Investment in Infrastructure: America has fallen very far behind in public transport, transportation network maintenance and electrical grid/transmission technology, especially when compared to Europe and Asia.

• Education: The authors go to great lengths to emphasise just how far America has fallen behind the educational over-achievers (such as Singapore, Japan, China and South Korea) – the U.S. has fallen to 31^st in Maths, 17^th in Reading and 23^rd in Science according to the OECD’s Programme for International Student Assessment (PISA) Rankings – and what policy decision must be made to reverse the trend.

• Immigration: The authors highlight how over 40% of the start-ups in Silicon Valley are started by first-generation immigrants and argue for a robust change of immigration laws as anti-immigrant sentiment is on the rise in and the country begins to close down its borders.

• Regulation: The necessary safeguards to protect against financial collapse in the private sector are crucial to any free market, and unless you’ve had your head in the sand since 2008, you’ll know that smarter (which does not necessarily dictate more or less) regulation is needed to protect against a minority of market actors who have the power to adversely impact the majority. Traditionally, the U.S has had a strong record in terms of harnessing the dynamic power of growing markets for the public good without major collapse.   However, more recently, the power of lobbyists and private interests have prevented the appropriate amendment and modernisation of such protections (which I would argue started with “Reaganomics” and then the partial repeal of the Glass-Steagall Act in 1999 under the Clinton administration).

• Government support for Research & Development: In the 1960s, investment in NASA’s space missions created a hub of scientific expertise in Florida that drove their economy and sparked innovation for decades.  However, more recently government research grants have been diminished and misplaced.  While the U.S. (and Europe to a lesser extent) continues to heavily subsidise fossil fuels, the Chinese government is investing in clean technology.

But wait, Friedman and Mandelbaum can see light at the end of the tunnel.  Their solution is one they term, “political shock therapy.”  In an attempt to jolt the country out of its two-party political malaise, the authors call for an independent presidential candidate, who would run on the following platform:

• Raise taxes across the board (raising taxes on only the highest income earners will not address the deficit, nor is the most equitable way to approach the problem).

• Cut spending (Social Security and Medicare programs will have to significantly cut their spending as baby-boomers approach retirement age – the authors recognise this is painful but necessary).

• Invest in the Formula (see the five factors outlined above) – focus on creating an economy in which education is paramount and risk-taking, within the appropriate framework, is rewarded.

In my opinion, this is a poignant political message and one that we are beginning to come to grips with here in Europe (the authors could quite easily be referring to the UK or France when writing this book). 

I support their broad message that individual sacrifice (higher taxes and a reduction in the social welfare budget) is necessary to embolden a country in this economics climate, however the discussion about where to cut spending is one that I think needs to be more democratically and openly debated (though the baby-boomer problem is very similar in most developed countries at the moment).  In addition, I whole heartedly agree that government worldwide have been overly distracted by short-term economics to the detriment of environmental issues (which undermines a country’s long-term economic outlook).

Unfortunately, I also agree with their analysis that America (and I would add, Europe) has been slow to react to the new world.  The world is hyper-connected and hyper-competitive now and no country or continent has an inherent right to monopolise jobs or wealth.  We are entering the age of international meritocracy and that is a good thing, and a necessary thing, for the developing world.  However, it does mean that Europe and America need to renew their vitality and invest with both eyes on the future, educate like there are no safe jobs and protect the planet as if we are all going to live here for a while. 

I only hope that we can look back in a 20 years’ time and say, “that used to be us.”

Score: 80/100