An American baby boomer born in 1955 traveled over brand new interstate highways. In his youth, he was surrounded by American goods, desired the world over. He experienced the U.S. as the victor, from the Cuban crisis to the moon landing to a winning system over the Soviet Union. He grew up firmly aware of living in the American century.
A child from the time after the Cold War, for example born in 1995, saw the Twin Towers fall at age six—and after that thousands of soldiers in Iraq and Afghanistan. Later the real estate market collapsed, then the banking system. General Motors, once the largest automobile manufacturers in the world, went bankrupt. The budget deficit exploded and unemployment rose to European levels. The computer with which the child born in 1995 does his homework is manufactured in China. His smartphone is also “designed in California,” but “assembled in China”; at least the operating system still comes from Apple or Google. In spite of that, baby boomers can by no means make phone calls from their cars without trouble. The connection is continually dropped, not as bad as disappearing into a pothole with your car, as recently happened in Detroit, but nonetheless an indication of the bad condition of U.S. infrastructure.
However, America will come back, like so often in its history. At least three trends speak for this, although they are readily overlooked in the swan song of economy, culture and politics in the United States:
1. Intellectual and digital dominance: The U.S. remains the most intelligent country on earth, and the one with the greatest innovative ability. All international collegiate rankings are dominated by U.S. elite universities. Technology clusters develop around them, which are copied worldwide, but not achieved. In terms of digitalization, the U.S. is still at the forefront. Not only is the Internet firmly in the hands of Americans, (behold Google, Facebook, Amazon and eBay) but also the next level of digitalization: data linking, business analytics and cloud computing.
2. The return of production: Of course, China will continue to play up their role as workbench of the world. But the zenith of transferring production to Asia will soon be reached. Of all things, an American textile firm shows what a renaissance in a U.S. place of production can look like: The design label American Apparel produces the relatively reasonable and high quality “Downtown L.A.” and achieves high margins and growth. Just as impressive is the comeback of the U.S. auto industry, and the aerospace industry can hardly manage to keep up with orders.
In future and crossover technologies like wind turbines, thermal solar power plants and large capacity batteries for use with electric-powered vehicles, it is also not definite that American industry will once again take the offshore route. Wage differences are decreasing and classical location advantages like proximity to development, manufacturing and marketing are becoming more important.
3. Demographics and individual strength: In 2050, the U.S. will likely have 400 million citizens, of whom 25 percent will be 60 years and older according to U.N. prognoses. In China, the proportion will be over 30 percent and Europe is aging as well. Americans not only have considerably more children, the country still attracts young, ambitious people from all over the world. America has the room and the openness to cause this to happen.
Despite all of the challenges in the educational system and in society, the United States is and remains a meritocratic country in which achievement is honored. Since the beginning it has been a risk-taking society, which is deeply buried in the collective national identity. That surely presents many disadvantages, but in reference to the capacity for economic comebacks, the advantages outweigh them. A European entrepreneur who goes bankrupt is highly likely to go into personal insolvency. After that, he is cut off. An American can beg off under exculpatory “Chapter 11” and, accepted by society, begin anew.
On both sides of the Atlantic the crisis comes from a trio of issues: debt crisis; crisis of the middle class; leadership crisis. Europe may not be totally doomed, but I believe the United States presently finds itself in a better position for a political and economic comeback—in spite of the much discussed “fiscal cliff.” Americans will soon reinvent themselves as they have often done throughout their history and come out of the crisis stronger.