☀ C'mon, Republicans, this isn't a 'dark moment' for an America 'in decline'
Also: 5 Quick Questions for … economist Martin Baily on productivity, protectionism, and AI
Quote of the Issue
“Never has there been a more exciting time to be alive, a time of rousing wonder and heroic achievement. As they said in the film ‘Back to the Future,’ ‘Where we're going, we don't need roads.’ - President Ronald Reagan, 1986 State of the Union address
The Essay
☀ C'mon, Republicans, this isn't a 'dark moment' for an America 'in decline'
It’s been said there are only two basic story macro-plots: “the hero goes on a journey” and a “stranger comes to town.” Likewise, there might be only two basic political campaign macro-themes: “you’ve never had it so good” and “it’s time for a change.”
So, understanding the latter, I’m not shocked at the downbeat tone of the Republican presidential debate earlier this week. Florida Governor Ron DeSantis, for instance, frequently mentioned America’s supposed “decline,” while businessman Vivek Ramaswamy said we are living in a “dark moment.”
Yet even discounting for the typical harrowing hyperbole of the political challenger, that negativity was all a bit too much. Look, I (still) happily describe myself as a “conservative,” as evidenced by the title of my forthcoming book, The Conservative Futurist, available for pre-order. Among other things, “conservative” means that while a) I value the liberal democratic-market capitalist inheritance of the past and b) I try to create the conditions that will preserve that inheritance and lead to a future of even more opportunity and freedom … c) I also try to achieve an evidence-based understanding of the present. And that understanding suggests to me that the deep pessimism on display Wednesday isn’t just misguided but harmful.
If it’s indeed a sort of “dark moment” in America, it’s also one pregnant with potential. Dark? Glance upward, and you’ll see the streaks of rosy-fingered Dawn are already appearing in the sky from coast to coast. After a half-century of underperforming our vast national potential (“Dude, who stole my flying car — and my fusion reactor, lunar colony, and 120-year healthy lifespan?”), the path forward to a second and even more awesome American Century is becoming clearer by the ever-brighter moment.
That path: Continue to perfect the American free enterprise system (which also includes an important role for limited but effective government) so more than any other country, the United States can cultivate and accelerate the recent burst of technological advances — in computer science, biotechnology, energy, and space — that could constitute the next phase of the Industrial Revolution that began a quarter millennium ago. Oh, and by the way, America is currently leading in all these technological areas.
An America where tech-driven innovation allows the economy to grow at a sustainable 3 percent to 4 percent pace over the next generation looks a lot different than one where it grows at the 1 percent to 2 percent pace currently forecasted by economists on Wall Street and in Washington. It would be an America with far greater ability to turn the dreams of its people into reality. The “widgets” produced by economies, as described in our high school and college economics classes, are really what physicist Cesar Hidalgo terms “crystals of imagination.”
How best to create that growthier economy should have been a key issue in the GOP debate.
America vs. the World
Now, let’s briefly fact-check the notion of American “decline.” It lacks needed context. Compared to where America could and should be, it is utterly proper to call the period since the Global Financial Crisis or, really, since the 1973 downshift in US productivity growth, a “long stagnation” or even a “great stagnation.” Still, America today is far better off than the America back then.
Similarly, if I were “drafting” a national economy like an NFL or NBA team drafts college players, the US economy would be the easy top pick even if it isn’t the perfect player or even the player it someday could be. Look at the competition for that top slot. America versus Europe? As a recent Financial Times column, “Europe has fallen behind America and the gap is growing” by Gideon Rachman noted:
The seven largest tech firms in the world, by market capitalization, are all American with only two European companies in the top 20, ASML and SAP. Rachman: “The development of AI is also likely to be dominated by American and Chinese firms.” (Europe will apparently settle for being a leader in AI regulation.)
Although Britain has a few top universities, such as Cambridge and Oxford, “the leading universities that feed the pipeline of tech start-ups in the US are lacking in the EU.”
The US dollar as the world’s reserve currency gives the US easy credit access, deep domestic capital markets offer the same for US companies, and the US economy is powered by cheap and plentiful domestic energy supplies.
Rachman concludes: “The aggregate figures are shocking. Underpinning them is a picture of a Europe that has fallen behind — sector by sector.”
The Chinese Century? Really?
Then there’s China, the subject of the recent Wall Street Journal piece, “China’s 40-Year Boom Is Over. What Comes Next?” WSJ reporters Lingling Wei and Stella Yifan Xie suggest China is heading for a big slowdown, dragged down by aging population and a clash with the U.S. and its friends, which scares away foreign money and trade. This could spell the end of a long era of economic ascent. “We’re witnessing a change in the most dramatic trajectory in economic history,” Adam Tooze, a Columbia University history professor, is quoted at saying.
The future may look bleak: The IMF forecasts China’s GDP growth below 4 percent in the coming years, less than half of its pace for most of the past four decades. Capital Economics reckons China’s trend growth has slowed to 3 percent from 5 percent in 2019, and will plunge to around 2 percent in 2030. At those rates, China would fail to achieve President Xi Jinping’s target of doubling the economy’s size by 2035. That would make it harder for China to escape the “middle-income trap” and could mean that China never tops the U.S. as the world’s largest economy, its ultimate ambition.
I’ve long said that an authoritarian surveillance state doesn’t create the sort of culture conducive to the creative leaps and imaginative risk-taking that are essential for economies wishing to push forward the technological frontier. China just sounds look a huge bummer to live in, as exemplified in The Economist:
Meanwhile, the relatively open cultural atmosphere of the Hu and Jiang eras has vanished under Mr Xi. He has replaced it with an “empire of tedium”, to borrow a phrase from Geremie Barmé, a noted sinologist. Censorship has become far more heavy-handed. Chatter on the internet has turned into a dreary chorus of nationalist talking points. On Chinese television depictions of “effeminate men” and women’s cleavage have been banned. Video games have been deemed too much fun; authorities have ordered the removal of gore and tried to limit kids’ playing hours.
At entertainment venues, bands are asked to send authorities videos of their sets before gigs. Directors of plays know that in the audience there are people checking that actors stick to approved scripts. Comedians plead for their audiences not to record them. Earlier this year Li Haoshi, a Beijing-based comic, used an army slogan—“Forge exemplary conduct! Fight to win!”—in a joke about how his dogs eagerly chased a squirrel. That was deemed insulting to the armed forces. Media companies were told not to hire the comic. Police said he was under investigation for causing a bad influence on society.
So, yeah, rather than merely harping de rigueur on the failures of the Biden administration, those GOP presidential wannabees should have acknowledged the moment of opportunity that we currently live in and had a serious conversation on how to best seize it. I mean, there was zero mention of artificial intelligence, much less the potential for an orbital economy being created by SpaceX, other than a snarky comment from Chris Christie that Ramaswamy sounded like he was a chatbot.
Bottom line: This debate was a missed opportunity to make a center-right, pro-progress case for both political reasons and to alert the American public of the vast opportunity right in front of us.
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