Time to Start Thinking
America in the Age of Descentby Edward Luce
“This is a book that will transform the way you think of this country.” —Liaquat Ahamed, Pulitzer Prize-winning author of The Lords of Finance
“Gentlemen, we have run out of money. It is time to start thinking.” —Sir Ernest Rutherford, winner of the Nobel Prize in Nuclear Physics
In Time to Start Thinking, Edward Luce offers an incisive and highly engaging account of America’s economic and geopolitical decline. The Washington bureau chief for the Financial Times for the last four years, Luce has traveled the country interviewing public officials like Lawrence Summers and Senator Don Riegle, and business leaders including Jeff Immelt and Bill Gates, as well as teachers, health care workers, and scientists.
Luce’s research, analysis, and reporting cover areas from education to health care to politics to business and innovation. He frames the issues historically, comparing America today to Britain in the early-twentieth century, when U.S. inventors developed the light bulb and the internal combustion engine, usurping Britain’s position as the center of research and development. As a result, Britain lost its place at the top of the world’s pecking order. Today, the same situation is evolving in America: Chinese and Korean scientists and innovators are becoming increasingly competitive with those in America, and companies like IBM and General Electric now employ more people outside the United States than inside it. The state of domestic politics is just as dire.
In what may be the smartest book yet on why and how America is broken, Luce offers a critical, nonpartisan analysis of the issues facing America today and a renowned journalist’s report on a country in economic, social, and political crisis.
“[Luce] knows the country well, and he wishes it well too. A result is that he leavens his yearning for smarter, more nimble government with a realism not always found among Europeans . . . Luce is a good writer with a vacuum-cleaner for a notebook. His book could not be bettered as a compendium of American problems, at least as filtered through the center-left sensibilities of a pro-American European. . . . Time to Start Thinking raises the right questions at the right moment, which is what books are supposed to do. It deserves an audience in America. And I wouldn’t be surprised, too, if it ends up stacked on the best-seller tables in China.” —Jonathan Rauch, The New York Times Book Review
“Superb reporting of the on-ground reality of America’s current economic crisis . . . an unflinchingly brave book. Luce does not shy away from conclusions that are hard for many Americans to hear, not does he cop out and offer up the happy ending many in his audience may want to read. Rather, he offers what is most needed now: an objective profoundly thoughtful look at the underpinnings of America’s economic troubles, what makes the current crisis different from the past, and where we are likely headed from here.” —Foreign Policy
“Carefully balanced and often startlingly evocative analysis and reportage . . . It is true that there have been serious errors in policy. Luce, formerly the Financial Times’s south Asia bureau chief based in New Delhi and now the paper’s chief Washington correspondent, spells out these exercises in self-damage in painful and illuminating detail.” —John Gray, The Guardian
“From the FT‘s chief Washington correspondent, this gloomy but absorbing view of US prospects combines interviews with sobering statistics ranging from education (twice as many are studying MBAs than engineering) to railways (Obama is investing $8 billion compared to China’s $200 billion).” —Independent
“[Luce] brings the perspective of both an insider and an outsider to Time To Start Thinking: America in the Age of Descent. . . . Luce demonstrates the many weaknesses in U.S. society, which he sees as caused by the extreme conflict in political agendas, the bureaucratic failure to resolve problems efficiently, and the greed that allows CEOs to receive outrageous compensation while employees are shortchanged and outsourced. . . . Time To Start Thinking benefits from Luce’s interviews with many experts as well as ordinary people in a wide variety of fields, including business, politics, and education. . . . [Luce] demonstrate[s] a wide-ranging curiosity and an analytical approach to large problems.” —John C. Holmes, Federal Lawyer
“A brilliant and devastating critique of those who blame the Democrats—and Obama in particular—for the economic crisis in the US and the assumption that America’s decline is merely the result of misguided policies which can simply be reversed by an act of will.” —Warren Boland, ABC Queensland
“Boiled down, it shows we are collectively burying our heads in the sand as we ignore problems at the local, state and national levels and continue to pretend and spend as if nothing has changed. But everything has changed. . . . [Luce] reminds us that if you have a hole in your roof, pretending to fix it does not keep the rain out. We have attempted to ignore, deny, patch and hope our problems away.” —Tom Watkins, Detroit News
“The book is not simply a laundry list of present-day policy failures (of which there have been many) but as hinted at by the title of a political system that’s stopped constructively engaging with policy challenges. . . . It’s time to start thinking.” —Slate.com
“Following a personalized and anecdotal narrative style, Edward Luce covers a wide canvas that describes the causes and possible solutions for the current state of the US economy. . . . Luce hooks from the first sentence . . . There will certainly be more books on the malaise, but this is a very engaging one.” —Bibek Debroy, Businessworld
“In the vast library of literature about the United States, books by detached European observers fill only a few short shelves. . . . In some respects, Edward Luce’s Time to Start Thinking stands in the lineage of these illustrious forebears.” —International Affairs
“[Luce] makes a convincing case.” —Matthew Partridge, MoneyWeek
“Luce wisely refrains from prescribing what America needs to do to get out of the rut. . . . They need new ideas, the lack of which Time to Start Thinking hopes to have captured. That in itself is no meager achievement.” —Hindustan Times
“Thoughtful and gently polemical . . . an engaging read, filled with anecdotes, stories and character vignettes that make the main arguments easy to follow and interesting to read. . . . thought-provoking . . . Luce argues convincingly.” —Maura Adshead, Irish Examiner
“Luce, despite his UK origins, has an insider’s knowledge of the US. He’s a long-time and well-connected Washington journalist and has also worked as a speechwriter for the US Treasury Department. But, as a foreigner, Luce is able to maintain some intrinsic distance from his subject (the US decline), which encourages a sober, data-driven analysis of America and its issues.” —The Financialist (Book of the Week)
“[Luce] puts forward a picture of a society that is poised delicately on the edge. America might not be facing complete collapse, ” la Rome, but Luce’s narrative makes it clear that tremendous effort—and plenty of luck—will be needed to reverse its current decay.” —India Today
“Every half-decade or so, Financial Times journalist Edward Luce delivers an easy-reading but insightful country profile. . . . Luce’s books profile nations at the tipping point. . . . Edward Luce is carrying forward the great tradition of foreign correspondents from the Anglo-Saxon world, going back at least to Edgar Snow, who have produced penetrating outsider accounts of nations in the throes of change.” —Indian Express
“Luce finds plenty of fresh thinking . . . Essential reading for anyone who cares about the fate of the US and its consequences for the rest of us.” —Denis Staunton, Irish Times
“Luce is a very good reporter. He has spoken to a terrific array of characters—including eccentric entrepreneurs, bankers, captains of old industries, new technology evangelists, senior politicians, an admiral, academics, a community college head, a recruitment agency boss, brilliant immigrant students who are ‘going back’ (i.e. away from the US). Best of all are his vivid portraits of Americans struggling to get by, assailed by what he calls ‘the hollowing out’ of America’s middle class.” —Financial Times (UK)
“Carefully balanced and often startlingly evocative analysis and reportage . . . illuminating . . . entertaining . . . Pundits who insist that American decline is not a fact but a choice are closing their minds to the real issue, which is how the US will adjust to a descent from primacy that cannot be stopped.” —John Gray, The Observer (UK)
“Luce puts his finger right on some obvious and less obvious problems, all the time pointing the way out of the swamp. . . . Some of his observations are simply delightful. . . . This book needs to be read as a dose of cold water, but also as a goad to action to change its sad prognosis before it is too late. The waterfall is just ahead.” —Dan Simpson, The Pittsburgh Post-Gazette
“[Luce] reveals, from his extraordinary access to Pentagon officials, that even they admit the era of US global dominance is over.” —The New Statesman
“A superb new book.” —The Council on Foreign Relations
“Deeply-researched.” —Bernd Debusmann, Reuters.com
“In this well-reported and extensively researched book, Luce puts his finger on many of the country’s most serious problems and explores the gaping disconnect between elite optimism and popular bewilderment, anger, and despair.” —Walter Russel Mead, Foreign Affairs
“Luce’s book, Time to Start Thinking: America in the Age of Descent, is 280 pages of easy-to-read journalism—interviews and data, soberly and clearly presented, without much of any personal opinion—that lets diverse voices say, essentially, that our country’s abandonment of collective action on science, infrastructure, industrial policy, and educational standards means we’re blowing our lead. Probably forever.” —Bruce Fisher, Artvoice
“Rarely has the case for our national decline been made more chillingly and in more persuasive detail by a journalist with Luce’s establishment credentials. . . . Luce portrays a people frozen like a deer in the headlights of its own collective narcissism and nostalgia for a mythologized past—a people unable to grasp how far things have already slipped. . . . Like a doctor examining the patient organ by organ, he diagnoses America’s ills in a wide variety of fields. . . . Luce wisely offers no magic bullet. Instead, he does what journalists are good at—he listens. And he lets us overhear what Americans are telling him.” —Richard Schiffman, Huffington Post Business
“[A] lucid, reported tour d’horizon. It provides an excellent snapshot of America in 2010 and 2011, a country grappling with serious issues and unsure about its place in the world.” —Yahoo.com
“[A] thoughtful and gently polemical book on contemporary American society. . . an engaging read, filled with anecdotes, stories and character vignettes that make the main arguments easy to follow and interesting to read.” —The Irish Examiner
“In a tradition stretching back to de Tocqueville, sympathetic foreigners are often the keenest observers of American life. Edward Luce is one such person. He paints a highly disturbing picture of the state of American society, and of the total failure of American elites to come to grips with the real problems facing the country. It rises far above the current political rhetoric by its measured reliance on facts rather than canned ideological posturing to reach its conclusions.” —Francis Fukuyama, author of The End of History and The Last Man
“Time To Start Thinking is not only a wonderful tapestry of the current state of America, it provides a deeply insightful narrative on the origins of our current economic and political malaise. Ed Luce is a brilliant reporter who has spoken to everyone: CEOs and members of the cabinet, lobbyists and small town mayors, recent MBAs and unemployed teachers. In his acutely observed, often witty, and very humane portraits he succeeds converting the abstractions of economics and bringing them to life. This is a book that will transform the way you think of this country.” —Liaquat Ahamed, Pulitzer Prize-Winning Author of The Lords of Finance
“Americans need friends who will tell us what we need to hear and how to think about the troubles, many of our own making, that threaten our democracy, prosperity, and leadership in the world. We’ve got just such a friend in Ed Luce. He’s a foreign observer who has not just traveled widely in the United States but listened carefully to a wide array of our citizens. His concerns reflect what he has seen and heard from us, and he shares with his predecessor de Tocqueville a belief that America’s greatness lies in an ‘ability to repair her faults.’” —Strobe Talbott, president, The Brookings Institution
“Warning: this book could be a danger to your peace of mind. One of the finest journalists of our time, Ed Luce has crisscrossed the United States, trying to understand what ails the country and what must be done. His conclusions are highly disturbing—and may sometimes set your teeth on edge—but they are a ‘must read.’ Once again, a visitor to these shores has written a masterful portrait of America.” —David Gergen, professor, Harvard Kennedy School; senior political analyst, CNN
“[T]his sharply written analysis by Financial Times columnist Luce (In Spite of the Gods) presents a sobering account of the U.S. in decline. . . . Despite ample doom and gloom, Luce’s analysis is sound, and his data irrefutable—required reading for pessimists and pious optimists alike.” —Publishers Weekly, boxed review
Introduction: The Graduations
The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults. —Alexis de Tocqueville, Democracy in America
The sun was shining. The last of the late spring cherry blossoms was still visible. All was well with the world. Or at least that is how it must have seemed to the three hundred or so graduating MBAs as they gathered for ceremonies beneath their university’s clock tower. This being the Georgetown class of 2011, most of the graduates, including my wife’s cousin Bikram Basu, who was my reason for attending, were keenly aware of the choppy economic waters into which they were heading. But on this day the positive was sure to be accentuated. Robert Solow, that year’s distinguished commencement speaker, had other ideas. “I am sorry,” Solow said to the graduates a few minutes into his bracing address. “I don’t do motivational speaking.”
Approaching ninety years of age, Solow is one of the few surviving American economists to have lived through the Great Depression, having been born five years before the crash of 1929. He won his Nobel Prize chiefly for identifying and measuring the technological underpinnings of economic growth, which, during the middle decades of his lifetime, created by far the largest and wealthiest middle class the world had seen. That same class has been under a grinding and, until recently, largely ignored siege for a generation or so. Having lived through the biting deprivations of a genuine depression—and seen the difference—Solow would surely cast today’s uncertainties in a reassuring light.
In the gentle and modulated tones of a true scholar, Solow set about doing the opposite. First he described the pronounced shift of America’s wealth away from wages and salaries and toward business income in the past quarter of a century. Corporate profits as a share of the American economy had recently climbed to their highest level since the eve of the Great Depression and wages had fallen to their lowest, Solow observed. For most middle-class Americans this had meant years of flat, or declining, incomes at a time when the top one percent were reliving the Gilded Age. The causes of this skewing were complex and deeply rooted, he said. But its importance, he added, with an understatement beloved of economists, was “nontrivial.”
“It might be that the balance of power in society is permanently shifting [toward the very wealthy],” said Solow. “If so, it is not going to be easily reversible—or reversible at all. If it continues, then your guess is as good as mine as to how society will respond.” Society aside, I was curious to see how Solow’s audience was responding. Few among the roughly equally divided American and international students and their relatives betrayed their verdict until Professor Solow had sat down. Georgetown’s alumni were likely to be “among the favored part of the population,” Solow reassured them. Then, as if to balance it out, he added, “It is by no means clear where you will all fit into all of this.” The Nobel laureate was equally economical in his conclusion. “Good luck with all that,” he said. “Thank you for listening.” There was a moment of uncomfortable silence before the audience offered twenty seconds of tepid applause.
A day or two later I sought out Bikram for his reaction. Like many of his peers, Bikram had struggled to find a job before graduating, even though his credentials (and background in engineering) were excellent. “We were pretty much evenly divided,” he said. Most of the foreigners, including Bikram, liked the speech for its honesty. But a lot of the American students were disappointed. “I think some of them wanted it to be a bit more uplifting,” he said. Unlike his American friends, though, Bikram could always take the easy route back to his booming homeland if things didn’t turn out well in America. “I would like to work in America for two or three more years before returning to India,” he said. “But it isn’t essential.”
There was a time when the vast majority of foreign students in America, particularly those from Asia, who make up the bulk of the overseas intake, would have strained every sinew to become American. These days the picture is much more variegated. Not only do many of their home countries offer matching and sometimes more lucrative career opportunities but, since the September 11, 2001, attacks, it has become much harder for graduating foreigners to stay on in America.
This scissor effect—multiplying opportunities at home and declining ones in the United States—has tangibly slowed the brain drain from which America has profited so handsomely in the past half a century. The net effect amounts to a large American subsidy for her global competitors. Universities charge in fees only a fraction of the true cost of an advanced degree in most science and engineering subjects. As Fareed Zakaria, the Indian-born commentator, has said: “Every visa officer today lives in fear that he will let in the next Mohamed Atta. As a result, he is probably keeping out the next Bill Gates.”
Some, like Michael Bloomberg, the mayor of New York, who refers to the post-9/11 U.S. system as “national suicide,” have argued for a “staple act” that would automatically attach a green card to every university degree. But few, of whatever leaning, expect Washington to overhaul America’s post-9/11 system any time soon. Barack Obama paid it only lip service in his first term. Even George W. Bush, who tried in his second term to push through an overhaul, was unable to bring along the majority of his Republican colleagues. Rahm Emanuel, Obama’s pugilistic first White House chief of staff, said early on that it would be “a great second-term priority”—code for the kind of kamikaze mission undertaken by presidents not seeking reelection (Bush junior included).
What is true for immigration is even truer for the rethinking many believe Americans must make if they are to confront what increasingly resembles the onset of decline. Much has been made of America’s mediocre public school system, which now consistently ranks below twentieth in the international tables in science and mathematics, and of the deterioration of so much of the country’s infrastructure into second world status. Much has also been made of America’s by now serial failure to capture the economic fruits of so many innovations that have sprung from its soil—not just in the rapidly widening sphere of renewable energy but also in robotics, jet propulsion, machine tools, nuclear energy, display systems, and batteries. Most of America’s problems, including the mess in immigration, are easy to grasp in theory. Almost all are proving harder over time to address in practice.
Americans reflexively single out Washington, D.C., as the cause of their ills. As this book will explore, however, Washington’s habits are rooted in American society. Blaming politicians has turned into a lazy perennial of modern American life. Even the politicians blame the politicians—bashing Washington is one of America’s few remaining bipartisan talking points. Few candidates would campaign on the promise of changing the culture of America. Yet that is what any self-preserving candidate vows to do to Washington. Sometimes it seems Americans are engaged in some kind of collusion in which voters pretend to elect their lawmakers and the lawmakers pretend to govern. This, in some ways, is America’s core problem: the more America postpones any coherent response to the onset of relative decline, the more difficult the politics are likely to get. Give or take a few years, China is set to overtake the United States as the largest economy in the world by 2020. Time and money are both in short supply. The appetite to mislay both remains unchecked.
Alexis de Tocqueville famously observed that Americans do not study much philosophy. But they tend to live by “philosophical method.” In other words, foreigners, particularly the French, are obsessed with what works in theory, Americans with what works in practice. “America is therefore one of the countries in the world where philosophy is least studied, and where the precepts of Descartes are best applied,” Tocqueville wrote. It is no accident that it was an American, Charles Sanders Peirce, who coined the word “pragmatism” to capture this philosophical method half a century after Tocqueville had described it. The word is distinctively American. But as this book aims to explain, America, at least in terms of how it governs itself, is no longer very pragmatic.
Among many liberals there is a resigned type of nostalgia that yearns for the golden age of the 1950s and ’60s when the middle class was swelling and the federal government sent people to the moon. Breadwinners worked eight hours a day in the factory and could bank on “Cadillac” health care coverage, a solid urban or suburban lifestyle, and five weeks’ vacation a year. Somewhat more mythically, among many conservatives the past is wrapped up in the godly virtues of the Founding Fathers from whom their country has gravely strayed. People stood on their own two feet and upheld core American values. It was a mostly small town place of strong families, where people respected the military and were involved in their community churches.
The right’s nostalgia tends to be angrier. But in their different ways both tend to blot out the sunlight. When a country’s narratives become this captivated by the past, they rob the present of the scrutiny it deserves. They also tend to shortchange the future. “America used to look ahead—we used to be good at that,” Craig Barrett, the former chief executive of Intel, which could lay claim to being America’s most consistently impressive company, told me. “Now we spend our lives reminiscing about the ‘Greatest Generation’ [i.e., that of World War II]. We can’t stop looking in the rearview mirror.”
Beyond the naval shipyard in Southeast Washington lies Fort McNair, America’s third oldest continuous fort, which looks across the Potomac at the Reagan National Airport on the other side. Sacked by the British in the War of 1812, the fort is today better known as the home of the National Defense University—the descendant of the Industrial College of the Armed Forces that was set up in 1924 to prevent a recurrence of the procurement difficulties that had plagued the U.S. military during the First World War. It was also supposed to act as a kind of internal think tank for the military.
NDU was the place where promising officers were sent to prepare their minds for leadership. Dwight Eisenhower, after whom its principal redbrick building is named, graduated from here. By focusing on the resources needed to sustain the U.S. military, these midcareer officers think differently than others. They grasp the importance of a robust economy. “Without it we are nothing,” says Alpha, a thoughtful air force colonel, who, as is the custom, is known by his military nickname (a name I have changed to protect his identity). “People forget that America’s military strength is because of our power. It didn’t cause it.”
I had gotten to know Alpha in peculiar circumstances. Unusually for a foreigner, particularly one whose forebears once trashed the place, I was invited by the NDU to judge the school’s annual exercise in national strategizing. Along with two other “distinguished visitors”—a label that has never before, and is unlikely again, to be bestowed on me—I was invited to assess a ten-year national security plan for America that the students had spent the previous two weeks thrashing out. The campus also conducts high-tech war simulations in which outsiders with military or diplomatic expertise are invited to participate.
This was an exercise in much fuzzier geopolitics. In short, what should America do over the next decade to sustain its global preeminence? I was intrigued to hear what these soldiers thought. Would they focus on defeating Al-Qaeda, pacifying Afghanistan, and disarming Iran? Or would they concentrate more on containing China as the emerging challenger to American power? As the saying goes, give a man a hammer and all he sees are nails. These people (I reminded myself) are the product of by far the most powerful military machine the world has ever known. Which nails were they seeing?
In what will qualify as another first and last, when I entered the room all its occupants stood and then, even more excruciatingly, sought my permission to sit down again. I momentarily thought about making a run for it. Instead we made our introductions. Of the sixteen members of the group, nine were in uniform and the remainder were mostly senior civilian officials from the Pentagon, the Department of Homeland Security, and the State Department. To judge from their accents at least half of them were from the South. Most had done combat duty in Iraq and Afghanistan. “I think you could still describe the U.S. military as a bastion of Republicanism,” Alpha told me a few days later. “But it’s a different kind to what’s in fashion nowadays.”
Over the following three hours this heavily bemedaled group laid out its blueprint. For the most part it was a highly articulate presentation. The only small exception was a tendency to stray into military jargon. Terms such as “off-ramp,” “kinetic,” and ‘situational awareness’ kept recurring. It reminded me of an American colleague at the Financial Times who, on his return from a briefing at the Pentagon, was asked what he had picked up. “I learned that situational awareness is a force multiplier,” he said. “Which means if you know where you are, you don’t need so many people.” When I related this to Alpha he smiled. “We could have done with some more situational awareness when we went into Iraq,” he said.
The group’s premise was that America still had enough power to help shape the kind of world it wanted to see. By 2021 that moment would have passed. The country needed to act very fast and very pragmatically. “The window on America’s hegemony is closing,” said the officer selected to provide the briefing. “We are at a point right now where we still have choices. A decade from now we won’t.” The United States, he continued, was way too dependent on its military. The country should sharply reduce its “global footprint” by winding up all wars, notably in Afghanistan, and by closing peacetime military bases in Germany, South Korea, the UK, and elsewhere.
America should make extra sure not to go to war with Iran. “We have to be able to learn to live with a nuclear-armed Iran,” said the briefer. “The alternative [war] would impose far too high a cost on America.” In Asia, America should recognize the inevitable and offer the green light to China’s military domination of the Taiwan Strait. In exchange for the United States agreeing to stand down over Taiwan, China would push North Korea to unite with South Korea. Finally, the United States should stop spending so much time and resources on the war against Al-Qaeda (the exercise took place about three weeks before Osama bin Laden was killed).
All this was a means to an end, which was to restore America’s economic vitality. It would not be easy. It may not even be possible, they conceded. But it should be the priority. “The number one threat facing America is its rising debt burden,” said the briefing officer. “Our number one goal should be to restore American prosperity.” Intrigued by the boldness of their vision, I was unprepared for what followed. The briefer said they had all agreed on the need to shrink the Pentagon budget by at least a fifth, partly by closing overseas bases, partly by reducing the number of those in uniform by 100,000, but also by cutting the number of “battle groups”—aircraft carriers—below its current level of eleven.
Most of the savings would be spent on civilian priorities such as infrastructure, education, and foreign aid. None of this would be possible were the United States at war, or even under threat of war, they said. It could be pulled off only if America were effectively to cede—or share—its domination over large parts of the world. “We would need to persuade our friends on the Republican side that America has to share power if we want to free up resources to invest at home,” said the briefer. “We tried really hard to come up with alternatives. But we couldn’t find a better way to do this.”
Led by my two “co-judges,” we probed the fifteen men and one woman for signs of hesitation. Expecting some kind of a reaction, I suggested that their plan would be seen as dangerously radical in America’s current climate. Pull out of Europe? Accept nuclear parity with China? Embark on a Marshall-style plan to revive the U.S. economy? The chances of anything like this happening were zero. “Nobody here thinks the politics in this town is going to change overnight,” said an army colonel from Tennessee with a classic military buzz cut. “All we are saying is that we’re in trouble if they don’t.” I heard his words and saw the person from which they were issued. It was still a struggle to match them up. “This isn’t about ideology, it is about understanding where we are as a country,” he said.
Later it occurred to me that what the group had laid out was within the mainstream of Republican tradition. In the 1860s Abraham Lincoln unleashed a series of investments that was to unify the continent into a single national economy—from the railroads to the public universities. In the early 1900s Teddy Roosevelt, another Republican, broke up the oil monopolies, introduced regulation of workplace conditions, and set up the first national parks to preserve American wilderness. Dwight Eisenhower, their fellow party alumnus, responded to the Soviet launch of Sputnik in 1957 with massive investments in public education, science, and road building. In a classic of unintended consequences, Ike also created the research agency that went on to develop the Internet.
Even Ronald Reagan, the undisputed icon of today’s conservative movement, shepherded through an amnesty for illegal immigrants, closed down thousands of income tax loopholes, and set up a public-private partnership to defend America’s embattled computer chip industry. Reagan once said, “I didn’t leave the Democratic Party, the Democratic Party left me.” Given the Republican Party’s instinct to equate virtually any taxes with socialism nowadays, it looks like Lincoln’s party has left the U.S. military—or at least its upper reaches.
Even with my grasp of polling methodology I knew a group of sixteen officers was too small a sample from which to draw any big conclusions. So it was with particular interest a few weeks after the session that I came across an article by the mysterious “Y” in Foreign Policy entitled a “National Strategic Narrative.” The piece made much the same arguments—although with fewer specifics—as the NDU group. It was written in homage to the famous Foreign Affairs piece by George Kennan in 1947 that argued for a strategy of “containment” of the Soviet Union and which he published anonymously under the byline “X.” In an attempt to get more attention, Admiral Michael Mullen, chairman of the Joint Chiefs of Staff and therefore the head of all the U.S. armed services, agreed to allow the names of the two “Y” authors to be revealed. These were Captain Wayne Porter of the U.S. Navy and Colonel Mark “Puck” Mykleby of the U.S. Marine Corps. Both were on loan to Admiral Mullen’s Pentagon office when they wrote it.
The authors argued that the United States could not hope to practice “smart power” abroad if it did not practice “smart growth” at home. Unlike the fate of the Kennan’s “Long Telegram” from which Kennan developed his piece, the article penned by Y generated virtually no response. Barring a few bloggers, none of the major newspapers or television stations saw it as newsworthy. Kennan had been compelled to reveal that he was X after a mounting campaign of public speculation. The authors Y elicited barely a shrug when they volunteered their identities. Yet their piece offered a key insight into the troubled mind-set of the U.S. senior military.
Much like the NDU group, Porter and Mykleby argued for a new spirit of “shared sacrifice” in America. It was Alpha who gave force to that phrase for me. Having patrolled the skies of Iraq—acting as the unblinking eye of the army—Alpha, like many of his colleagues, was disappointed with how the civilians managed that war. “In this country ‘shared sacrifice’ means putting a yellow ribbon around the oak tree and then going shopping,” he said, in reference to George W. Bush’s infamous call for Americans to hit the ski slopes and the shopping malls after 9/11. The memory clearly still bothered him. “Taxes are the price we pay for civilization,” he said, in quotation of the jurist Oliver Wendell Holmes.
America’s ability to reverse her fortunes could come about only through being admired around the world, rather than feared, Alpha said. There was a thin line between being feared and being mocked. “Should we be seen as a hegemon that imposes its will on others or as a beacon?” he said when I asked whether America should regain its appetite to promote democracy overseas. “The best thing we can do for democracy around the world is to change our act here at home.”
Alpha’s group had also recommended lifting the foreign aid budget by $30 billion a year entirely at the expense of the Pentagon. “We know there’s no lobby in Washington for foreign aid,” he said. In a poll by World Public Opinion a few months earlier, the American public estimated that one quarter of the U.S. federal budget was spent on foreign aid. In fact Washington spends little more than a dollar on aid for every ninety-nine dollars it spends on something else. The gap between perception and reality is occasionally stunning. In practice, and given the patchy record of the aid industry around the world, it is unlikely more money would buy the kind of goodwill that Alpha’s group would expect for America. Development is a complicated business. But that seemed beside the point. What I took from Alpha and his colleagues was a visceral concern about America’s future.
I picked up the same concern from Admiral Mullen in an interview that he gave me three months before retiring as head of the U.S. military. Mullen was in a talkative mood. In 2010, in the midst of overseeing a 30,000-troop surge to Afghanistan, Mullen had vented alarm about growing U.S. national debt, declaring it the country’s number one threat—greater than that posed by terrorism, by weapons of mass destruction, and by global warming. He had since repeated his point. We met amid the rolling high drama that led up to the last-minute decision in August 2011 to raise the U.S. national debt limit by more than $2 trillion.
Perched at his utilitarian semicircular desk, with a bank of television screens behind him, the admiral munched happily through two hot dogs, both of which he had drowned in mustard. It did not slow his word rate. “We are borrowing money from China to build weapons to face down China,” he said. “I mean, that’s a broken strategy. It may be okay now for a while, but it is a failed strategy from a national security perspective.”
Mullen spoke of the need for Washington to make more effective decisions at a time when America is entering a lengthy phase of fiscal austerity. It was clear Mullen did not think authorities in Washington were up to the task. Many still hadn’t made a proper account about the events that led up to the September 2008 meltdown following the collapse of Lehman Brothers. Nor was there strong reason to be confident that such a meltdown would not recur. “Where were the overseers, as opposed to the finger pointers, which is what they became?” he asked. “Where was the oversight, the helpful, regulatory, legislative oversight to keep us in limits? Because it wasn’t there. It wasn’t there. Where the hell is the accountability for this?”
Mullen’s concerns reminded me of Eisenhower’s famous farewell address in 1961, just before John F. Kennedy was inaugurated as president, in which he warned of the dangers posed by America’s emerging “military-industrial complex.” The world has turned at least a half circle since then. Nowadays people in Mullen’s position spend more time worrying about the foreign sources of components that go into U.S. military equipment. The global supply chain is a growing reality for the Pentagon. In such a hyperintegrated world, very little is made purely in America.
The world is changing rapidly, Mullen continued, and America cannot be expected to do all the heavy lifting. Much of America’s industrial base, including the naval shipyards and certain kinds of missile-building systems, was now in a “critically fragile” state, he said. “Once you lose that capacity it’s hard to get it back. We’re going to have to have something like a global security strategy that involves our allies and our alliances so that our industrial capacities are complementary.” In short, America’s allies should share much more of the economic burden. “There is not a country in the world that can do this alone any more,” Mullen said.
A few weeks after the NDU course finished Alpha went back to Afghanistan, to a war in which he believes America has again set its heights too high. “We should be more modest in what we think we can achieve,” he said. “The American military was never supposed to be an aid agency.” For Alpha, as for Mullen, America’s recent history offers a lesson in overreach. The U.S. military forces have been asked to pull off the impossible in faraway places. But whatever they have learned only reinforces their skepticism about what they can achieve.
In contrast, America’s soldiers can at least imagine America surmounting some of its bigger domestic problems. For the most part these are not obscure. But the will to confront them appears to be missing in action. For Alpha the biggest puzzle remains Washington’s reluctance to address the festering morass in America’s immigration system. As a nation of immigrants, America is supposed to attract people. “We take the world’s smartest kids and we give them the best education available and then we put them on a plane back home,” he said. “How smart is that?”
Don Riegle rose very early in the morning to give himself enough time to write the commencement address he was due to give later that day. “This isn’t an easy speech to give,” he said as we were driving to the venue. He continued to scribble notes throughout the morning. We had both stayed at the Holiday Inn Gateway, the only decent hotel in Flint, Michigan, which, perhaps appropriately, is located next to an interstate highway several miles out of town. As Michael Moore showed in his famous (to many in Flint infamous) documentary Roger and Me, the town has been in economic decline for many years. Today it serves virtually as a museum of American deindustrialization—the collapse of middle-class neighborhoods and the institutions that came with it.
From the robust public school system to the social clubs and voluntary associations that Edmund Burke called America’s “little platoons,” Flint has lost virtually all texture of a functioning city. Large tracts of it, including the neighborhood in which Riegle was born and raised, turn into shooting zones at night. In spite of having a population of only a hundred thousand Flint had sixty-six documented murders in 2010, giving it the seventh highest murder rate (by population) among American cities. The same year there were 517 acts of arson. Yet over the previous three years Flint’s police department had been cut by a whopping two-thirds1. On some Friday or Saturday nights there are fewer than ten police personnel on duty and just one patrol car to go around. Flint’s police headquarters is “closed weekends and holidays,” leaving a largely desolate urban landscape to its own fate.
A former Democratic senator for Michigan who stepped down in 1995 after having served thirty years on Capitol Hill (finishing his career as chairman of the Senate banking committee), the seventy-three-year-old Riegle was back in Flint to give the graduation address at the local community college. He invited me along so that he could show me what had happened to his hometown. Riegle, whose father was briefly mayor of Flint in the 1950s, grew up in a lower-middle-class suburb within earshot of the factory whistle that would issue each dawn from the adjacent Buick plant, signaling the start of the morning shift. Every Buick made in America was produced here.
During World War II the auto plants in Flint, like most of the rest of Michigan and the surrounding Midwest, were converted into Franklin Roosevelt’s so-called arsenal of democracy. General Motors and Ford turned into the world’s most efficient military suppliers. At one point half of the world’s industrial production took place within a three-hundred-mile radius. This was the epicenter of the machine that rolled back Japan and helped defeat Hitler. Flint’s workforce also helped to keep Britain afloat during the darkest days of the war, when the United States was still hoping it could stand apart.
Today, Riegle’s formerly bustling neighborhood reminded me of the strangely pockmarked streets of Bosnia that I saw in the mid-1990s. Ethnic cleansing in Bosnia had left some houses perfectly intact and others totally burned out, like a mouth with pearly white teeth except that half of them had been removed. Riegle drove me through the streets of his youth. At one moment you would see a nicely kept picket fence bungalow. “These are the people who are keeping things together but are locked in because they can’t sell their home,” said Riegle. The next you were staring at an empty lot where the house had been burned to the ground. “These are the people who went for the insurance,” he said. The pattern repeated itself for block after block.
Most of the trees that had once given these streets their intimacy had been stripped for fuel. At regular intervals local residents had nailed wooden makeshift signs to whatever trees were still standing. “This is a Kid’s Zone, not a Hoe’s Zone,” says one. “Prostitutes keep out!” says another. “One thing we don’t want to do is get out of the car,” said Riegle. It was eleven in the morning. Flint has had it bad, but this could have been Cleveland, or Detroit, or any number of economic sink zones in the American Midwest. For Riegle, however, the sight was visceral. He hadn’t been back in several years. At various points Riegle would point at a boarded-up shop or a smoke-charred ruin and say, “That was a ten-cent variety store,” or “That was where the Coney Island restaurant used to be, my dad used to take us there,” or “This block was what we called the Hungarian Village.”
When we reached his childhood home at 1814 Franklin Street, Riegle’s expression saddened. The modest single-story house looked like it had seen better days. It was still possible to picture the busy community that had surrounded it. “It is almost an out-of-body experience,” said Riegle, driving at a crawl past his house. “To think of the epic, compressed change that has hit this neighborhood. To think of how totally things can fall apart.” Gesturing at what was clearly a crack house a few doors down, he continued, “For better or worse, it was this town that made me into who I am,” he said. “If you’re born here nowadays what chance do you have?”
In spite of his parents’ modest financial means, Riegle had enough parental support to make it to college in Michigan and then into Harvard Law School in the early 1960s. Riegle also credits his local public school for his subsequent success. “Most of the teachers were women and if they got married they were fired,” he said chuckling. “It sounds quaint in today’s context. But the system worked.” We were heading for an indoor hockey rink to celebrate the eleven hundred people graduating from Mott Community College. “The one thing I’m not going to dwell on is the state of the economy,” said Riegle, who had been mulling over what tone he should strike. “On the other hand I don’t want to paint an unrealistic picture. Are there any jobs for them?” After some thought, he added, “These kids have beaten all the odds to pick up a skill and I want to make them feel good. They deserve it.”
Before the ceremony we ate a buffet lunch with members of the college board in an upholstered campus residence. Richard Shaink, the nationally recognized college president (Mott was ranked by the college association among the top ten of the 1,167 in the country2), described the condition of the students when they arrive to begin their two-year associate degree. More than two-thirds fail to pass an eighth-grade reading test, which means the large majority of Flint’s high school graduates are stuck at or below the reading age of a thirteen-year-old. Mott requires students with deficiencies in reading, writing, or basic maths (and sometimes in all three) to take crash courses before they are allowed to go any further. A majority of the students drop out before starting their chosen degree. It reminds them too much of high school.
In an area with more than 20 percent official unemployment—almost double that in real terms if you include those who have dropped out of the labor market or who cannot find full-time work—Mott’s graduates have a fighting chance of getting jobs. “The people who are graduating today have stuck at it through thick and thin and really accomplished something,” Shaink said to us. A large number were qualifying as nurses, dentist’s assistants, or social workers. Others were picking up certificates in more tailored fields. A few had been trained to work in nail salons, many more to work on IT help desks, and there were a wide range of electricians, auto-repair workers, and paralegal assistants. “In most cases they are the first people in their family to graduate from anywhere or with anything,” said Shaink.
The stadium floor was covered with lines of empty chairs that would be filled by the students at the end of the opening procession. The stands around it were packed with expectant relatives. The buzz they gave off was the kind you hear before a sporting event. Some of them had brought vuvuzelas. They erupted in cheers when the choir launched into “America the Beautiful,” which signaled that the students were starting their procession. Dressed in ceremonial black gowns and mortarboards, each bore a different colored tassel or sash, conveying the subject field in which they were graduating. I flicked through the event brochure, which listed the rules governing the pageantry for community college graduations, including the colors you are permitted to wear and in what form. There was “apricot” for nurses, “golden yellow” for the sciences, and “citron” for social workers. Amusingly—and I wondered if it was intentional—”drab” was assigned to those graduating in accounting.
At a guess, about two-thirds were women. Some flashed smiles and waved both hands at their families in the stands. Others took pictures of their classmates. There was a small but consistent trickle of middle-aged men and women, most of whom seemed a little less exuberant. “Keep your eyes on the women’s shoes,” said the lady sitting next to me as they shuffled past in single file to collect their degrees. “Aren’t they the best?” Like many Europeans (and a smaller minority of Americans), I am not a fan of having to stand up and sing patriotic songs. But there was something very moving about the undisguised pride written on so many faces as they entered the arena to “America the Beautiful.” For the first time I paid close attention to the words. O beautiful for patriot dream / That sees beyond the years / Thine alabaster cities gleam / Undimmed by human tears / America! America! / God shed His grace on thee / And crown thy good with brotherhood / From sea to shining sea.
After the posting of the colors, the audience settled down for Riegle’s address. Having heard him mull over its contents earlier on, I felt an unearned stake in his performance. I was curious to see how it would be received. Riegle started on the economy. “These are hard economic times for people in America and particularly for the people of the Midwest,” he said. But the people of Flint—or the “Flintstones” as they have more recently become known—had been through even tougher times than this. Riegle described the Flint into which he was born in 1938, when it was just emerging from the Great Depression and the bitter factory lockouts that had scarred the auto industry through the 1930s. It culminated in a climb down by management and the creation of the United Auto Workers union. “Many of our citizens died in poorhouses,” said Riegle. “But we were a hardscrabble town, probably the toughest in America.”
Then came the Second World War, which turned Flint into a critical piece of the war machine that defeated fascism. The experience helped to cement one of the tightest knit industrial communities in the nation. When the town was devastated by a tornado in 1953 it pulled together. “Within two weekends the people of Flint rebuilt ninety-five percent of the houses—everybody pitched in. It was in our DNA. It is in your DNA,” he said. Riegle quoted Franklin D. Roosevelt and John F. Kennedy.
Then he turned to the present. He told the graduates that they had climbed a big mountain against steep odds and the expectations of society. “Some people think Flint doesn’t have what it takes to survive and succeed,” he said. “But you have shown with your courage that you have what it takes.” Without painting a false picture of the world that awaited these graduates, Riegle’s words showed heart and knitted skillfully with the pride of the occasion. Apart from the loud chatter from children in the stands, the adults clearly appreciated it. “What did you think?” asked Riegle as we got into the car. I said he had pitched it perfectly. “I’m not so sure about that,” he replied.
Many economists would argue that what has happened to Flint and so much of the Midwest is a sad but necessary feature of America’s dynamic economy, the country that has most closely tracked the cycle of “creative destruction” set out by the early-twentieth-century political scientist Joseph Schumpeter. In Schumpeter’s society dying assets are liquidated more rapidly, making way for a more rapid investment in the next cycle of production. The old dies so that the new can be born.
There is accuracy to the observation. But a city is also a home. And cities never really die. Detroit’s population today is less than half its peak of 1.8 million in 1950. Places such as Toledo, Flint, and Cleveland have experienced similar drops in what demographers say is the greatest urban population decline since the Black Death in thirteenth-century Europe. But that still leaves more than 700,000 people trapped in Detroit, many of them in homes they can never hope to sell. Will they be buried with their assets? “It’s easy to say now but I guess the moral of the story is you’ve got to diversify,” says Riegle.
The slow-burning plight of America’s Midwest is no longer something that can be swept neatly, if unhappily, into a side category. People used to see America’s rust belt as a tragic but unavoidable casualty of America’s transition into a dynamic service economy. But the rust continued to spread into other corners of America. Since 2000, America has lost another 5 million manufacturing jobs, which is roughly a third of what was left. The new service economy jobs that replaced them don’t pay the same rates. Nor do most of them come with health care benefits or pensions. Five-week holidays have almost vanished. For the first time in modern history the majority of American households were poorer at the end of a business cycle than at the beginning (2002 to 2007). Since then things have gotten worse.
A nation the size of America can handle the fates of a few Flints and Detroits. But how many declining suburbs and exurbs can it absorb before some kind of tipping point is reached? Many Americans attribute their country’s success to a unique set of virtues that qualifies the United States as exceptional in world history. In economic form, such values include self-reliance, a small state, low taxes, and free trade. All of these are freighted with some elements of myth. America’s deepest virtue may lie in its rich tradition of pragmatism. How soon, and with what effect, that quality will resurface is a “nontrivial question,” as Professor Solow might say.
This book will not predict America’s collapse. But it will prove skeptical about America’s ability to sharply reverse her fortunes. Its title, Time to Start Thinking, implies that America has not yet begun to think seriously about the consequences of where it is headed. Nowhere is this deficit more apparent than in American politics. If America is to restore its competitiveness it will need to do many things, few of which will be possible without a much more effective federal government. In today’s world, smart government is a critical ingredient of national competitiveness. Unless America can address government’s role in a more pragmatic light, it may doom itself to continued descent.
The first chapter, “The Lonely Middle,” looks at the changing structure of the U.S. economy, in which the impact of technology and globalization has reduced the earnings potential of a large share—and possibly most—of the workforce while catapulting the most productive elites into a different hemisphere. It will ask whether it is possible to revive a jobs-rich American manufacturing sector, as many, perhaps somewhat optimistically, believe is still possible. And it will assess the growing bewilderment of America’s economic elite, who have been hit by a crisis they were the last to see coming. They have yet to find a new paradigm.
The second chapter, “Leave No Robot Behind,” looks at America’s steep challenge in overhauling public education. It also asks whether America can refurbish a system of worker training that is shortchanging most of America’s labor force. Chapter three, “The Golden Goose,” looks at the health of American innovation and takes a neutral stance on America’s chances of remaining the world’s leader. Silicon Valley continues to be the most dynamic place on the planet to start up a company and the likeliest parent of disruptive technologies. But if the valley’s secret sauce is to be found in its distinct blending of place, money, and talent, only “place” can be firmly relied upon to stay put.
Chapter four, “Gulliver’s Travails,” looks at waning prospects for overhauling the U.S. federal government, which, in spite of repeated efforts at reform, remains part of the problem. Chapter five, “Against Itself,” looks at what is driving the continued polarization of America’s politics. The bitterness in Washington might be seen as an analogue to the polarized economy outside the Beltway. So, too, is its disorientation. It has become fashionable to talk of America’s “broken politics.” Unlike most fashions, this looks to be more durable. The lessons taken in states such as Texas and California are not encouraging.
Chapter six, “Maybe We Can’t,” looks at the increasingly debilitating effect of the “permanent [election] campaign,” a trend Barack Obama has exacerbated and in many ways come to embody. The final chapter, “An Exceptional Challenge,” looks at America’s dwindling options in a world where the pace is increasingly being set elsewhere. Many Americans believe it is still within their power to determine whether the country retains its global preeminence. That is probably wishful thinking. But it is within America’s power to reverse its increasingly plutocratic internal character.
The book therefore concludes where it begins, with America’s shell-shocked middle classes. Can their fortunes be revived? Must we await another shock, along the lines of the 2008 Wall Street meltdown, for America to stir itself into action? American history is rich with examples of shocks that galvanized big change (the Great Depression, Sputnik) and others that prompted much darker responses (the McCarthyite Red Scare and the invasion of Iraq). Who can say whether the next tipping point will be positive or negative? “It is conventional wisdom in Washington to say, ‘We need another crisis. That’s when we’ll get things done,’” Michael Bennet, the senator from Colarado, told me. “I’m not so sure about that. What would it look like? Shouldn’t we be careful what we wish for?”
In what had been a summer of graduations, I still had one to go, the event to which I had been most looking forward: the 2011 Princeton Class Day for my talented nephew Nikhil Basu Trivedi. At just twenty-two, Nikhil had already secured his first job at a private equity firm in Manhattan, at a starting salary that discretion forbids me from disclosing. The previous winter I had visited Nikhil at Princeton to talk to his peers about the jobs they wanted. My chief curiosity was to see whether the 2008 meltdown, which took place when Nikhil’s class was in its sophomore year, had made any impact on the career aspirations of Princetonians. Chiefly via a Facebook posting and a Tweet, Nikhil pulled together an articulate cross section of about twenty of his peers.
We sat around a dining table for a couple of hours talking about their career plans. Roughly a third of this self-confident, bright, and diverse group of young men and women were planning to study for MBAs at places such as Harvard and Wharton. Some were applying to Teach for America—the philanthropic movement that places highly motivated graduates into some of America’s toughest schools for two years. And most of the rest, in one form or another, including Nikhil, were heading into the financial sector and into nonfinancial business.
My unscientific poll may have understated how little had changed, however. A large chunk of college graduates who do MBAs go on to Wall Street. And a large share of those who join Teach for America go on to study for MBAs. Given that Wall Street had been through only a year of suppressed bonuses before bouncing back to its precrash heights, most of Nikhil’s peers agreed that the 2008 financial cataclysm had not radically altered their outlooks. The price signal from Wall Street was almost as loud as it had been before the bubble burst.
Six months later on a sweltering day in early June I watched them graduate. Having supplied nine of the fifty-five attendees to America’s constitutional convention, Princeton rivals Yale and Harvard in Ivy League prestige (they had five and four apiece). For commencement days, the president of Princeton is always the speaker, unless, that is, the U.S. president is available. That day’s chief dose of reality came from Shirley Tilghman, Princeton’s first female president and a renowned molecular biologist. She gave some tongue-in-cheek advice to the young graduates.
Tilghman warned that Princetonians of the class of 2011 would find themselves in a world that operated under different rules once they had left “the orange bubble.” Outside the bubble, “you will not be rewarded for doing your work with free Kettle corn and pancake breakfasts,” she said. “You will be rewarded by not being fired.” Tilghman’s advice provided a lighthearted reminder of how enjoyable life at Princeton had been. “In the real world using printers, getting massages, and going on trips to the Galapagos Islands actually costs money,” she said.
In her humorous way, she also chided the outgoing class for where most of it was likely to be headed—barely a forty-five-minute car ride away. “And so,” she concluded, “we are proud to have you carry Princeton University’s name into the farthest reaches of the upper west and upper east sides of Manhattan.”
Every body laughed. They laughed, too, on the previous day when Michael Bloomberg dropped by to speak at yet another Princeton graduation event. The mayor of New York had also done some unscientific polling. Like most graduation speakers, he felt obliged to dispense career advice. That is one thing graduation speakers seem to have in common. “As you venture forth into your chosen careers, whether it be in finance, or . . . Oh wait,” said Bloomberg, pausing. “I think that pretty much covers it.”