American Dream at the Cross Roads
John Samuel
The idea of American Dream- the US as the land of opportunity, education, technology, the cultural melting pot and freedom- is at the risk of fading away. The American boom , to a large extend, was driven by the American dream- its ability to attract some of the most motivated people, with ambition as well talent, across the world. This helped the USA to emerge as the global soft-power house, at the forefront of ideas, education, science, technology and communication. This created conditions for a vibrant market and booming economy.
The rise of neoconservative politics and the overwhelming dependence on unilateral military might as the primary source of American power seem to undermine the American Dream, multiculturalism, good will and economy. The US foreign policy is fast losing its ability to create consensus or peace and increasingly defined by its capacity to create confrontation, violence and war. The ongoing tendency to lead more by mighty muscles and less by contemplative mind will create more sense of security paranoia among different sections of people within the US. There is a possibility that the USA will be less and less of a global destination for some of the most motivated and talented people. This can trigger off very challenging economic consequences.
The USA is one of the most significant trading partners of many other economic powers, including India and China. The global economy to a largest extend depends on the demand in the USA. There is also a very strong link between the economic policies and the consequent political consequence in one country and its implications in other parts of the world.
Recently George Bush boasted that “economy is powerful, productive and prosperous”. It would be worthwhile to compare this with the message of President Calvin Coolidge to the congress on Dec 4, 1928: “Enlarging production is consumed by an increasing demand at home and expanding commerce abroad. The country can regard the present with satisfaction and anticipate the future with optimism”. Within less than a year of that statement, on 29th October 1929 the world felt the great crash at the New York Stock Exchange, arguably the most traumatic experience in the history of capitalism. The near universality of this economic crisis and its political implications are not too far to forget.
While Bush is busy fighting a shadow wars in Iraq and the ‘war on terror’ globally, the shape of the American economy is far from soothing. With an estimated growth of 3.5% this year, unemployment low at 4.6% and fat profits, the economy looks robust. However, if we look at other key indicators, then there is less space for any optimism.
The US trade deficit, both in absolute size and as a percentage of GDP, is unprecedented. It reached $ 800 billion (almost 7% of GDP) in 2005 and accumulated $ 4.5 trillion since 1990.Scrap metal and waste paper are two of the biggest export item. Former Federal reserve Chairman Paul Volcker predicts 75% chances of a major financial crisis within four years.
The biggest buyer in the global economy is the USA. Other key players such as Japan, EU and China are net sellers. The clear indicator of the credit based consumerism is the household spent. The USA as a nation consumed about $ 800 billion (around 7% of GDP) than it produced and the household spent $ 500 billion more than they earned. The USA has negative savings and low rate of investment and the substantial amount of savings and investment of global economy are in Asia. As a result, the net borrowing of the US every day, from the rest of the world, is a whopping $ 3 billion, largely by selling US treasury bonds. So buying and borrowing keep the economy of the USA apparently robust. But there is less chances for the show to survive at this rate.
There is a large chunk of US dollars outside the US. While Japan has around $ 1 trillion, China and Saudi Arabia are not far behind. To manage its increasing debt, there is an increasing chance that US will trigger dollar devaluation, along with raising interest rates in the US. This can have major impact on the global economy.
The ever increasing expenses to meet the war in Iraq, along with the expense of war on Terror would mean there will be less money for social sector expenditure. There has been consistent cut in the social sector expenditure, including that for education and health care. John F Kennedy’s adage that “rising tide lifts all boats” is not happening any more. When Hurricane had ripped through New Orleans the myth of American dream was exposed. The rising tide of economic growth has failed to lift the boats of the poor. There are an estimated 37 million poor (with less than $14,680 for a family of three) people, in a nation with a population of 300 million. The poverty rate of 12.7 percent is the highest in the developed world.
Poverty has both colure and gender. The majority of poor are people of colure, African American, American Indian and Hispanic form the vast majority of them. Soon after Katrina, Sen. Barak Obama said on the floor of the Senate: “They were abandoned long ago- to murder and mayhem in the streets- to substandard schools, to dilapidated housing, to inadequate health care, to pervasive sense of hopelessness”.
While the poor, with an identity of colour, gets alienated further from the mainstream economic and political process, the inequality is on the rise. Gini index (measure of income inequality on a scale of 0 to 100) of the US is 41, the highest in the developed world. The study by Emmanuel Saez shows that the share of aggregate income going to the highest earning one percent of American had doubled from 8% in 1980 to 16% in 2004. Now an American chief executive earns 300 times the average wage, tenfold more than 1970. Though the unemployment is relatively low at this point, other indicators such as the proportion of the people working, the stagnation of income levels of the middle class etc point towards the vulnerability of the situation. A possible hike in the oil price may exasperate the condition of the economy.
The sky rocketing budget deficit, trade deficit, increase of poverty and inequality are not signs of good omen. As a recent survey has pointed out that more than six out of ten are skeptical of free trade. The survey by the Foreign Affairs pointed out that nine out of ten American worry about their jobs going offshore. But the fact of the matter is the number of jobs that shifted offshore is not more than 1 million. However, such perceptions, coupled with an increasing sense of paranoia and insecurity, may signal the fading of the American dream and the seductive capacity of the land of opportunity.
The US is witnessing the rise of neo-conservative politics, neo-liberal economic policies, and the over dependence on the unilateral military hardware for power play. The alternative is an America that promotes equitable democracy and social- economic justice, real human rights and multilateral internationalism based on soft power and negotiated diplomacy- an enabling and supporting America which will create less wars and more good will. American Dream is at the cross roads.
# This is a piece written in 2006, predicting an economic down turn in 2008. This is published by Himal South Asia, The New Age, The News,Infochange and several other publications in West Asia
John Samuel
The idea of American Dream- the US as the land of opportunity, education, technology, the cultural melting pot and freedom- is at the risk of fading away. The American boom , to a large extend, was driven by the American dream- its ability to attract some of the most motivated people, with ambition as well talent, across the world. This helped the USA to emerge as the global soft-power house, at the forefront of ideas, education, science, technology and communication. This created conditions for a vibrant market and booming economy.
The rise of neoconservative politics and the overwhelming dependence on unilateral military might as the primary source of American power seem to undermine the American Dream, multiculturalism, good will and economy. The US foreign policy is fast losing its ability to create consensus or peace and increasingly defined by its capacity to create confrontation, violence and war. The ongoing tendency to lead more by mighty muscles and less by contemplative mind will create more sense of security paranoia among different sections of people within the US. There is a possibility that the USA will be less and less of a global destination for some of the most motivated and talented people. This can trigger off very challenging economic consequences.
The USA is one of the most significant trading partners of many other economic powers, including India and China. The global economy to a largest extend depends on the demand in the USA. There is also a very strong link between the economic policies and the consequent political consequence in one country and its implications in other parts of the world.
Recently George Bush boasted that “economy is powerful, productive and prosperous”. It would be worthwhile to compare this with the message of President Calvin Coolidge to the congress on Dec 4, 1928: “Enlarging production is consumed by an increasing demand at home and expanding commerce abroad. The country can regard the present with satisfaction and anticipate the future with optimism”. Within less than a year of that statement, on 29th October 1929 the world felt the great crash at the New York Stock Exchange, arguably the most traumatic experience in the history of capitalism. The near universality of this economic crisis and its political implications are not too far to forget.
While Bush is busy fighting a shadow wars in Iraq and the ‘war on terror’ globally, the shape of the American economy is far from soothing. With an estimated growth of 3.5% this year, unemployment low at 4.6% and fat profits, the economy looks robust. However, if we look at other key indicators, then there is less space for any optimism.
The US trade deficit, both in absolute size and as a percentage of GDP, is unprecedented. It reached $ 800 billion (almost 7% of GDP) in 2005 and accumulated $ 4.5 trillion since 1990.Scrap metal and waste paper are two of the biggest export item. Former Federal reserve Chairman Paul Volcker predicts 75% chances of a major financial crisis within four years.
The biggest buyer in the global economy is the USA. Other key players such as Japan, EU and China are net sellers. The clear indicator of the credit based consumerism is the household spent. The USA as a nation consumed about $ 800 billion (around 7% of GDP) than it produced and the household spent $ 500 billion more than they earned. The USA has negative savings and low rate of investment and the substantial amount of savings and investment of global economy are in Asia. As a result, the net borrowing of the US every day, from the rest of the world, is a whopping $ 3 billion, largely by selling US treasury bonds. So buying and borrowing keep the economy of the USA apparently robust. But there is less chances for the show to survive at this rate.
There is a large chunk of US dollars outside the US. While Japan has around $ 1 trillion, China and Saudi Arabia are not far behind. To manage its increasing debt, there is an increasing chance that US will trigger dollar devaluation, along with raising interest rates in the US. This can have major impact on the global economy.
The ever increasing expenses to meet the war in Iraq, along with the expense of war on Terror would mean there will be less money for social sector expenditure. There has been consistent cut in the social sector expenditure, including that for education and health care. John F Kennedy’s adage that “rising tide lifts all boats” is not happening any more. When Hurricane had ripped through New Orleans the myth of American dream was exposed. The rising tide of economic growth has failed to lift the boats of the poor. There are an estimated 37 million poor (with less than $14,680 for a family of three) people, in a nation with a population of 300 million. The poverty rate of 12.7 percent is the highest in the developed world.
Poverty has both colure and gender. The majority of poor are people of colure, African American, American Indian and Hispanic form the vast majority of them. Soon after Katrina, Sen. Barak Obama said on the floor of the Senate: “They were abandoned long ago- to murder and mayhem in the streets- to substandard schools, to dilapidated housing, to inadequate health care, to pervasive sense of hopelessness”.
While the poor, with an identity of colour, gets alienated further from the mainstream economic and political process, the inequality is on the rise. Gini index (measure of income inequality on a scale of 0 to 100) of the US is 41, the highest in the developed world. The study by Emmanuel Saez shows that the share of aggregate income going to the highest earning one percent of American had doubled from 8% in 1980 to 16% in 2004. Now an American chief executive earns 300 times the average wage, tenfold more than 1970. Though the unemployment is relatively low at this point, other indicators such as the proportion of the people working, the stagnation of income levels of the middle class etc point towards the vulnerability of the situation. A possible hike in the oil price may exasperate the condition of the economy.
The sky rocketing budget deficit, trade deficit, increase of poverty and inequality are not signs of good omen. As a recent survey has pointed out that more than six out of ten are skeptical of free trade. The survey by the Foreign Affairs pointed out that nine out of ten American worry about their jobs going offshore. But the fact of the matter is the number of jobs that shifted offshore is not more than 1 million. However, such perceptions, coupled with an increasing sense of paranoia and insecurity, may signal the fading of the American dream and the seductive capacity of the land of opportunity.
The US is witnessing the rise of neo-conservative politics, neo-liberal economic policies, and the over dependence on the unilateral military hardware for power play. The alternative is an America that promotes equitable democracy and social- economic justice, real human rights and multilateral internationalism based on soft power and negotiated diplomacy- an enabling and supporting America which will create less wars and more good will. American Dream is at the cross roads.
# This is a piece written in 2006, predicting an economic down turn in 2008. This is published by Himal South Asia, The New Age, The News,Infochange and several other publications in West Asia
1 comment:
Good article very informative. The US has to truly set their house in order. They have to reduce disparity and to do something urgently to provide all a level playing ground. Upliftment of the poor and downtrodden should get top priority. On the international front ,the US should shed the policy of trying to control the world as it is impossible to do this . In a globalized world , a nation cannot have its supremacy just by muzzle power or economic domination. They have to tell and demonstrate to the world that they care for others and the world and, have no intention to control , exploit the world. They have to adopt a policy of cooperation and peaceful coexistence. If they want to retain their supremacy they have to start truly helping other nations to develop and prosper and win over their trust and confidence.The problem of US is that they still try to dominate and control the world which is foolish and impossible in the present scenario. The US can help themselves and help others only by adopting a policy of 'live and let live'. Unfortunately , lack of a strong leadership is visible. The ability of new leader whether it is Hilary or Trump is very much under Cloud. The chances are that the New President is going to be worse than the present incumbent. This will not be a good sign for the US or the rest of the world.
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