The American Prosperity Myth

The American Prosperity Myth
by WILL HUTTON



Everyone knows the story by now. America may have its social problems, but its highly productive, job-generating, innovative economy is the envy of the world. Europeans, on the other hand, are in a despond of high unemployment and economic sclerosis. Europe's addiction to welfarism--its overcooked social contract--is killing the economic goose that lays the social egg. Americans may pay a price in inequality for their economic vitality, but when you take the country's extraordinary social mobility and opportunity into account the price is worth paying. You might want to reverse Bush's tax cuts for the very rich, but nobody sane is going to tinker with the essence of the great American Business Model that delivers so much wealth.

I contend--unfashionably and, I know, incredibly, given the consensus--almost the opposite. The American economy has great strengths, but it is not so all-conquering. And the American Business Model, with its ruthless focus on shareholder profits, has profound weaknesses. Indeed, American industry is at its strongest where it has not observed antistate, progreed precepts and operated in more European ways. Smart action by the state, a viable social contract and efforts by companies to harness human capital and serve a purpose larger than short-term profit maximization turn out to be indispensable components of successful American capitalism as well--though America's public conversation hardly concedes these points. It's a gaping omission that is costing the country dearly.

Signs of trouble are everywhere. For a start, the United States is experiencing an alarming and unsustainable growth of international indebtedness. By the end of this year the country's net liability to the rest of the world will approach $3 trillion, and it is growing exponentially. At the current rate, liabilities will double again over the next five to seven years, taking the United States into banana republic territory. At some point foreigners will cease holding dollars and instead buy the alternative world currency--the euro. The dollar will crash and interest rates will jerk upward in response.
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http://www.thenation.com/doc.mhtml?i=20030901&s=hutton

Related: this graph showing not the unemployment (which are hardly comparable anyways), but the employment rates is interesting.

The darker column is for males. Dark gray is without an completed education; gray is with a non-academic degree and light gray is with an academic degree.

http://www.spiegel.de/img/0,1020,222499,00.jpg

So according to the graph of percentage employed, as opposed to percentage unemployed, 9% of college-educated men in the U.S., 14% of high school graduates, and 25% of dropouts are not in the labor market. (The figures for women are skewed by the number of married women who are at home full time, so I 'm sticking to the figures for men.)

I'd be interested to know whether this includes retirees. Oh, wait, no, the German text says that it's the percentage of people able to work.

These figures seem more accurate to me than the ones claiming only 6% unemployment.

I wonder, though, whether the German figures cover only full-time employment or use the U.S. method of counting part-time workers as "employed," even if they'd rather be working full-time.

I wish Hutton had delved into personal debt and savings. I don't have the comparative figures for Europe and the USA on hand, but they are similarly edifying.

Thanks for the post. I am somewhat new to this board, however, it is becoming the first place I visit to catch up on "fair and balanced" news. Thanks to all those who post on this board and on LBN.

and you have very good taste in web sites! DU is da best!

Great place to get culled news items from all kinds of sources.

There really are some great articles on this board. I have just about given up on reading my local newspaper(with the exception of sports) since the only thing they report is the b... party line spin.

This board has been like a breath of fresh air.....

n/t.

Eye opener. We are great at the top income level.
On average eliminating top 5% not so hot.

We are down totem pole on many many factors.

Home ownership and average income is higher in other nations.

Social Factors. We lead in none.

It's observations are no surprise to the well informed but it is not often that the unvarnished truth about the much vaunted American "way of life" is published anywhere.

Great article! Thanks.

A little kick.