Wednesday, November 16, 2011

Is America in Decline?

     There's been a lot of negative news coming our way for several years now.. A constant drumbeat of recession, foreclosures, bankruptcies, increases in poverty, sky-high prices for energy and health care; while, they tell us, the American dream is a fading vision for many young people who can't get jobs, can't afford college, have lost the Puritan work ethic and given up on American optimism.

     In fact, the drumbeat has been so loud, for so long, I'm beginning to wonder. I do not believe in American exceptionalism -- how narcissistic is that! -- but I do believe in capitalism, competition, entrepreneurship and the American can-do spirit.

     But I must admit, it's getting harder and harder to hang onto that.

     The list of seemingly insurmountable problems goes on and on: The stock market has gone nowhere for the past decade. Real wages are actually lower than they were in 2000, while unemployment is higher, the poverty rate is higher, and prospects for almost everyone seem more clouded. Meanwhile, Social Security is beginning to run up against its inevitable, long-term demographic problem -- too many recipients and not enough contributors -- while Medicare is facing even more daunting financial prospects.

     Health care gobbles up more and more of our financial resources, while many people are simply left out of the health care system because they don't have the money to pay a doctor, or because they don't have the right connections (work at the right company or belong to the right association) to get affordable insurance. Meanwhile, it could be argued, as a country we squander huge medical resources on the extremely elderly while we deny simple health care to many of our children and young adults.

     We face stronger and stronger competition from other countries around the globe. Third-World people who understandably want a bigger piece of the economic pie, are willing to work for wages much lower than workers in the Unites States. Yet, Europe is falling apart, threatening to bring the American economy down with it, while reports from Asia suggest China is slowing down, meaning less opportunity for our exporters and maybe less enthusiasm for buying our debt.

     The housing market is moribund, becoming a dead weight on the American middle class. Housing prices have fallen an average of 33 percent since 2006, and some people like Jennifer Bridwell at PIMCO and Robert Shiller of Yale see another 5 to 10 percent decrease over the next couple of years -- with no recovery in sight for years to come.

     State and local governments are going broke. Central Falls, a town in the economically devastated state of Rhode Island, filed for Chapter 9 bankruptcy in August. Just last week Jefferson County, Alabama, was filing the largest municipal bankruptcy in U. S. history. Meanwhile, by one estimate, budget shortfalls in 44 states could reach $140 billion for fiscal 2012.

     Many American households are no better off. Last year almost 3 million homes went into the foreclosure process because people either couldn't or wouldn't pay their mortgage. Consumer debt currently stands at 112 percent of income.

     Meanwhile, a record number of Americans are out of work. The official unemployment rate is calculated at 9 percent, but the real rate of people who want to work, but can't find a fulltime job, stands at about 16 percent. Historically, after a recession ends, it takes about six months to return to the normal employment picture. This time around, at the current rate of growth and job creation, McKinsey, the management consulting firm, estimates it will take another five years. Others calculate it will take even longer, as people who are unemployed for extended periods find that their job skills become outmoded, making them essentially unemployable. And the long-term unemployed tend to get depressed; they suffer greater health problems and have shorter life expectancies.

     Will small business perform its usual function as the engine of job growth? Loans to small business actually dropped somewhere between 8 and 14 percent last year. Are our young people being trained for future jobs? According to the most recent study from the OECD Program for International Student Assessment (PISA), the U. S. ranks 28th among 41 developed countries in math skills, behind most European countries (including the Slovak Republic) and Asian countries such as Japan and Korea. U.S. students rank 22nd in science, and 29th in problem solving.

     Meanwhile, we can't get anything done because of our polarized political situation -- some 25 percent of Americans sympathize with the Tea Party while, according to a recent Quinnipiac poll, 30 percent sympathize with the Occupy Wall Street crowd.

     A recent Yahoo! finance poll found that 41 percent of Americans say that the American dream has been lost. And only 45 percent of Americans believe that their kids will be better off than they are.

     Despite all these negative numbers, I'd still like to think America can find its way out of the woods. Remember the 1970s? They were pretty moribund. But then came the end of Cold War and the beginning of the Internet revolution, and we were back on the road to prosperity.. Can it happen again?

     What say you? Vote in the poll at right. Explicate below if you can offer any insights, explanations or suggestions.


schmidleysscribblins, said...

Wow, now for some cheerful news, not. I am reading 'Your world is about to get a whole lot smaller' by Jeff Rubin. This book will make you pause.

I wouldn't say we were in decline, but we sure face a different world. The world of the 1990s was an aberration, as were the 1920s and the 1860s in NYC.

Reducing the military may save lots of fuel, but we still need to find alternative energy. Rubin discusses the alternatives and they aren't pretty.

Of course we demographers knew this day was coming and taked about it openly in the 1970s, 1980s and later.

The Occupy Wall Street crowd won't accomplish a darn thing if they don't learn how to work in or with the system that exists. The Tea Party went political and accomplished a lot, whether we agree with it or not, and I don't agree with much of what they have to say.

Great post Tom. You know I love this stuff. Dianne

Retired Syd said...

It's so refreshing (although a little bit depressing) to read this summary of the real problems we are facing. I've been addicted to the Republican debates and am so sick of hearing that our problems are simply taxes and regulations. We can't find solutions unless we direct our attention to the actual problems.

Too bad you're not running.

Anonymous said...

This Holiday/Christmas season will be our 5th one in the Long Great Recession.

Apparently, the whole world is in decline. Not just the United States. Without global demands, production eventually comes to a standstill. Only necessities chug things along. Have you noticed that?

Perhaps, this is a good thing. If the whole world requires less, the whole world can work less, live on less, make due with less and so on. Maybe what is happening to us is a new normal? The end of waste and excess?

Isn't that what we wanted all along?

Olga said...

I remember the 70's well and the kind of bleak feelings and fears my parents had for retirement and the future for their children. Now I am expressing the same bleak feelings and fears for my children. But in all honesty, I have a pretty good life and I really do have faith that things will turn around and my children will prosper eventually.

Sightings said...

So, are we ready to drive smaller cars, not travel as much; have two or three generations living under the same roof, with adult children living at home instead of getting their own apt., taking care of our elderly instead of having them (us) being cared for in a nursing home? Is that where we're going? And if so, is that so bad?

Nance said...

That was a tough vote to make. What made it tough is definition. How do we define comeback? If we mean back to the prosperity of the second half of the nineties (when a monkey with a calculator could have made 15% on stocks, when Citibank sent applications for credit cards to all incoming college freshmen without requiring a parental signature) or the insane, Paris Hiltonesque materialism of '05, then we must check, "Yes, it's inevitable." on the poll. We are arguably morally bound to check that choice.

If, on the other hand, we mean that there's hope and that the longer picture contains the potential for Americans to innovate, to grow ethically as a culture, to employ more of its people, then count me in.

rosaria said...

We're adjusting; we're are re-inventing; we're resilient to the tenth degree. Yes, we're caught in an adjustment period, where everything will cost more for everyone. But, we're are ready to move ahead.

Sightings said...

Nance -- I mean the longer picture, where Americans innovate and enjoy something close to full employment, with opportunities for our children to fulfill their dreams and ambitions while providing decent support for the sick and elderly. Think it'll happen?

Anonymous said...

The new world you describe, is not so new after all. The Asians care for their elderly all under one roof. In Europe, especially Italy, sons & daughters remain at home till they marry. Is that really soooooo bad?
Already, many new home owners are building multi-family dwellings.
I am sure my dad would have liked me to be living under his roof (or our roof) when he entered his 90's. And in retrospect, I wish we did.
I already drive a smallish car. I live in a smallish home and own a smallish boat. I even live in a small town. If low-cost travel was possible through high speed rail lines, I guess I would be traveling more. And packing a smaller bag.

How much is enough?

The other day, my daughter commented that she couldn't watch TV on our 27inch screen as it was so much smaller than her 52inch screen back at her own home

"How can you watch that thing"!! she said.

When did this happen that everything had to be bigger, brighter, larger and immense? Perhaps if we all got a little bit smaller, there would be room enough for everyone.

Just sayin'

Jono said...

I think the consumerism of the last several decades has led to a false economy. Why is there a "need" to upgrade to the latest i device so often. I am pretty rural and cell phones don't even work here, so it is easier for me to live without them. My European cousins live several generations in very nice homes and seem to lack nothing. They all seem to work for the benefit of all and not the "every man for himself" mentality that seems to divide us in our U.S. culture. Oh wait, caring about the greater good is socialism so it must be bad.

Janette said...

My children's dreams and ambitions are very different than mine. They are intregued by "what is next" while I enjoyed "what will make me better in THIS job."
Unemployment will look different as well. Those who cannot get ahead by innovation power will have to do dirt power. Unfortunately, somewhere along the line our US noses got a bit long when looking at farmers, machine workers and highway people.That is slowly changing.

We have come to a turning point that not only do women work-but they want to stay in their job into their 60's like the men- almost doubling the workforce of the 1960's.

Are we declining? No Are we changing? I sure am, so are my adult children. The US continues to be a great place to live.