Friday, October 24, 2014

America: Slouching Towards Third World Status

Will Truthiness Destroy America?

"The best lack all conviction, while the worst
Are full of passionate intensity" -- "The Second Coming", William Butler Yeats

Yeats' lines aptly describe our current age of political mediocrity. As we consider our politicians, we can hardly say that they're our best. And the worst of them are full of passionate intensity, with passions driven by ideology, rather than fact-based analysis.

The United States has been in decline relative to other countries for the last 30 years. On key metrics, we've fallen behind our peer group of industrialized countries, such as the UK, France, Germany, and Japan.

Am I exaggerating? Well, according to the Corruption Perception Index, we rank 24th in the world (only slightly better than Qatar) for public sector corruption. We rank 25th (way behind our peer group) in the OECD for math scores among 15-year-olds.

Over the past 30 years, our national debt has grown from about 30 percent of GDP to over 100 percent, and will become much worse based on current trends. In a recent survey of 10,000 Harvard Business School Alumni, "66 percent of respondents see the U.S. falling behind emerging economies." It is difficult to find many encouraging metrics.

If the above statistics don't convince you, visit the New Delhi International Airport, then compare it with our JFK or Newark International Airports. In many areas, our infrastructure is an embarrassment, already inferior to that of many third world countries.

These facts (and many others) have escaped Romney, Santorum and our current group of Republican leaders. Obama and the Democrats aren't doing significantly better at confronting these challenges.

In the 19th century, America aggressively compared itself against the world, and aspired to be "best in class." We were an early adopter of kindergarten because we saw evidence that it would improve educational outcomes. In 1862, the U.S. was suffering through the Civil War, but Congress still had the foresight to pass the Land Grant Colleges Act, which created some of our finest universities. This investment was made because it was important for our country's growth, and the U.S. clearly lagged behind Europe in college and university education.

Today, many of us suffer from what Thorstein Veblen called "trained incapacity" and John Dewey described as "occupational psychosis." We filter the world through our own ideological training, believing only what fits our story. Or, as Stephen Colbert, cultural commentator and 2008 Peabody Award winner commented:

"It used to be, everyone was entitled to their own opinion, but not their own facts. But that's not the case anymore. Facts matter not at all... What is important? What you want to be true, or what is true?... Truthiness is 'What I say is right, and [nothing] anyone else says could possibly be true.'"

Many Americans still have an almost cult-like belief that America is the greatest nation on earth. They systematically reject evidence suggesting we have significant room for improvement.

Sounds overly-dramatic? When opposing President Obama's health care reform proposals, Speaker of the House John Boehner repeatedly proclaimed (with passionate intensity) that America has the "best health care system in the world." Boehner is correct only if you exclude the entire developed world from the comparison. The U.S. ranks 50th for longevity and 49th for infant mortality, where we're barely ahead of Belarus, Croatia and Lithuania.

I defy anyone to name a single important health care metric where the U.S. is considered a best-practice example as a nation. The only thing we lead the world in... is cost of health care. We have the world's most expensive health care system. For example, our health care system costs almost twice Canada's, but we produce inferior results.

For Boehner to say we have the best health care system in the world, and not be laughed out of office, is at best 'trained incapacity' or 'occupational psychosis.'

Boehner doesn't have to support Obama's health care reform plan. Obama's reforms might make things worse. But, let's have an actual debate grounded in facts, without inventing (and propagating) falsehoods about the current system.

China has been one of the most successful countries economically of the last 30 years. It's fitting then to quote the architect of its economic renaissance Deng Xiaoping: "It doesn't matter whether a cat is white or black, as long as it catches mice." For too many Americans, what matters is not whether the policy works, but whether it fits our preconceived ideologies.

It's the ultimate irony that we need to take the advice of a communist hardliner to put aside ideology, and focus on fact-based pragmatic solutions. Otherwise we'll continue our slouch towards Third World status.

A version of this article was originally published at The Huffington Post

About the Author: Steven Strauss was founding Managing Director of the Center for Economic Transformation at the New York City Economic Development Corporation (NYCEDC). He is an Advanced Leadership Fellow at Harvard University for 2012. He has a Ph.D. in Management from Yale University and over 20 years' private sector work experience. You can follow him on twitter at: @Steven_Strauss.

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  1. CommentedLewis Perelman

    America has serious problems, but not really because it is "in decline relative to other countries." America is still #1 by most realistic measures.

    The Titanic was undoubtedly the best ship in the world. Which just goes to show that (a) 'best' is over-rated and (b) superiority is not particularly relevant to the immediate problem.

    Comparing "countries" as diverse as the U.S., Lithuania, Singapore, etc. is a statistical trope that really makes no sense. Size, among other things, matters. Saying that squirrels are more agile than elephants is saying very little.

    All of the big players in the world economy at the moment are more or less in trouble and faltering.

    The EU and its ill-conceived euro are on the brink of unraveling. Japan was stagnant for 20 years before its trifecta disaster struck last year; now it is in deep trouble. Endemic corruption is strangling India. The boom in Brazil, also rife with corruption, is faltering. Mexico, despite economic progress, verges on being a broken state. Turkey's economy is booming, but it lives in a dangerous neighborhood.

    As Fareed Zakaria recently pointed out, China's economy is running out of 'rocket fuel'. Its economy has grown to the level where marginal gains become increasingly costly, and inevitably taper off. Meanwhile, thanks to its demographic imbalance, China will be the first country in history, as Richard Jackson and others point out, to get old before it gets rich.

    As for 'occupational psychosis', this piece in some ways shows its symptoms. Invoking initiatives like the Morrill Act (disdained by the Ivy League), public schooling, the New Deal, etc. from the distant past hardly suggests a fresh perspective on the realities of the present.

    As a tonic for such nostalgia, I recommend Otto Beckman's book, "The Good Old Days: They Were Terrible."

    Citing the opinions of Harvard Business School graduates also hints of 'trained incapacity'. Analyst Ray Soifer's Harvard Business School Index tells investors that a surfeit of HBS grads in a business is a signal to sell. (

    An index of corruption might be telling, but of "perceptions"? A mashup of 17 surveys -- how does that reflect reality? For what it's worth, the US scores higher than most countries of the EU other than Germany -- whose mercantilist economy has prospered by beggaring its neighbors.

    The political system of the US is faltering, maybe failing. But so are those of many other countries. In an era of acute technological and structural transformation, innovation in political economy seems to be lagging, at great cost to the world as a whole. Public trust in institutions generally, not just in the U.S. but globally, is far below 50%. The streets are jammed with naked emperors.

  2. CommentedLouis Woodhill

    It's not just John Boehner that believes that America has the best healthcare system in the world. You believe this, too. If you get cancer, I promise you that you are not going to go to Canada for treatment. You will go to M.D. Anderson in Houston. When the King of Saudi Arabia needs medical treatment, he comes to the U.S.

    If you exclude our growing underclass, the U.S. has the best health outcomes in the world. Obesity, drug use, and gunshot wounds are not caused by our medical system.

      Portrait of Steven  Strauss

      CommentedSteven Strauss

      Thank you for your comments - Agreed, the US has some of the finest medical facilities in the world. But, Boehner was not saying that we have some of the finest hospitals/doctors in the world, he was saying best health care system in the world.

      Regarding the 'underclass' (your word), this gets a little complicated as to where you draw the boundaries around a health system. For example, if a doctor sees a patient who is obese/at risk for diabetes, best practice would probably be offer counseling with a nutritionist or offer other interventions, which does not always happen in our system given a large portion of the population is without health insurance.

      Again, thank you for your thoughts.

  3. CommentedNoni Mausa

    The only bright light in this dismal situation is that it's not too late. Two things remain in place which are necessary to recover:

    -- The infrastructure of a prosperous democracy is still in place. That's the solid bits -- everything from schools and roads to broadcasting stations, factories and so on are still pretty much in place. What is incapacitating them is in the realm of the abstract. Patents, ownerships, funding, investments (or the lack of) and so on. You can bet those barriers would disappear instantly if the fleet from Proxima Centauri arrived.

    -- The memory of a prosperous democracy is still in place. We Boomers are not so old that we have forgotten what it was like, the Rockwell vision of freedoms, the parents solemnly going to vote as though they were going to church Sunday morning, and the Reader's Digest image of America as the sponsor of freedoms world-wide. The myths have been badly hacked and bruised, but they were deeply embedded in us as schoolchildren and they are still there, dormant, ready to be activated. (Cartoon versions of these are still used to manipulate Americans, but these days never used as though they were truths.)

    Ironically, what incapacitates them lies in the realm of the concrete -- low pay, poor health and social supports, fragmented families -- all the fallout of an insufficient ROI to workers for their energy and time. Again, that would vanish in the face of a real, abrupt challenge to the nation.

    Of course, that the solids and the abstracts of democracy are still in place is only the beginning -- to get into the control room and flip the switches may well be an impossible feat. But at least the switches and the control room are still there.


      Portrait of Steven  Strauss

      CommentedSteven Strauss

      Thank you for your thoughts. And, I remain an optimist. Or, as someone (Mark Twain?) remarked 'I prefer to be an optimist about the future, as I expect to spend the rest of my life in it' :-)

      Regarding things changing in the face of an invasion from alpha centauri, actually we have sort of had the equivalent over the last tenish years. We had the 9/11 attack, two wars (Iraq, Afghanistan) and what to me is interesting is the lack of a vision for shared sacrifice. Imagine if after Pearl Harbor the reaction had been we can't raise taxes because it will discourage the wealth creators :-)

      Again, with thanks for your comments.