Has the United States transcended the laws of economics? As the New Year begins, the US continues to race ahead of its rich-country counterparts. The gargantuan US trade deficit? No problem. In 2005, it widened further, and the dollar only strengthened. Low investment and a deteriorating primary education system? Not to worry. The super-flexible US economy keeps managing to produce more with less.
Nor are there any signs of America’s economic hegemony starting to fold under the weight of maintaining its unilateral military dominance. Instead of feeling the pinch of wartime privations, like in any ordinary country, American consumers are binging as if it were Christmas all year round.
There are those who truly believe in the idea that America is exceptional. Those true believers argue that America’s consumers can long pursue their spendthrift ways because their country’s economy is better than everyone else’s. The US labor market is more flexible than Europe’s, enabling it to react more nimbly to the ever shifting sands of globalization. And, unlike most countries, especially in Latin America and Asia, the US system ruthlessly prunes weak corporate leadership.
Moreover, the true believers cite America’s better-funded and hyper-competitive university system, which sucks in a disproportionate share of the world’s top students and researchers. Many ultimately choose to immigrate to America permanently, and it is relatively easy for them to do so, thanks to a society that still welcomes outsiders with open arms (even if things have become more difficult since 2001). On top of all this, the US military, rather than being a burden, feeds the country’s technological superiority by subsidizing basic research.