Some commentators point to the ???rise??? of China ??? to its very rapid economic growth ??? and say that rise spells decline for America. But in reality, economic growth is not a zero-sum game; China can rise and the US can rise too ??? we can all be better off.
Yet there are a number of indications that the U.S. is not rising ??? and much of it seems the result of what???s going on inside the U.S., not anything to do with China???s exports or U.S. companies??? ability to compete with Chinese firms. Instead, the most frightening data about American competitiveness is in areas like education, health, and infrastructure. On those measures, US competitiveness is declining relative to other countries (including China). Consider:
America???s telecommunications infrastructure now ranks 15th in the world ??? far behind countries like South Korea, Denmark, Iceland, Belgium.[1]
Last year an incredibly distinguished group of business leaders, academics, and policymakers ??? members of the "Rising Above the Gathering Storm" Committee ??? prepared an update to their 2005 report on the state of American competitiveness. Among their findings:[2]
No new nuclear plants and no new petroleum refineries have been built in the United States in a third of a century, a period characterized by intermittent energy-related crises.
United States consumers spend significantly more on potato chips than the government devotes to energy R&D.
In 2000 the number of foreign students studying the physical sciences and engineering in United States graduate schools for the first time surpassed the number of United States students.
GE has now located the majority of its R&D personnel outside the United States.
Sixty-nine percent of United States' public school students in fifth through eighth grade are taught mathematics by a teacher without a degree or certificate in mathematics.
Since 1995 the United States share of world shipments of photovoltaics (for solar panels) has fallen from over 40 percent to well under 10 percent ??? while the overall market has grown by nearly a factor of one hundred.
Japan has 1524 miles of high speed rail; France has 1163; and China just passed 742 miles. The United States has 225. China has 5612 miles now under construction and one plant produces 200 trains each year capable of operating at 217 mph. The United States has none under construction.
According to the ACT College Readiness report, 78 percent of high school graduates did not meet the readiness benchmark levels for one or more entry-level college courses in mathematics, science, reading and English.
The U.S. has eliminated or dramatically cut public funding for energy R&D (long considered the next revolutionary industry, as was semiconductors before it) and lost its competitive edge in that sector as a result. In 1987, when China launched its Program 863 to fund and facilitate R&D in sectors like clean energy, the U.S. was the undisputed leader in clean energy technology ??? making more than 50 percent of the world???s solar cells and installing about 90 percent of the wind power.
Today, China makes more solar cells than any other country. In the U.S., the Department of Energy???s investment in research in 2006 was one-sixth what it was in 1979. In 2005, the National Academies called for creation of an Advanced Research Projects Agency-Energy to spark an effort to regain the American lead in clean technology. But the first Bush administration rejected the proposal as ???an expansion of government??? into an area ???more appropriately left to the private sector.???[3]
At the end of 2010 the World Economic Forum published its annual Global Competitiveness Report. On the broadest overall competitiveness measure, the U.S. dropped from second place to fourth ??? behind Switzerland, Sweden, and Singapore.[4] Three key subindexes are used to derive that overall competitiveness measure; they include:
On basic requirements the U.S. ranked 32nd (compared to 28th in 2009-10)
On efficiency enhancers the U.S. ranked 3rd (compared to 1st in 2009-10)
On innovation and sophistication factors the U.S. ranked 4th (compared to 1st in 2009-10)
While the U.S. still ranked first in innovation, its ranking (relatively low, and declining) on basic measures like institutions, infrastructure, and health and primary education should worry American policymakers. These data are worrisome regardless of what China is doing, because a decline on measures like education, health, infrastructure, and government support for R&D portends a lesser ability to grow productivity ??? and productivity growth is what drives the US economy. They portend a future in which the U.S. no longer ranks first in innovation.
The solution? It???s not to blame China for America???s economic woes ??? that leads to fear-based protectionist policymaking. What could be helpful is fostering America???s competitive spirit ??? not one that erects trade barriers but one that fuels innovation; this is the ???Sputnik moment??? President Obama referred to in his State of the Union address earlier this year. Read more about what the U.S. can do to reverse its decline.
This article is part of Issues in Depth: Is China Rising? Is the US Declining? Click here to explore this issue in depth ??? to read more articles similar to this one, see relevant data charts and graphs, and hear from the experts.
[1] OECD Broadband Statistics, OECD Broadband Portal
[2] Rising Above the Gathering Storm, Revisited: Rapidly Approaching Category 5
[3] The Betrayal of American Prosperity, p. 268.
[4] World Economic Forum, 2010-11 Global Competitiveness Report
The U.S. Is Declining | Future of US / China Trade
Yet there are a number of indications that the U.S. is not rising ??? and much of it seems the result of what???s going on inside the U.S., not anything to do with China???s exports or U.S. companies??? ability to compete with Chinese firms. Instead, the most frightening data about American competitiveness is in areas like education, health, and infrastructure. On those measures, US competitiveness is declining relative to other countries (including China). Consider:
America???s telecommunications infrastructure now ranks 15th in the world ??? far behind countries like South Korea, Denmark, Iceland, Belgium.[1]
Last year an incredibly distinguished group of business leaders, academics, and policymakers ??? members of the "Rising Above the Gathering Storm" Committee ??? prepared an update to their 2005 report on the state of American competitiveness. Among their findings:[2]
No new nuclear plants and no new petroleum refineries have been built in the United States in a third of a century, a period characterized by intermittent energy-related crises.
United States consumers spend significantly more on potato chips than the government devotes to energy R&D.
In 2000 the number of foreign students studying the physical sciences and engineering in United States graduate schools for the first time surpassed the number of United States students.
GE has now located the majority of its R&D personnel outside the United States.
Sixty-nine percent of United States' public school students in fifth through eighth grade are taught mathematics by a teacher without a degree or certificate in mathematics.
Since 1995 the United States share of world shipments of photovoltaics (for solar panels) has fallen from over 40 percent to well under 10 percent ??? while the overall market has grown by nearly a factor of one hundred.
Japan has 1524 miles of high speed rail; France has 1163; and China just passed 742 miles. The United States has 225. China has 5612 miles now under construction and one plant produces 200 trains each year capable of operating at 217 mph. The United States has none under construction.
According to the ACT College Readiness report, 78 percent of high school graduates did not meet the readiness benchmark levels for one or more entry-level college courses in mathematics, science, reading and English.
The U.S. has eliminated or dramatically cut public funding for energy R&D (long considered the next revolutionary industry, as was semiconductors before it) and lost its competitive edge in that sector as a result. In 1987, when China launched its Program 863 to fund and facilitate R&D in sectors like clean energy, the U.S. was the undisputed leader in clean energy technology ??? making more than 50 percent of the world???s solar cells and installing about 90 percent of the wind power.
Today, China makes more solar cells than any other country. In the U.S., the Department of Energy???s investment in research in 2006 was one-sixth what it was in 1979. In 2005, the National Academies called for creation of an Advanced Research Projects Agency-Energy to spark an effort to regain the American lead in clean technology. But the first Bush administration rejected the proposal as ???an expansion of government??? into an area ???more appropriately left to the private sector.???[3]
At the end of 2010 the World Economic Forum published its annual Global Competitiveness Report. On the broadest overall competitiveness measure, the U.S. dropped from second place to fourth ??? behind Switzerland, Sweden, and Singapore.[4] Three key subindexes are used to derive that overall competitiveness measure; they include:
On basic requirements the U.S. ranked 32nd (compared to 28th in 2009-10)
On efficiency enhancers the U.S. ranked 3rd (compared to 1st in 2009-10)
On innovation and sophistication factors the U.S. ranked 4th (compared to 1st in 2009-10)
While the U.S. still ranked first in innovation, its ranking (relatively low, and declining) on basic measures like institutions, infrastructure, and health and primary education should worry American policymakers. These data are worrisome regardless of what China is doing, because a decline on measures like education, health, infrastructure, and government support for R&D portends a lesser ability to grow productivity ??? and productivity growth is what drives the US economy. They portend a future in which the U.S. no longer ranks first in innovation.
The solution? It???s not to blame China for America???s economic woes ??? that leads to fear-based protectionist policymaking. What could be helpful is fostering America???s competitive spirit ??? not one that erects trade barriers but one that fuels innovation; this is the ???Sputnik moment??? President Obama referred to in his State of the Union address earlier this year. Read more about what the U.S. can do to reverse its decline.
This article is part of Issues in Depth: Is China Rising? Is the US Declining? Click here to explore this issue in depth ??? to read more articles similar to this one, see relevant data charts and graphs, and hear from the experts.
[1] OECD Broadband Statistics, OECD Broadband Portal
[2] Rising Above the Gathering Storm, Revisited: Rapidly Approaching Category 5
[3] The Betrayal of American Prosperity, p. 268.
[4] World Economic Forum, 2010-11 Global Competitiveness Report
The U.S. Is Declining | Future of US / China Trade