Conventional wisdom is that once the United States achieves full economic recovery we will be out of the woods. Conventional wisdom is wrong!
For America to succeed in the 21st century, it must move from recession, through recovery to renewal. Recovery is a means not an end.
The end must be to renew American by creating a 21st century competitive advantage for the nation and its citizens. The reason for this is simple. America’s current economy is structurally challenged and the international economic scene for the U.S is significantly more competitive than it was in the 20th century.
Many in the media have not recognized this and are also misreading the tea leaves regarding the state of the recovery itself. Recent headlines in prominent publications have proclaimed “Don’t look now but the economy’s bouncing back: Ignore the downbeat commentary. Recovery is busting out all over”, and “America’s Back! The Remarkable Tale of Our Economic Turnaround.”
To turn a phrase from Mark Twain, we believe these reports of America’s recovery have been greatly exaggerated. Admittedly, there are some green shoots. GDP is improving. The market is doing better. Housing starts and manufacturing indices are up – even restaurants and retailers are reporting slightly better performance than in a dismal 2009.
But, for every green shoot there are as many weeds. Unemployment remains excruciatingly high and is projected to stay so at least through the end of the year. Foreclosure filings jumped in March. Small business confidence went down in the same month. Consumer bankruptcy filings look like they will rival the 1.4 million of 2009.
Still, it appears, using traditional measures, that the recession is over and the recovery has begun – even though the contradictory evidence on the recovery suggests that it is a fragile one. However, that misses the point.
The threshold question remains – is America doing what is required to renew itself in order to win the race for competitive advantage in the 21st century? As business people, we believe not.
First, the country doesn’t have a plan and has not prepared to win the race. Historically, the United States has been a planning averse nation. Through a combination of factors, including a relatively weak field of international competitors in the past quarter of the 20th century, that aversion worked for us.
Times have changed. This past decade has been one relative economic decline for the United States and one of rapid growth for China, India and Brazil.
This is the new “final four”. We are still in the leadership position. The future, though, is promised to no one. Our position in that final four will be dictated not by our past performance but by our preparation for the future.
Second, America’s status as the “Land of Opportunity” is slipping. As Isabel Sawhill and Ron Haskins, Senior Fellows at the Brookings Institution noted, “If you are born into a middle-class family in the United States, you have a roughly even chance of moving up or down the ladder.” They continued to state “If you are born poor, you are likely to stay that way.”
Third, classic economic theory is that as GDP goes up, unemployment goes down, and the standard of living goes up. That hasn’t happened here so far. The United States is experiencing a jobless recovery, wage deflation or stagnation and a situation in which income inequality in the country is at its highest level in recorded history. If the recession has ended and the recovery has begun but the benefits do not flow through to a large segment of the populous what does it say about the future of America and the American dream?
Our elected officials and business leaders have recognized that the budget deficit and debt threaten our nation’s future and have established a National Commission for Fiscal Responsibility and Reform to develop proposals to address this critical issue. We need to understand that the disjuncture between “recovery” at the macro level and “renewal” at the micro or individual level is a critical one that threatens our nation’s future as well. It demands as much, if not more attention, as the budget deficit.
Therefore, we recommend that a National Global Competitiveness Commission be established to develop a 21st Century Competitive Advantage Plan for the United States. The Commission should be similar to the 9/11 Commission in the unfettered scope of its reach. It should be nonpartisan rather than by bipartisan. It should draw national leaders from all sectors.
The charge to the Commission should be to conduct a thorough and in-depth assessment of the United State’s current situation and to develop a comprehensive and strategic plan for competitive advantage. The plan should be constructed to address the micro factors and to renew America in the areas that matter to average citizens. It should be reviewed with various stakeholder groups for comment and then presented to the President and Congress for consideration and action.
This past decade has been one of decline for the United States. This current decade will be the decisive one. By creating a competitive advantage plan for the country, we will ensure the decisions we make and the actions we take will position the nation and its citizens for success in the 21st century.
Frank Islam, George Munoz and Ed Crego are co-authors of Renewing the American Dream: A Citizen’s Guide for Restoring Our Competitive Advantage to be released on July 4, 2010. The book provides a systematic assessment of America’s current condition and detailed recommendations for citizen involvement in addressing it. Islam heads his own investment group and serves on the advisory committee for the Export Import Bank. Munoz chairs the Munoz Investment Advisory Group and was formerly President of the Overseas Private Investment Corporation. Crego is a management consultant specializing in strategic planning, customer focus and organizational transformation.