Can America Keep Up?
Why so many smart folks fear that the United States is falling behind in the race for global economic leadership
The next time there's a moon shot, don't expect the United States to take the prize.
Over the past century, Americans have become accustomed to winning every global battle that mattered: two world wars, the space race, the Cold War, the Internet gold rush. Along the way, Americans have enjoyed unprecedented prosperity and lived lives that were the envy of the rest of the world.
It was nice while it lasted. Today, while unemployment remains low, home values continue to surge, and fearless American consumers keep spending beyond their means, the land of the free is slowly, but unmistakably, yielding advantages earned over decades to foreigners who work harder, expect less, and, often, are better educated. Taken piecemeal, these shifts are virtually imperceptible to most Americans. But business leaders, top academics, and other experts--especially those who travel abroad frequently--increasingly see America as a nation that has pulled into the slow lane, while upstarts in a hurry outhustle Americans in the race for technological, industrial, and entrepreneurial supremacy. "Every one of the early warning signals is trending downward," frets Intel Chairman Craig Barrett. "We're all fat, dumb, and happy, which is one reason why this is so insidious."
In academics, America's mediocrity is a familiar story, one factor in President Bush's call, in this year's State of the Union address, for rigorous new training for 70,000 high school teachers. The reading literacy rate for 15-year-olds in the United States is barely above the average for western countries. American eighth graders rank ninth worldwide in science scores--and 15th in math, behind students in Estonia, Hungary, and Malaysia. And for years, U.S. students have been migrating away from hard sciences--which tend to be the source of cutting-edge new products and other innovations--toward business, law, and liberal arts degrees. "We had more sports-exercise majors graduate than electrical-engineering grads last year," lamented General Electric Chief Executive Jeffrey Immelt in a January speech. "If you want to be the massage capital of the world, you're well on your way." While the United States still boasts many of the world's premier universities, world-class schools are taking root in India, China, South Korea, and other nations--often under the tutelage of academics at top American institutions.
Losing ground. Vaguely worrisome long-term trends are finally becoming today's problems. General Motors, America's biggest industrial company, is a poster child for America's waning influence, as it staggers toward possible bankruptcy. Japan's Toyota Motor Co., meanwhile, is likely to overtake GM as the world's largest carmaker as early as this year. The job toll at GM: 30,000 and counting. And while GM's woes may represent an "old economy" hangover, the same patterns are emerging in modern technological areas, too. Many of the leading breakthroughs in semiconductor development, telecommunications, nanotechnology, and Internet services--once dominated by U.S. companies--are steadily migrating overseas. American businesses are seeking legions of talented technical specialists abroad, partly because they're cheaper there but also because they're far more plentiful than in the United States. "What's happening now with cars is working its way up to higher technology," says David Calhoun, General Electric's vice chairman. "I hate to see a market as big and strong as the U.S. market growing weaker."