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By Root 6855 0

with the end of the Cold War, technology was flattening the global economic playing field, reducing the advantages of the people in developed countries such as the United States, while empowering those in the developing ones. The pace of global change accelerated to a speed faster than any we had seen before. It took us Americans some time to appreciate that while many of our new competitors were low-wage, low-skilled workers, for the first time a growing number, particularly those in Asia, were low-wage, high-skilled workers. We knew all about cheap labor, but we had never had to deal with cheap genius—at scale. Our historical reference point had always been Europe. The failure to understand that we were living in a new world and to adapt to it was a colossal and costly American mistake.

To be sure, the two decades following the Cold War were an extraordinarily productive period for some Americans and some sectors of the American economy. This was the era of the revolution in information technology, which began in the United States and spread around the world. It made some Americans wealthy and gave all Americans greater access to information, entertainment, and one another—and to the rest of the world as well—than ever before. It really was revolutionary. But it posed a formidable challenge to Americans and contributed to our failure as a country to cope effectively with its consequences. That failure had its roots in what we can now see as American overconfidence.

“It was a totally lethal combination of cockiness and complacency,” Secretary of Education Arne Duncan told us. “We were the king of the world. But we lost our way. We rested on our laurels … we kept telling ourselves all about what we did yesterday and living in the past. We have been slumbering and living off our reputation. We are like the forty-year-old who keeps talking about what a great high school football player he was.” It is this dangerous complacency that produced the potholes, loose door handles, and protracted escalator outages of twenty-first-century America. Unfortunately, America’s difficulties with infrastructure are the least of our problems.

The Big Four

And that brings us to the core argument of this book. The end of the Cold War, in fact, ushered in a new era that poses four major challenges for America. These are: how to adapt to globalization, how to adjust to the information technology (IT) revolution, how to cope with the large and soaring budget deficits stemming from the growing demands on government at every level, and how to manage a world of both rising energy consumption and rising climate threats. These four challenges, and how we meet them, will define America’s future.

The essence of globalization is the free movement of people, goods, services, and capital across national borders. It expanded dramatically because of the remarkable economic success of the free-market economies of the West, states that traded and invested heavily among themselves. Other countries, observing this success, decided to follow the Western pattern. China, other countries in East and Southeast Asia, India, Latin America, and formerly communist Europe all entered the globalized economy. Americans did not fully grasp the implications of globalization becoming—if we can put it this way—even more global, in part because we thought we had seen it all before.

All the talk about China is likely to give any American over the age of forty a sense of déjà vu. After all, we faced a similar challenge from Japan in the 1980s. It ended with America still rising and Japan declining. It is tempting to believe that China today is just a big Japan.

Unfortunately for us, China and the expansion of globalization, to which its remarkable growth is partly due, are far more disruptive than that. Japan threatened one American city, Detroit, and two American industries: cars and consumer electronics. China—and globalization more broadly—challenges every town in America and every industry. China, India, Brazil, Israel, Singapore, Vietnam, Taiwan, Korea, Chile,