The Post-American World - Fareed Zakaria [98]
For decades, American workers, whether in car companies, steel plants, or banks, had one enormous advantage over all other workers: privileged access to American capital. They could use that access to buy technology and training that no one else had—and thus produce products that no one else could, and at competitive prices. That special access is gone. The world is swimming in capital, and suddenly American workers have to ask themselves, what can we do better than others? Or, to rephrase the question in a more direct way, the American worker is now wondering, does this competition mean I’m going to lose my job?
The Hollowing Out of the Middle
When I travel from America to India these days, it’s as if the world has been turned upside down. Indians are brimming with hope and faith in the future. After centuries of stagnation, their economy is on the move, fueling animal spirits and ambition. The whole country feels as if it has been unlocked. Meanwhile, in the United States, the mood is sour. Americans are glum, dispirited, and angry. The middle class, in particular, feels under assault. In a Newsweek poll in September 2010, 63 percent of Americans said they did not think they would be able to maintain their current standard of living. Perhaps most troubling, Americans are strikingly fatalistic about their prospects. The can-do country is convinced that it can’t.
Americans have good reasons to worry. We have just gone through the worst recession since the Great Depression. The light at the end of the tunnel is dim at best. A year and a half after the official end of the recession, the unemployment rate remains higher than it was in the depths of all but one of the postwar recessions. And as government spending is pared back, the economy shows new signs of weakness.
Some experts say that in every recession Americans get gloomy and then recover with the economy. This slump is worse than most; so is the mood. Once demand returns, they say, jobs will come back and, with them, optimism. But Americans are far more apprehensive than usual, and their worries seem to go beyond the short-term debate over stimulus versus deficit reduction. They fear that we are in the midst of not a cyclical downturn but a structural shift, one that poses huge new challenges to the average American job, pressures the average American wage, and endangers the average American dream. The middle class, many Americans have come to believe, is being hollowed out. I think they are right.
For a picture of the global economy, look at America’s great corporations, which are thriving. IBM, Coca-Cola, PepsiCo, Google, Microsoft, Apple, Intel, and Caterpillar are all doing well. And they share a strategy that is becoming the standard for success. First, technology has produced massive efficiencies over the past decade. Jack Welch explained the process succinctly on CNBC last September. “Technology has changed the game in jobs,” he said. “We had technology bumping around for years in the ’80s and ’90s, and [we were] trying to make it work. And now it’s working. . . . You couple the habits [of efficiency] from a deep recession [with] an exponential increase in technology, and you’re not going to see jobs for a long, long time.” Welch gave as an example a company owned by the private-equity firm with which he is affiliated. In 2007 the business had 26,000 employees and generated $12 billion in revenue. It will return to those revenue numbers by 2013 but with only 14,000 employees. “Companies have learned to do more with less,” Welch said.
Next, companies have truly gone global. By turning their direction outward, America’s great corporations access global markets, easy credit, new technologies, and high-quality labor