What We’ve Been and Can Be Again

That Used to Be Us:  How America Fell Behind in the World it Invented and How We can Come  Back

By Thomas L. Friedman and Michael Mandelbaum

Published:  2011

Read:  May 7, 2017

We all know the US is facing significant challenges.  Some think it seems somewhat adrift currently.  These authors put together a useful look at the principals that made America great for two centuries, the challenges that face it now, the basic changes the US must make to correct course, and a possible way to start on that path.  Their book is written for the layman but is filled with acknowledgements for the various sources they used to synthesize their points.  It uses stories about individuals, companies, and countries to expand their points in a digestible and instructive, but not overly preaching manner.

The authors lay responsibility for our current state in the laps of both political parties and in the laps of all US citizens that elect them.  They relate that the federal, state, and local governments’ inability to act fiscally responsible reflects the general attitude of the public they serve—“we want everything right now; we can’t afford it but we want it now anyway”.  The authors are frankly more effective at delineating the issues the country faces than in providing specific prescriptions for “How We Can Come Back” but frankly getting a highly specific prescription to fix our problems is likely unrealistic.   The authors vigorously do encourage us to understand our own history and the principals that have served us well to make us a magnet for dreamers everywhere and learn from them to get back on track.    This is an appropriate plea and not an insignificant request.  We didn’t think about consequences of all our actions that got us where we are when we took them.  We DO need to stop and think about our past and we DO need to learn the lessons it can teach us.

The following summarizes some of the highlights of the five sections of the book that I want to remember and share to kick start that thinking process for myself and for readers of this article.

In Part I:  The Diagnosis, the authors define four major challenges facing the US:

• How to adapt to globalization
• How to adjust to the IT revolution
• How to cope with large national debt and soaring budget deficits stemming from the growing demands on government at every level and unwillingness to raise enough money through taxation to cover those demands
• How to manage energy consumption and rising climate threats.

The authors also delineate five pillars of prosperity that led the US to two centuries of increases in living standards and that made the US the “world’s greatest magnet for dreamers everywhere”:

• Public education
• Building and modernizing infrastructure
• Open door for immigration, adding low skilled but high aspiring immigrants and adding the best minds in the world
• Support for basic research and development
• Implementation of necessary regulations on and incentives for private economic activity to safeguard against financial collapse, environmental ruin, and to encourage capital flow to the US

Several formula builders are called out from our history.  This list is a small sampling of the history recalled for us by the authors:

• Alexander Hamilton: established a budget and tax system, a custom service, and a coast guard; developed plans for a peacetime army; and promoted the need for a strong and active although limited government
• Thomas Jefferson: in addition to writing the Declaration of Independence and authoring the Virginia state statue for religious freedom, emphasized the importance of education by starting the University of Virginia
• Abraham Lincoln: spurred the transition from an agrarian society to an industrial society;  during the course of the Civil war oversaw significant Acts of congress:  Homestead Act of 1862 opening the west for settlement; Pacific Railway Acts of 1862 and 1864 that connected the eastern and western parts of the country; Morrill Act of 1862 establishing the land grant college system; and in 1863 started the National Academy of Science to bring together the best researches to “investigate, examine, experiment, and report on any subject of science or art whenever called upon by any department of government”
• Theodore Roosevelt: established a system of rules and regulations to prevent abuses and hold business accountable; it is also remarkable that in 1907 1, 285,349 people came to the US from other countries, the largest annual intake in American history to that point
• Franklin Roosevelt: significant public investment in building infrastructure (dams, roads, parks, airports, power stations, schools, libraries, etc) and education as part of the New Deal; the Securities Act of 1933, called the “truth in securities” law; re-regulation of the banking system; introduction of Social Security and unemployment insurance programs.  The authors suggest we recall that the free-market economy produces losers as well as winners and these programs provide some protection to the losers, thus stabilizing our overall system.  The “brain wave” of immigrant scientists, writers, artists, musicians, historians, and intellectuals occurred during this time as Europeans were fleeing Nazi Germany (ie recall the US behave home to Albert Einstein).
• Harry Truman: a 1944 act known as the GI Bill of Rights provided training to 7.8 million of 16 million WW II veterans by 1956.  The National Science foundation was initiated in 1950
• Dwight Eisenhower: initiated the Advance Research Projects Agency (later known as the Defense Advanced Research Projects Agency (DARPA)) from which flowed the technology powering many of today’s tools (ie the internet, GPS, weather satellites among others).  Eisenhower also won support for the creation of the interstate highway system.  He also was a defender of the immigration and pushed for liberalization of restrictions on immigration.

In Part II:  The Education Challenge, the authors discuss significant forces on jobs we must recognize, the current state of our preparedness to meet the challenges resulting from these forces, and what we need to do to correct course.

Globalization and the IT revolution are here whether we want them or not.  “The genie is out of the bottle” and there is no going back.  A huge impact of these is the loss of jobs in the US.  The authors remind us that after the last three recessions (1991, 2001, and 2007), the time required (or projected) for jobs lost to come back to the peak prior to each recession has progressively increased.  Jobs are being automated, digitized, and outsourced.  The authors argue that “blue-collar” and “white-collar” are no longer the ways to describe jobs.  Rather, they suggest there are two types of workers:  creators and servers.  Creators are driving productivity and servers service these creators.  They caution” many servers will be replaced by machines, by computers, and by changes in how business operates”.  They describe a model of 4 types of job holders:  1) “creative creators”, people who do non-routine work in a non-routine way—the best of the various creators.   2) “routine creators”, people who do non-routine work in a routine way—the average of the various creators.  3)  “creative servers”, non-routine low-skilled workers who do their work in an inspired way—the extraordinary servers; 4)  “routine servers” who do their work in a routine way, offering nothing extra.  They caution that types 2) and 4) are the job holders most vulnerable to job loss.  So the focus for individuals—and the educational system that prepares them—is to “be “present” all the time, in whatever we do, so that we can be either creative creators or creative servers.”

A good fraction of the book is focused on the current state of education in the US and how the US stacks up against the rest of the world.  It’s not a pretty picture.  US fourth grade students perform reasonably well in standardized international math and reading tests but US high school student perform in the middle or towards the bottom in standardized tests applied globally.  Basically, the longer US students are in school, the worse they perform against international peers.  The authors suggest students either attend bad and/or dangerous schools or they attend “nice” schools that aren’t very good either.  The author’s prescription to address this:  “We believe six things are necessary:  better teachers and better principals; parents who are more involved in and demanding of their children’s education; politicians who push to raise educational standards, not dumb them down; neighbors who are ready to invest in schools even though their children do not attend them; business leaders committed to raising educational standards in their communities; and last but certainly not least—students who come to school prepared to learn, not to text”.

Part III is titled:  The War on Math and Physics.  In short, the US has pretended that routinely running budget deficits doesn’t matter and that human-driven global warming and corresponding climate change “is an invention of a global conspiracy of left-wing scientists and Al Gore”.

Ronald Reagan’s first term cut taxes substantially but deficits ballooned because the revenue base was reduced by 5% of GDP while domestic spending fell only 1% of GDP and defense spending soared.  In response, Reagan enacted five “revenue enhancements” which took back about 40% of the lost revenue.  Neither George H.W. Bush nor Bill Clinton wanted to raise taxes but they did to keep the deficit under control.  Simultaneously they either did not add new spending programs that can be seen as “entitlements” or they reduced spending on ones that existed at the time.  The outcome of their actions meant that America’s debt-to-GDP ratio improved, decreasing from 49% to 33%.

Unfortunately the administration of George W. Bush took us in a different direction.  The new generation of Republicans were no longer concerned about controlling the deficits and believed that the economy would outgrow the deficit if “plied with enough tax cuts”. We entered wars without increasing revenue to pay for them (the first time ever in US history).  Massive tax cuts combined with no spending cuts, an added a new spending/entitlement program—Medicare prescription drugs, and increased defense spending for wars in Iraq and Afghanistan led to enormous deficits, funded by borrowing from other nations, especially China.  Spending further increased under Obama to prevent collapse of the US (and global) economy just as he came into office.

Also unfortunately, state and local governments are generally in a poor situation as well as they continued to sign contracts with their workers to pay generous defined benefit pensions and associated retiree health care benefits and now find themselves unable to pay for the promised benefits.

And finally and unfortunately, the willingness of the public to accept that human-driven global warming is occurring and the impact will be massive climate and geography change is a hoax is spilling over into general disbelief of experts of all types if their message is inconsistent with “truths” found in unsubstantiated sources on the internet and in the media.

A very brief summary of the authors’ prescriptions:

• Get serious about our problems
• Accept that we will all have to sacrifice
  • Raise revenues through various types of taxes
  • Cut spending overall
  • Shift spending by cutting some programs (ie Medicare and Social Security need to be reined in and likely reduced) and increasing spending in others—in particular education, infrastructure, and research and development
• Start debating on how to generate more clean energy to slow climate change and stop debating whether to do so.

Part IV:  Political Failure provides interesting insights on the evolution of US politics.  In the 1950s and 1960s, both the Democratic and Republican parties were coalition of liberal and conservatives.  In these days, cooperation and compromise existed within and across political parties.  Opposition to the civil rights movement meant that Southern conservatives begin to defect to the Republican Party.  Social conservatism within the Republican Party over issues including abortion, school prayer, feminism, and gay rights pushed some Northern Republicans into the Democratic Party.  Centrist groups began to disappear while liberals and conservatives remained quite active in politics and became more impactful in their respective parties.  Redistricting every 10 years has been subject to “gerrymandering” since its initiation (the descriptor was coined in 1812).  Combining these effects means that the most extreme parts of each party are most likely to win primary elections and choices for voters in the general elections are between two extreme candidates.  The center has essentially evaporated.  Once elected, the extreme candidates face pressure to remain extreme or be removed by other extreme candidates within his or her own party leading to little moderation and compromise with the other party.  Fund raising is non-stop—there is no time to just focus on governing. The “24 hour news cycle” means every word an elected government representative makes is scrutinized, analyzed, and discussed.  This all makes for a pretty broken system.

The authors suggest that both Democratic Party has to move from a “you can’t touch Medicare, Social Security, and other similar programs” and the Republican Party has to accept that tax cuts alone will not solve our problems.  The authors suggest some “shock therapy” is needed.  Preferably the shock comes from within, not from a devastating circumstance such as an external foe, global economic crisis, or from Mother Nature.  The authors hope that a serious independent presidential candidate can capture sufficient traction to help moderate the parties and influence the governance following an election, likely won by one of the two major parties.  The authors teach about three times this has happened in the twentieth century.

George Wallace won 13.5% of the popular vote and five Deep South states in 1968.  He ran against the civil rights laws passed between 1963 and 1965, for “law and order”, and as a populist hostile to the federal government and liberal establishment.  The Nixon administration, although actually quite liberal by today’s standards, adopted some of these policies and attitudes including opposing compulsory busing of schoolchildren to desegregate schools.

18. Ross Perot won 18.9% of the popular vote in 1992. Bill Clinton won with 43% of the vote beating out the sitting president George H.W. Bush (who polled 37.5%). Perot focused on the federal budget deficit and raised the public’s awareness of it and concern with it.  Clinton’s presidency did work to reduce the deficit.

Theodore Roosevelt ran as an independent candidate in 1912 to regain the presidency which he held from 1901 to 1909 as a Republican.  He felt that the reform agenda he devised while president to support a successful transition of the nation from an agrarian society to and industrial one was not being pressed by his Republican successor, William Howard Taft.  Woodrow Wilson won that election although Roosevelt won 27.5% of the popular vote and earned 88
Electoral College votes.  Roosevelt’s ideas regarding regulation of business, a minimum wage, an eight-hour workday and a six-day week, unemployment, and old-age pensions were eventually enacted.

Running for president is expensive and both Perot and Roosevelt were primary sources of funding for their campaigns.  The authors hope that successes of Howard Dean in 2004, Ron Paul and Barack Obama in 2008 to raise substantial funds from small individual contributions can propel forward a new independent candidate.

In response to the question “But does it have a happy ending?” the authors remained positive in their conclusions.  By rediscovering our American history and the “5 pillars of prosperity” noted earlier, they believe the US can find its footing to remain a global leader.   They propose that mproving our educational system, addressing glaring infrastructure needs, resolving the status of  illegal immigrants and making it easier for new immigrants with needed talents and aspiration to come and stay in the US, and modernizing our regulations and incentives for business can and must be done and will make us successful.

Comments on the 2016 election:

As this book was published in 2011, it wasn’t possible for the authors to comment on the most recent election.  It’s interesting that an outsider candidate was chosen by the Republican party and ran on principals that  are in some cases  opposite to some of the “5 pillars of prosperity”:  anti-immigration and general relaxation of regulations on business.  Additionally his promises were consistent with a continuation of “we can have it all and have it not cost us anything”, specifically lower taxes and better health care with less cost to individuals.  At least he has promoted significant spending on the aging infrastructure, but with no increases in revenue to support it.  An outsider candidate running for the Democratic nomination pushed the successful Democratic nominee to be even more extreme than she would have been otherwise including a “we can have it all and not cost anything” plank as well with low or no-cost education for all.  The new president’s personality and approach combined with a continued attitude of “whatever that party is for we will block at all cost” doesn’t bode well for the US soon being on the path these authors promote.   We have much to re-learn and little time to do it before we are a has-been nation with a standard of living that takes an even bigger dive that is happening now.