Ever since the election of Donald Trump, many of our leading academic voices, like Paul Krugman, predicted everything from a stock market crash to a global recession. Slow growth, mainstream economists like Larry Summers, argued, was in the cards no matter who is in charge. That was then. Now the United States stands as by far the most dynamic high-income economy in the world.
In such areas as economic growth, the U.S. is generally outperforming other rich countries — such as Japan, Germany and the rest of the EU — by roughly two to one. Meanwhile our most serious global rival, an increasingly overextended China, as well as much of the developing world, are seeing drops in once rapid growth rates.
Donald Trump, being a braggart by nature, of course claims this success for himself. Even President Obama, who presided over the tepid recovery but can claim he pulled the economy “out of the ditch,” wants to take a bow. Yet the real hero here is neither president, but America itself, whose phenomenal advantages over its competitors have gotten stronger with time.
Sources of greatness
Perhaps nothing reveals fundamental insecurity in America than the debate over the issue of American “greatness.” Trump, of course, thinks he can bully the country into being great “again” while New York Gov. Andrew Cuomo suggest the country was “never that great.”
During her disastrous campaign, Hillary Clinton noted America was “already great” and in this case, she’s proving to be right. Despite the awful fools in both parties in Washington, and a press compromised by its own politics, the United States remains unique due to a three factors — our enormous natural endowment, innovative culture and more youthful demographics.
Our competitors may possess some of these things, but not all. Germany and Europe, for example, lack strong tech companies to drive growth or a great resource base. Many of these countries are far too dependent on merchandise trade, which is one reason why Trump holds the better hand in trade negotiations than his opponents. Exports of both goods and services, for example, account for less than 12 percent of U.S. GDP compared with over 16 percent in Japan, nearly 20 percent in China and a remarkable 46 percent for Germany. Trump can threaten to expand tariffs with all these countries, because they buy so much less from the U.S.
The continental edge
Unlike its European or Japanese competitors, America is a huge country with enormous natural resources. It not only can feed itself, but also much of the world. As China is learning, there’s no real substitute, at least at low prices, for American produce.
Perhaps even more critical are energy and natural resources. Japan, China and the EU remain largely dependent on such dicey countries as Iran, Saudi Arabia and Russia for their oil and gas. The U.S., already the world’s largest producer of oil and gas, has achieved what analyst Walter Russell Mead has called an “oil and gas boom that has sent geopolitical shocks through world affairs.”
Ultimately energy will prove critical to the manufacturing economy, the sector that Trump has most targeted. Lower energy costs offer U.S. firms unique advantages against their prime competitors. Industrial employment has reversed declines from the end of the Obama years, growing by 327,000 jobs over the past year, the best performance since 1995, producing the strongest output in August in 14 years. Retailers, home-builders, business service firms are all hiring, and, for the first time in over a decade, wages for the lower half of the labor force are actually rising and even the long-term unemployed are returning to the workforce.
What Trump misses — but America still has
Physical advantages or innovative companies are not the only things that makes America great. What matters as much, or more, is our demographics that remain considerably healthier than those of our prime competitors. This largely reflects the impact of immigration, something that Trump and his minions miss. By 2050, according to Pew, the U.S. population will be much younger and will still be growing, while our three major competitors — Japan, Germany and China — all will suffer more rapid aging as well as stagnant or even shrinking populations.
Immigrants are critical at almost every level of the economy, from low-wage service workers to the most elite technology researchers. They also have higher levels of entrepreneurship, now accounting for one in four businesses. Asians, now the largest group of new legal immigrants, boast both higher income and education levels than the general populace. To be sure, the country needs to modify its laws, and cut off illegal immigration, but moves by Trump allies to reduce legal immigration threaten to undermine our long-term economic future.
America needs political and media figures who actually understand our fundamental strategic advantages. We should not employ xenophobia to make ourselves feel better about ourselves, nor do we have to embrace the fundamental anti-patriotism increasingly characterizing the left. America deserves a political class that understands the roots of the country’s greatness and how best to press that advantage in the coming decades.
This article first appeared at The Orange County Register.