Fareed Zakaria his updated his 2008 bestseller and dubbed it The Post-American World: Release 2.0. He was a guest this week on Fresh Air in an interview that was so good I listened twice. Some highlights:
[T}he tallest building in the world is now in Dubai. The biggest factory in the world is in China…The largest oil refinery in the world is in India. The largest investment fund in the world is in Abu Dhabi. And the largest Ferris wheel in the world is in Singapore.
And needless to say, 25 years ago, almost every one of those categories was dominated by the United States. Now more troublingly, we are also losing our grip on some key indices such as patent creation, scientific publications and things like that, which are really harbingers of future economic growth.
And that – in the area for example citations, the number of journals -scientific journals you produce and that are cited – the United States has had the lead, has been the number one country in the world since the 1930s. We overtook Germany in the 1930s. I think, in three years, China will overtake the United States, and that is hugely important in terms of the generation of scientific knowledge, technological advancement and therefore your ability to dominate those industries. …
The fact of the matter is that by almost every measure, other countries are moving up, and they’re moving up into space that used to be dominated by the United States and the Western world. So I don’t know how you can fight those facts. They are very awkward, and it’s very difficult to have to accept that we are going to have to share power.
What are others doing right?
If you look at Germany, it’s a fascinating role model. The Germans have maintained their manufacturing edge, despite being a high-tax, high-regulation economy. Why? Because the government really set about ensuring that it maintained funding for technical training, technical advancements, apprenticeship programs. It made a concerted effort to retain high-end, complex manufacturing, you know, the kind of BMW model, if you will. And they’ve done that so successfully that Germany, which has a quarter of America’s population, exports more than America does. Think about that. We have four times the population of Germany and we don’t export as much as they do. Again, it might be worth taking a look at that country and asking what are they doing right?
Debating the role of government:
We have this debate in America that is almost a theoretical debate about the role of government, the proper role of government in the economy and whether, you know, government should be involved and how distorting it would be if it were. And I worry that while we are having this theoretical debate, on the other side of the globe the Chinese government is vigorously promoting industry after industry. The German government is vigorously promoting its manufacturing sector, the South Korean government is vigorously promoting its manufacturing sector – and that by the time we’ve resolved our debate, there won’t be any industries left to compete in. In point of fact, it is absolutely clear that government plays a key role in – as a catalyst, more than as a producer of any kind – but as a catalyst in promoting long-run growth. […]
If you look at when we had dominated the world it was the ’50s, ’60s, ’70s, ’80s. What were we doing in that period? Well, the U.S. government was massively subsidizing research and technology. We were building this huge state university system. We were setting up the NIH, the NSF, all these institutes that spent billions and billions of dollars on scientific research and technology. The second thing that was happening is that the U.S. government was buying massive quantities of new industrial and electronic products.
The computer chip for example. The U.S. government was the only buyer of computer chips for 10 years while the cost declined. NASA was the only buyer of large computers. Then you have, of course, the case of something like the Internet, which was developed by the Defense Department at a time when the commercial industries looked at the project and said it was commercially not viable. So if we were to look at our own history we would recognize the powerful role that government has played.