Aaron Copland, one of the great American composers of the past century, told the story of browsing in a bookshop one day, when he noticed a woman buying one of his books, “What To Listen for in Music”, together with a paperback edition of a Shakespearean play. As the customer left the shop, Copland stopped her and asked, “Would you like me to autograph your book?” Looking blankly into the composer’s beaming face, the woman asked, “Which one?” That’s seems to be the Americans’ plight these days: being unable even to identify the nature of their problems.
The U.S. dispute is concentrated on the immediate: controlling the fiscal deficit or increasing public spending in order to promote job creation. Advocates of the former say that without reestablishing the health of the economy, job creation would be ephemeral, while those espousing the latter insist that the risks of social breakdown are the only relevant criterion. Our experience in Mexico is clear: without fiscal equilibrium, everything else is irrelevant. However, the core problem transcends the immediate disputes and the way the U.S. resolves them will exert an enormous impact on Mexico’s future.
For more than fifty years, the U.S. economy constituted the horse that pulled the world’s cart. Its economic strength and the manner in which they articulated incentives for growth comprised the pillar that yielded decades of creativity, scientific and technological development, and leadership in the world. It is not by chance that, as a superpower, the U.S. constituted the main promoter of globalization in economic as well as in the social and cultural fields.
Today, the Americans are confronting the costs of their enormous success. Their fiscal and employment problems reflect the transformation of the world economy: nations that assumed globalization as a strategy have achieved such success that they now compete with Americans for the most productive jobs. The problem was not serious while it was only a few Thais, Mexicans, or Koreans achieved productivity indices similar to those of the Americans at a fraction of the cost. The problem was uncorked with the weight of economies such as those of China and India that, due solely to their size, ended up unhinging the U.S. middle class.
Some years ago, Niall Ferguson coined the term “Chimerica” to explain the new phenomenon: the Americans developed science, technology, engineering and, in general, all of the services that are fundamental inputs (and that are those with greatest added value in economic activity), while the Chinese supplied the manpower. The joint effort appeared to be a winning formula. The problem is that American workers, who for decades had been the mainstay of their middle class, ended up being the biggest losers: inasmuch as manufacturing jobs evaporated (even as manufacturing output grew), their income stagnated or declined. Thanks to the deficiencies of their educational system, the majority of these persons had no abilities other than manual, those required by the great steel mills or automotive companies and that, little by little, were transferred to other localities (including Mexico). This situation was not evident for some years because, thanks to the availability of consumer credit and home equity loans, families maintained, in artificial fashion, their socioeconomic level and spending capacity. When the bubble burst, American society found that an important part of their population had no access to their current sources of wealth (high added value services): the remainder does not have the ability to incorporate themselves into successful activities or are not willing to try this. Their high unemployment levels are not the product of a transitory problem, but rather one of a fundamental structural sea change.
Globalization has favored nations that have assumed it integrally, allowing formerly poor countries to become wealthy and to multiply like mushrooms. Those that assumed the cost up front, as occurred with several Asiatic nations, became wealthy countries. Others, like Mexico, which have avoided paying these dues, have achieved very important advances in some sectors, but continue to experience the burdens of poverty and low productivity in the rest. The Americans are beginning to experience precisely this situation: they have leading sectors worldwide that place them in a privileged situation, while other activities, above all industrial, add less value and employ fewer and fewer people every day. In an open economy (in the sense of effective freedom to import) such as that of the U.S., unproductiveness is penalized without delay and this is what has led to so many workers having lost their work sources: why should a businessman pay a local employee $50 dollars an hour when a highly qualified engineer in Hungary costs $15 and another in India, $5.
The U.S. finds itself at a key tessitura. Historically, nations (and still more superpowers) that find themselves in the face of a crisis that combines unemployment, external competition, discouragement, and new powers in the offing have in the last analysis transformed themselves for the good or capitulated and become engrossed in consuming themselves from within. Examples of the former are Germany and Japan after World War II. But the case of Germany is also emblematic because of the way that it responded when confronted by unemployment and internal economic upset during the Weimar Republic after WW I.
In terms of the U.S., the option of transforming itself would implicate redefining the structure of its productive plant and revitalizing its exceptional inventive capacity and ingenuity to position itself again at the vanguard of development, now under other parameters. The revitalization of its exports in order to re-encounter a balance in its exterior checks and balances, above all with China, would be of utmost importance in this dimension. The alternative would consist of being consumed in sterile debates concerning the best way of preserving a structure that is unsustainable. As if arranging the chairs of the Titanic were more important than avoiding an iceberg.
What they end up doing will be crucial for Mexico. The first path offers exceptional opportunities in which we would be a key piece, a competitiveness factor in the region’s manufacturing renaissance. The alternative is terrifying for them, for us, and for the world. The good news is that U.S. history is rich in examples of transformation, but there is no certainty that, in an environment as tense and conflict-ridden as that which characterizes them today, they’ll be capable of achieving this. In the words of De Tocqueville: “The greatness of America lies in her ability to repair her faults”. The whole world is watching.