American Idiocracy

from the Economist

American idiocracy

The civil war in Washington, DC, is damaging American business

Businesspeople still enjoy huge advantages from being in America. Business is part of its DNA in much the same way that la dolce vita is part of Italy’s. America has a disproportionate number of the world’s most innovative businesses, from greybeards such as 3M to toddlers such as Salesforce.com. And Americans are to management what Brazilians are to soccer. After studying 10,000 firms in 20 countries, Nicholas Bloom of Stanford University and three other academics concluded that American firms are the world’s best managed, with German, Japanese and Swedish firms a short way behind and Chinese and Indian ones trailing badly.

A commenter to this article asked if the comparison of management styles was done within each country as his ‘personal’ experience had found that Americans in general didn’t do well in dealing with other cultures.

This ideological civil war has led to the marginalisation of corporate America. In the Republican Party country-club types have been elbowed aside by Rush Limbaugh listeners. In the Democratic Party the business-friendly centrists who flourished under Bill Clinton have been sidelined by Ivy League intellectuals and trade-union and minority activists. Granted, Mitt Romney, the front-runner for the Republican presidential nomination, looks like a made-for-television business candidate: a Harvard Business School graduate and Bain consultant who helped to create successful companies such as Home Depot. But on the campaign trail he has devoted more effort to wooing Mr Limbaugh’s legions than to crafting businesslike solutions for America.

The civil war is creating two obvious problems for American business: paralysis and uncertainty. The Obama administration is still pockmarked with vacancies because Congress refuses to approve routine appointments. Important trade deals have been languishing for months. The Republicans are fighting a war of attrition against Barack Obama’s health-care reforms and his new Consumer Financial Protection Bureau.

All this has immediate consequences for business. The federal government not only runs basic services such as the Federal Aviation Authority (where thousands of workers were briefly laid off because Congress refused to renew the FAA’s authority). It also accounts for a quarter of the economy. Scott Davis, the boss of UPS, the world’s largest package-delivery company, recently complained that FAA funding disputes made him unsure how many of his aeroplanes to fit with new air-traffic-control gear, while the failure to ratify a trade pact with South Korea weakened the case for expanding his fleet of aircraft and lorries.

The direst consequences of all this lie in the future, however. America’s health-care system consumes a sixth of GDP but produces only mediocre results. America’s schools produce run-of-the-mill results despite generous funding. The immigration system leaves 11m people in the shadows and condemns many of the brightest graduates of American universities to years of grovelling before bureaucrats if they want to stay in America. Many give up and take their skills back to India or China.

Kinda sad really. Corporate types rail about government intrusion and “excessive regulation” and then complain when government services are taken away.

American companies are sitting on a gigantic pile of cash; Apple alone has $76 billion in the bank. Why won’t corporate America invest in America? It does not help that domestic demand is feeble, and that the global economy is in turmoil. But American politicians deserve some of the blame. Their unpredictability erodes confidence. The gulf between American business and the Obama White House is growing ever wider, as business-friendly insiders (such as Larry Summers, an economic adviser) leave the administration. Even more dangerously, the gulf between business and the rest of the country is widening: opinion polls show that American businesspeople are losing faith in their country even as ordinary Americans are losing faith in business.

The ever-widening split between those who are doing better than ever and the vast majority of Americans is now being furthered by certain politicians with their rants against the ‘others’ – the ones who aren’t Real Americans, the ones who just want to kill babies, the ones who are sucking on government’s teats, the ones who don’t think the world was created 6000 years ago.

Why do some support this evil? For they think they too will one day be part of the elite – never mind the reality of ever decreasing opportunity in this nation.

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