Recently I had an interesting conversation with an investor about the ?American dream?. The American dream was first expressed by James Truslow Adams in 1931, ?Life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement regardless of social class or circumstances of birth.? Since its founding in 1776, the US was regarded as a beacon of liberty and prosperity. The US was regarded as a country that was open and transparent; the one that respects merit; the one that attracts the best brains across the world to come and work there without any fear of intimidation or discrimination; the one that professes free and fair trade across the world; and the one where people with little background ended up taking their place among the richest in the world by dint of their sheer innovation and hard work. The world always looked up to the US as a country to emulate for success.
But, what is happening today? An average American today is more pessimistic than an average Asian. Recently I saw an advertisement in the US where a Chinese professor (set in Beijing in 2030 AD) was talking about the fall of great empires, including the Greek, Roman, British and the US. He says in the advertisement that all those great empires had fallen because they went back on the principles, which made them great in the first place. He concludes by saying that the US had accumulated huge amount of debt, which were owned by the Chinese, and the Americans now work for the Chinese. This was sponsored by the citizens against government waste and clearly reflects the mood of the Americans today.
The Tea Party activists who are conservatives want the US government to cut their deficits and reduce government spending. With the unemployment rate close to 10%, and not coming down, the groundswell opinion is to be more protective and the anger is clearly against the free trade pacts the country had signed with several countries. Most of the Americans today are more pessimistic about their future. They are amused by the huge public debt; see the employment opportunities coming down due to globalisation and outsourcing of both manufacturing and services to Asian countries; their competitiveness eroded due to high taxes and social benefits; their education system in a shambles and requiring massive change; and their innovation engine being threatened and overtaken by smart people from Asia. The fear is there is only an ?Indian dream? or a ?Chinese dream? and no more the ?American dream?.
While on the surface this is to some extent true and a majority of the US citizens believe this, the strength of the US is its innovation engine. Their universities are still world-class and attract the best brains from across the world. The world is still struggling to compete with companies like Apple, which are in the forefront of innovation. The ability of the US to take tough decisions with greater flexibility is still unparalleled. More than that, the world still regards the US as a country to emulate and beat. For the world, the benchmark for success is still the US.
What could change this pessimism in the US? The government should view the current situation as an economic issue rather than a political issue. They should make it much easier for the best brains to come and work there even if it means going against the popular public opinion. They should integrate more with the world and focus on innovation, which was key to their successes in the past. The basic thing lacking in the US today is confidence. The corporates are sitting on $2.2 trillion of cash but are not making any investments or creating jobs due to lack of confidence in the economy. The government should provide the confidence in the form of industry friendly and job creation oriented fiscal and economic policies. On top of it all, the US should come to terms with the fact that their current situation is the result of wrong policies practised by them in the past and stop blaming other countries for their economic ills. If they pursue this path, it?ll only make the other countries more protective and will end the free trade. The sooner they realise this, the better it is for the US economy.
The American dream still exists even if the majority of the population in the US do not believe in it. It is easy for politicians to get carried away by public opinion and make the country closed, which will end the great ?American dream?. Hope it does not happen and make the statement by the Chinese professor in the advertisement come true.
The author is CFO, Infosys Technologies