How Broken is the USA?

The USA can be an exasperating place, but also an exhilarating one. We hear all the time of systems being broken and of gridlocked politics, yet somehow New York can work rather well. Further, people still want to come to live here. There is an immigration problem because people want to immigrate. Russia and China don’t have immigration problems.

But it is still possible that things are broken, perhaps beyond repair. A great company can be doomed a generation before it actually goes bankrupt, and smart analysis can reveal how. A great brand and strong legacy can mask problems for a long time. The same can be true of countries.

The USA certainly has a wonderful legacy, and some enduring strengths. The land is vast and fertile and blessed with natural resources, yet under-populated and located with natural defences. Its people are largely immigrants, people who have chosen to come and displayed the drive to follow their dream, hence energetic and optimistic. The time of colonization enabled a first class constitutional and justice system. Good choices were made in long-past wars, leaving a legacy of influence and wealth. Many of these advantages will endure.

But look a bit more closely, and much of the key structure of society really is broken, and that portends ill for the future, especially because few of the broken elements appear easily fixed.

Start with health and welfare. The USA remains the only advanced country where basic health care is not a right. Virtually the only thing that the Obama administration was able to enact was a partial fix for this, but even that is being unwound. Healthcare costs the economy double what it does in key competitors, yet outcomes are worse. Life expectancy has lagged other nations for many years and is now actually declining. The recent UN happiness report partly attributed the poor ranking of the USA to three related epidemics, of obesity, opioids and depression, yet almost no public policy effort attempts to counteract these. Incentives remain skewed – a visit to a medical practitioner can resemble that to a bank. This is one broken system, and not one that can be fixed easily.

Next, take education. US universities are lauded around the world and indeed generate influxes of talent and innovation. But their costs are out of control, and increasingly access is restricted to the wealthy. Meanwhile, public schools resemble jails and produce results among the worst in the developed world and let down the disadvantaged most of all, because funding is local and hence skewed to richer areas. Public policy is a proxy battle between unions and greedy entrepreneurs, fought over charter schools and common testing, but for goals other than fixing the broken system.

Justice is little better. The court system is good, but public policy has led to dogma and disaster. A third of black men will see the inside of a jail, a huge multiple of the share in any other developed country. Violence is endemic, including by police, who kill a large but unmeasured number of citizens each year. By contrast, in Norway or Germany or Japan the number of bullets fired annually by police is in single digits, and each one leads to a public outcry. The cost of justice excludes most citizens. The effects of all of this will take generations to heal, even if public policy were to become more enlightened.

Infrastructure, another key fuel of the economy, is crumbling. Roads are more potholed than in any advanced nation. Bridges collapse, water systems poison people, and public transport barely exists outside of a few large cities.

The national balance sheet has a vast and growing deficit. Enabled by having the world’s reserve currency, debt is allowed to grow and competitiveness to progressively decline. Many key programs, such as social security and public pensions, will soon become unaffordable. Yet imposing taxes even to stabilise the situation becomes politically impossible. Locally, many declining cities and states have unsustainable finances too.

The banks were incentivised to create one crippling crisis and appear headed towards another one sooner or later.

Defence appears rather better, at least superficially. The USA certainly has a lot of firepower, and key global assets such as military bases. But look more deeply. Since 1960, almost all key decisions have been deeply flawed, and execution has been poor, constantly outflanked by more agile adversaries. And they are addicted to money, with precious little scrutiny. This is not a recipe for sustained success.

Foreign relations are broken as well. Even before the calumny of the current administration, most of the world’s citizens and many of its governments actively disliked the USA. It is tolerated because of its power and its money. Most Americans live in blissful ignorance of this uncomfortable fact, and make little effort to understand the needs and motives of others.

Business policy is similarly broken, notwithstanding the great success of some USA companies. Arguably, a lot of these successes are riding on the back of defence spending and legacy advantages. But most industries have less competition and hence less innovation than they did, with trends heading in the wrong direction. Protectionism will only hurt competitiveness.

The USA has many wonderfully generous people and strong communities. But there are deep tensions and resentments as well, notably along race and class lines. The ugly history of suppressing the indigenous population will become divisive soon too. These attitudes infect politics, yet public policy tends to exacerbate rather than ameliorate. As an example, housing for the poor becomes progressively less affordable, creating a vicious cycle of eviction, despair, illness and resentment.

Culture is a rare bright spot, at least in the bigger cities. And culture will become more important as communication becomes ever easier and lives cease to be dominated by work. Once the current ugliness over immigration dies down, demographics will once again work in the USA’s favour. The USA does not have the ageing problems of Japan and Germany.

Overall, this is a depressing scorecard. Indeed, most public services are broken or close to breaking point, with adverse trends and almost no legislative progress. Instead, Congress talks about walls and monuments and distant enemies and making rich people even richer. With gerrymandering, lobbying and the dominance of money in politics, this will not improve soon. Meanwhile, the current administration is destroying the civil service, along with its other sins.

A well-run country would be making incremental progress on all the items above. None are actually difficult. It would then be spending serious time contemplating the more difficult issues that are around the corner. Even climate change luddites will have to respond to its effects. The ageing of society, the end of the work-dominated society, artificial intelligence and the impact of autonomous vehicles will all need a response sooner rather than later. Good luck with that, congress.

I don’t want to portray things as worse than they are. Some strengths are enduring. Trump will pass. The next generation are wonderful humans. But I think if the USA were traded on a stock market, it might have a share price like that of GE or Ford or even IBM – great past, reasonable present, but no future. Read Lionel Shriver’s brilliant The Mandibles to get an extreme idea of what that might turn out like.