It's time for a hubris check for America. Chief executives and Washington officials alike are busily striding the globe, from Davos, Switzerland, to Osaka, Japan, proudly proclaiming to one and all that "America has got it--and you don't." On economic growth, the Internet, jobs, profits, record stock prices, low inflation, the number of personal computers per capita, and budget balance, the message is the same. This 1990s chorus of American triumphalism, however good it feels to Americans, is beginning to echo Japan's cocky tone of the 1980s. America should cut it out. Much work remains to be done in building a prosperous and just society.
Not that a good pat on the back isn't in order. A decade ago, who would have thought that Corporate America would have the ability to remake itself and become so competitive so quickly; that politicians would convert to fiscal discipline so wholeheartedly; that information technology would spread so widely; that the workforce would adapt to the New Economy so productively; and that monetary policy would be managed so deftly? Who would have guessed that, in the course of the the 1990s, the U.S. would win the cold war, defeat aggression in the Persian Gulf, stop the bloodshed in Bosnia, and make its own streets safer? It has been one incredibly successful decade.
REBUILDING THE SCHOOLS IS JOB ONE
But before America trips over its own pride and loses its new geo-economic momentum, the country must get a grip on what remains to be done. There is little question that economic inequality is now the No.1 domestic problem facing America and that education is the solution. The country's great transition from a continental, industrial economy to a global, information-based economy plays to many of America's strengths: entrepreneurialism, pluralism, mobility, and adaptability. But for that transition to continue, the entire workforce, not just the top half, must be in a position to benefit from the New Economy. To participate in it requires solid schooling. So President Clinton is right in using his bully pulpit to push for the establishment of national standards in grade-school math and reading. One of the saddest fiascos of our time is the failure of state and local governments to educate America's children adequately. National guidelines to spur local school districts to improve teaching and learning are a great idea.
Giving $50 billion in tax credits to middle-class American families for college, however, is not. President Clinton's good intentions are misplaced. It is the K-12 (kindergarten through high school) sector of the education system that sorely needs revamping and fresh resources. U.S. colleges and universities are the envy of the world, and they remain available to qualified students in some form or other. Clinton's $50 billion would be better spent on charter public schools, on rewarding master teachers, and on increased funds on the Pell grants that help the poor with college costs. Failing that, why not simply offer the tax credits to parents for any level of education, from first grade to college senior? Let them decide on their own families' educational needs and how to finance them.
HARD CHOICES ON FISCAL REFORM
Then there are the macroeconomic issues that need to be resolved. Maintaining the momentum of noninflationary economic growth into the years ahead will be impossible without first completing the job of putting America's fiscal house in order. The easy stuff has already been cut from the budget. Now, it's time to tackle middle-class entitlements and corporate welfare. Both Democrats and Republicans appear ready to blink in the face of popular pressure. They're tempted to fake it by postponing tough cuts, making one-time asset sales of government property, and shifting Medicare expenses from one account to another.
The balanced-budget bargaining that has already begun in Washington should have only one outcome. Most spending cuts should be made in the next three years, not in the next century. And real Social Security and Medicare reform should be made now, not sometime in the vague future. Changes in Social Security should include smaller cost-of-living adjustments, raising the retirement age, and bringing all public employees into the system. Market incentives and managed-care options are essential for restoring Medicare to a firm financial footing. All this will take more political courage than either Senate Majority Trent Lott (R-Miss.) or President Clinton has yet shown.
A backlash against America's triumphant capitalism is already stirring. From the left, William Greider's new book, One World, Ready or Not: The Manic Logic of Global Capitalism, argues that free trade is destroying the standards of living of working people everywhere. From the right, George Soros, the billionaire hedge-fund trader, in an article entitled "The Capitalist Threat" in the Atlantic Monthly, writes that, with communism dead, the excesses of free-market capitalism are the new enemy of civil society. Many of Europe's intellectual and political elites, both liberals and conservatives, would agree with him. Indeed, in America free trade is the bte noire of not only Republican Pat Buchanan but also John J. Sweeney, president of the AFL-CIO.
The U.S. has every right to be proud of its hard-won economic achievements. But arrogance about past success won't guarantee the future. A broad consensus needs to be built to continue the drive toward an information-based global economy. To do that, benefits must accrue to all who participate productively. That means providing solid education and the ample opportunities that come with the sound management of macroeconomic policy. America will be truly triumphant when more of its citizens participate in the economic miracle now unfolding.