Correction: The original version of this story cited Sweden as the country ranked first in the Global Competitiveness Report. Switzerland ranks first. We regret the error.
The World Economic Forum has released its annual Global Competitiveness Report, and the news is not good for the United States — or for developed economies, for that matter. The U.S. has fallen for the third year in a row, placing fifth among the top 10 most competitive nations.
The question, now, is why? Why does the U.S. continue to drop, and what does it say about America’s willingness to compete?
The United States’ fall from first in 2005 to fifth in 2011 represents the largest fall of any of the 113 countries included in the Global Competitiveness Index. Three countries tied for second in this regard: Greece, Ireland and Iceland. Meanwhile, the gap between the U.S. and China continues to narrow. And that gap is critical, according to the report, because it “partly explain[s] the reduction of the gap between the emerging and advanced blocks.”
So what are America’s strengths? The authors note that the size of the U.S. economy, its flexibility and the ability for the business and university sectors to collaborate on research and development are all noteworthy:
U.S. companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive.
But it’s the negatives — the problems that continue to draw America further down the list — that speak not to ability but to will. (The numbers in parentheses represent the United States’ overall ranking in the areas mentioned.):
... there are some weaknesses in particular areas that have deepened since past assessments. The business community continues to be critical toward public and private institutions (39th). In particular, its trust in politicians is not strong (50th), it remains concerned about the government’s ability to maintain arms-length relationships with the private sector (50th), and it considers that the government spends its resources relatively wastefully (66th). In comparison with last year, policymaking is assessed as less transparent (50th) and regulation as more burdensome (58th).
A lack of macroeconomic stability continues to be the United States’ greatest area of weakness (90th). Over the past decade, the country has been running repeated fiscal deficits, leading to burgeoning levels of public indebtedness that are likely to weigh heavily on the country’s future growth.
It could be argued that the will to compete is not the issue so much as America’s ability. But the United States has a proven ability to be ranked first. And the authors note that countries like Switzerland, currently ranked first, serve as proof that developed economics can move up the ladder as well as down. But a lack of trust in elected politicians, the private sectors’ critiques of the public sector and decrease in policymaking transparency — these points of weakness are almost identical to the ones outlined by Standard & Poor’s when the credit rating agency issued its downgrade of U.S. credit-worthiness. These are the result of choices the U.S. has made in both the public and private sectors over the long term.
President Obama will present his much-anticipated jobs plan Thursday in an attempt to both kick-start the beleaguered economy and, in the process, bolster his re-election chances. But, if past is prologue, expect Republicans to reject the plan outright. Meanwhile, Republican presidential candidates Mitt Romney and Jon M. Huntsman Jr. have presented jobs plans of their own — plans Democrats and their allies were quick to criticize. They’ve called Romney’s plan “extreme” and have gone after Huntsman’s business ties to China (he was the U.S. ambassador to that nation under Obama), saying: “It’s ironic that Huntsman is pushing ‘Made in America’ so hard when ‘Made in China’ has made him millions.” And the 2012 election is still in its early stages.
Then, of course, there is the nation’s spiraling debt, which the report cites as the United States’ leading weakness. On this point, both sides continue to be gridlocked, with the left supporting raising revenue through tax increases and budget cuts and the right through budget cuts alone.
It can be argued these practices could not continue without the endorsement of the American people, who have the opportunity to vote for an elected official at least every two years. But each election cycle seems to bring more gridlock, more debt and a lower competitiveness ranking. All of this points not to a lack of ability, but a lack of will, and it will be interesting to see when — or if — that willingness will return.
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