Who Stole the American Dream? (51 page)

America’s challenge, Kennedy concluded, is to find a more reasonable balance between its military commitments and trying to “preserve the technological and economic bases of its power from relative erosion in the face of the ever-shifting patterns of global production.”

Kennedy wrote that in 1987, when America’s global economic position was stronger than today—making his comments an even more trenchant augury of the current dangers of America’s excessive global commitments and military spending.

Six decades ago, at the height of the Cold War with the Soviet Union, President Dwight Eisenhower warned of precisely that danger—the danger that the United States, by overspending on defense, would damage its domestic economy, its engine of growth.

Eisenhower, who is remembered for his parting admonition about the excessive political power of the military-industrial complex, had worried earlier in his presidency that the United States was becoming
so obsessed with the Soviet threat and its urge to build a network of overseas bases that it risked undermining the nation’s long-term economic security. As Eisenhower put it: “
To amass military power without regard to our economic capacity would be to defend ourselves against one kind of disaster by inviting another.”

Eisenhower was explicit about the trade-offs between guns and butter. Making one heavy bomber, he said, meant sacrificing thirty modern schools or two fully equipped hospitals or two electric power plants. “
We pay for a single destroyer with new homes that could have housed more than 8,000 people …,” he said. “This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.”

In 2008, presidential candidates Hillary Clinton and Barack Obama applied Eisenhower’s trade-offs to the war in Iraq. “
Instead of fighting this war …,” Obama told primary voters in Charleston, West Virginia, “we could be fighting to put the American Dream within reach for every American…. For what folks in this state have been spending on the Iraq war, we could be giving health care to nearly 450,000 of your neighbors, hiring nearly 30,000 new elementary school teachers, and making college more affordable for over 300,000 students.”

Clinton spelled out the benefits nationwide for average Americans if $1 trillion spent on Iraq went instead to domestic programs. “
That is enough,” Clinton declared, “to provide health care for all 47 million uninsured Americans and quality pre-kindergarten for every American child, solve the housing crisis once and for all, make college affordable for every American student, and provide tax relief to tens of millions of middle-class families.”

Increasingly, members of Congress have been pressing Obama to apply this economic logic to Afghanistan. Tea Party Republicans in the House have joined liberal Democrats in calling for defense cuts and faster withdrawal from Afghanistan. Several national security experts have offered a foreign policy rationale: Reverse mission creep and go back to the original anti-terrorism mission in Afghanistan and forget about building Afghan democracy. With Osama bin
Laden dead and buried at sea and with al-Qaeda operating from Pakistan and beyond, these experts say the United States can legitimately declare, “mission accomplished.”

“
Afghanistan is no longer a war about vital American security interests,” asserted Leslie Gelb, a former State Department policy maker. “With Osama bin Laden now swimming with the fishes, the U.S. has but one sensible path: to draw down U.S. forces to 15,000–25,000 by the end of 2013, try cutting a deal with the Taliban, and refocus American power in the region on containment, deterrence and diplomacy.”

What Gelb and others are urging is not just a faster pullout from Afghanistan, but a more restrained strategy throughout
the Arc of Danger. That approach would reduce the need for our “Empire of Bases,” including what the Obama Administration initially planned as a $6 billion-a-year, later cut to the $3.7 billion-a-year, U.S. embassy in Iraq with its sixteen thousand personnel, including five thousand U.S. military trainers and a force of civilian security contractors.

Political Washington’s recent focus on the national debt has accelerated the push for a less aggressive foreign policy and a smaller U.S. global footprint. As Congress and the White House clashed in 2011 over the national debt, the key question about the Afghan war changed from “Is the strategy working?” to “Can we afford it?”

“We should be working toward
the smallest footprint necessary …,” asserted John Kerry, the Democratic chair of the Senate Foreign Relations Committee, and he had the backing of the committee’s ranking Republican, Dick Lugar of Indiana. “Make no mistake, it is fundamentally unsustainable to continue spending $10 billion a month on a massive military operation with no end in sight.”

While Kerry was talking about Afghanistan, his comments conveyed a broader, deeper impulse for the United States to reduce its global military overstretch and to trim its overseas commitments to fit its more modest economic means—a cutback that would provide resources for many programs badly needed by average Americans.

IN ARNOLD TOYNBEE’S ANALYSIS
of the rise and fall of human civilizations, we Americans fall among those, like ancient Greece and Rome, whose most dangerous challenge comes from within—from the rifts and schisms that we have allowed to develop within our economy and our body politic in the decades since the peak of our power and prosperity from the 1940s to the 1970s.

The new global economy makes it tempting for Americans to blame China or India or the irresistible sweep of technology and globalization for causing the dangerous divide that imperils America today. But in fact, we Americans have done it to ourselves. We could have protected our country better and provided for our people better by pursuing different strategies and policies that minimized our economic erosion, our glaring financial inequalities, and the weakening of our industrial strength. But we decided to pursue a market strategy and to go our separate ways, and in doing so, we have stretched our social fabric close to the breaking point.

The challenge now is to find our way back to common ground, to rise above the economics of selfishness and the politics of partisan advantage and revenge, and to reknit the bonds of a people committed to building a strong common destiny.

A powerful response must come from all of us. At the commanding heights of business and government, we need to restore the economics of shared prosperity. At the pinnacle of wealth, we need a revived ethic of social responsibility. At the grass roots, we need a renaissance in the politics of citizen action to restore and reclaim the American Dream.

FOR THREE DECADES
, we have pursued the laissez-faire economics of lower taxes, less regulation, and trust in the market to lift all boats, and we have seen the dangerous schisms this has created. Just in the past two years, there has been
a dramatic increase in people’s sense of a class division and a sharp class conflict in America.

To reverse that trend, to heal our schisms, to restore our sense of community, and to rejuvenate our competitive economic strength, we need a new direction and a new agenda—a new political and economic response, in Toynbee’s terms. Changing America’s direction will not be easy. It will happen only if there is a populist surge demanding it, a peaceful political revolution at the grass roots, like the mass movements of the 1960s and 1970s.

In the economy, we need to get the virtuous circle working once again to rebuild middle-class prosperity. That challenge requires a positive response from business—a change in the business mind-set: smart CEOs committed to rebuilding productive capacity at home in America and then sharing more of the fruits of higher productivity with average Americans through higher pay. Even if that means lower dividends for Wall Street and for wealthy shareholders in the short run, everyone will profit in the longer run from a vigorous economy where the spoils are shared more evenly.

And in the world at large, we need to step back from Imperial Overstretch that has exceeded our means and refocus our resources and our energies on regenerating America’s economic might and shared prosperity.

Many good people from different walks of life sense the need for a new direction. Some top corporate executives have joined economists and political moderates and liberals in calling for a national economic strategy that will generate an American industrial renaissance and revive America’s global competitiveness.
Advocating a comeback
for manufacturing in America is one issue that Mitt Romney, Rick Santorum, Newt Gingrich, and other contenders for the Republican presidential nomination shared with President Obama.

One group of top corporate executives, the Horizon Project, advocates
a domestic Marshall Plan, evoking the generous American aid that put Western Europe back on its feet after World War II by financing reconstruction of its infrastructure and its war-ravaged industry. In other words, a massive collective effort—a public-private partnership sparked at the outset by government initiatives and investments.

“
Job creation must be the number one objective of state economic policy,” declares former Intel CEO Andy Grove. “The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal.”

It’s a mistake, says Grove, for America to count on individual companies, even big ones like Intel, to meet the job and growth needs of the nation without government policies that stimulate them to do so. “Each company, ruggedly individualistic, does its best to expand efficiently and improve its own profitability,” says Grove, who ran Intel from 1987 to 1998. “However, our pursuit of our individual businesses, which often involves transferring manufacturing and a great deal of engineering out of the country, has hindered our ability to bring innovations to scale at home. Without scaling [mass production], we don’t just lose jobs—we lose our hold on new technologies…. [We] damage our capacity to innovate.”

Business organizations, such as the Alliance for American Manufacturing and the U.S. Business and Industry Council, as well as organized labor, endorse Grove’s thinking. So do many economists.

New York University’s Michael Spence, a Nobel laureate in economics, explains their logic.
Spence has documented how global competition has stunted the growth of the “tradable” sectors of the U.S. economy—the industries that make cars or cellphones or energy equipment and that are directly exposed to foreign competition. Their poor performance, Spence explains, has left nearly 98 percent of America’s job growth since 1980 to the lower-paid health care,
service, and public sectors, the so-called nontradable sectors where work has to be done locally. These domestic-oriented sectors have generated 26.7 million of the 27.3 million new jobs in the United States from 1980 to 2008. But those sectors face dim prospects for future growth, Spence asserts, and so
America needs “to devote public funding to developing infrastructure and the technological base of the U.S. economy with the specific goal of restoring competitiveness and expanding employment in the tradable sector.”