They Have Spoken

Two recent articles, in Foreign Affairs and HBR, feature the views of two Harvard professors about the road ahead.  I commented on each one of them, and conclude here that the kind of intellectual leadership that has brought us where we are, through 2008, is alive and well.  Have a look for yourself, and draw your own conclusions!

The Future of American Power
Dominance and Decline in Perspective
Joseph S. Nye Jr.
Summary: It is currently fashionable to predict a decline in the United States' power. But the United States is not in absolute decline, and in relative terms, there is a reasonable probability that it will remain more powerful than any other state in the coming decades.
JOSEPH S. NYE, JR., is University Distinguished Service Professor at Harvard University. Parts of this essay are drawn from his forthcoming book, The Future of Power (PublicAffairs, 2011).

Yes, our perceptions about the future have gone up and down through our history, yet people's lives went also up and down unless they counted themselves among the lucky/Ivied. Each time our common fortune went up, it followed some long period of pain and was the result of some major transformation.

Professor Nye doesn't say a word about the type of transformation ahead. He talks generalities and quotes selectively in support of his argument. For example, he counts us as leaders in biosciences, but then why doesn't he look at the flip-side, to the requirement for this? A lousy and expensive medical system whose results are half as good, for twice the money, as in other developed economies. Surely, the argument could be extended to his dear universities--compare $50k to quasi-free in annual college tuition. Oh, his list of where we are #1 is almost comprehensive, for if he added military and financial innovation, the list would have been complete.

What do these observations make me think?

1) That our being #1 cannot be sustainable under status qvo, even in a reduced number of areas. Indeed, for example, an overburdened and socially under-performing medical system cannot be counted on to keep going forever.  The author's prescriptions amount to folklore. 
2) That Professor Nye may be, well, a bit out of touch. I guess, they don't call some the Boston Brahmin for nothing...

No, China won't go up and higher forever; Yet, a question lost on the author is, How big China's economy needs to be to turn it into a challenger? Going into GDP or per capita comparisons is not as relevant as the author makes it sound. Switzerland may get higher grades on many dimensions, yet it is hardly a menace for the US.

Nor will we reach the bottom in free fall. More likely to happen is a world choosing between our type of capitalism and state-capitalism. If we overcome the political gridlock (à la Fallows/Nye), the two types of capitalism will converge. Meanwhile, texts like this are meant to put the middle class to sleep.

The Big Idea: Creating Shared Value
by Michael E. Porter and Mark R. Kramer
The capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community.

Alas, this has been written by:

* E. Porter is the Bishop William Lawrence University Professor at Harvard University. He is a frequent contributor to Harvard Business Review and a six-time McKinsey Award winner.
* R. Kramer cofounded FSG, a global social impact consulting firm, with Professor Porter and is its managing director. He is also a senior fellow of the CSR initiative at Harvard’s Kennedy School of Government.

For the reader skeptical of my comment, let me quote from the article:

"Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking."

How many times has it been that we've heard such calls? Each time, they are similarly worded and meant to supplant government responsibility&action for a clean environment, sustainable societies and so on.

Now, allow me to state what the problem is with this: I have little control over how businesses operate, for they are subject to their institutional imperative of making short-term money. Arguably, the government is responsible to me. Do you see the problem? I can do little to nothing to influence business, I can vote every electoral cycle to keep the government honest. For those countering that we vote for business everyday with our wallet, I'd say, not anymore when you are in debt and/or the business in question is a monopoly. Moreover, if the behavioral requirement is not normative, as in a law subjecting all players to the same constraint, there will always be businesses trying to get advantage of not respecting otherwise self-generated social objectives.

So, the rule must be the same for all businesses, and the enforcer should be from the sphere of government/society, not businesses themselves.


Yes, I know, we don't do government, lest someone calls us socialist, but then why all the talk about business-this and business-that?  To pacify us while waiting for the next bubble?  If so, why not stop sucking on the damn rubber?

1 comment:

for Paul Kennedy said...

[...]a point made almost 20 years ago by the Harvard scholar Joseph Nye, that America’s strength and influence in world affairs was like a sturdy three-legged stool; that is, the nation’s unchallenged place rested upon the mutually reinforcing legs of soft power, economic power, and military power. In all three dimensions, Nye suggested, the United States was comfortably ahead of any other competitor. Global shares of relative strength were being diffused, perhaps, but in no way enough to shake America’s dominant role.

How does this assessment look today? Of the three legs to Nye’s stool, soft power—the capacity to persuade other nations to do what America would like—looks the shakiest.

As to the weakening of the second leg of the stool, America’s relative economic and foreign-currency heft, well, a person would have had to have been blind and deaf not to observe its obvious deterioration in recent years. If anything surprises me, it is how fast and how large the relative weakening has been: A truly competitive great power should not have its trade deficits widening so fast, nor its federal, state, and municipal deficits ballooning at such a pace, literally, into the trillions of dollars. It is unsustainable, although that fact has been obscured by the thousands of American economists and investment advisers who emit positive noises to their clients and who themselves simply cannot think strategically.

America’s military strengths are, by contrast, still remarkable; at least this one leg of the stool is sturdy. But how sturdy? Well, almost half of the world’s current defense expenditures come from the United States, so it is not surprising that it possesses a gigantic aircraft carrier Navy, a substantial Army and Marine Corps that can be deployed all over the globe, an ultra high-tech Air Force, and logistical and intelligence-gathering facilities that have no equal. This is the strongest leg of the three. But it is not going unchallenged, and in several regards.

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