NETWORK18 BUSINESS MAGAZINE SPECIAL
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Rebuilding Brand America, the way ahead
Published on Thu, Nov 20, 2008 at 14:09, Updated on Sat, Nov 22, 2008 at 13:22 in World section
Tags: Barack Obama, India
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The morning after still feels good. The effusive prose, breathless platitudes and grateful tears that greeted Barack Obama as he was elected the 44th President of the United States of America don’t sound worn out yet. It is unlikely they will wear out for some time. There’s a good reason: America is half-sunk in a quagmire and is looking up to him as if he’s a pole to safety.
To get a sense of how bad things are, consider the legacy Obama’s predecessor, George Bush, is leaving behind: a ravaged economy that has pushed the rest of the world into recession and a remarkably naive foreign policy agenda that has stoked wars in Iraq and Afghanistan, catalysed simmering resentment in the Middle East, and has Russia, China, and large parts of Latin America and Europe seething. Sandwiched between the two problems is the American middle class, struggling to emerge from job losses, rising bills and falling asset values.
President George Bush famously told visitors to the White House just after the 9/11 attacks, to the eternal consternation of the rest of the world: “I don’t do nuance”. He plunged America into a mud pit without a single nuance indeed.
Therefore, it is tempting to imagine a post-American world where the superpower doesn’t figure. Where the brand of capitalism it exported to the world is wrapped up in rags; where the great American corporate role models such as AIG, GM and Merrill Lynch are just historical figures; and where the world no longer benchmarks wealth and influence to the brash individuals who ran Wall Street. Remember John Thain (Merrill Lynch), Richard Fuld (Lehman Bros) and John Mack (Morgan Stanley)?
To buttress the post-American hypothesis, consider the G-20 summit currently being hosted in Washington, DC. The New York Times reports that China is the most sought after country at a gathering many observers are calling Bretton Woods II. With close to $2 trillion in reserves and the muscle to pull other economies out of the dire straits they are in, China’s popularity shouldn’t surprise anybody.
Then there is oil-rich Saudi Arabia that British PM Gordon Brown is courting to infuse funds into the International Monetary Fund. Into this explosive cocktail, add French President Nicolas Sarkozy’s aspirations to lead a European renaissance on the global stage and it would seem America has finally been pushed into a corner.
But is that the truth? Between black and white, there are shades of gray. And looking at America through a monochromatic lens perhaps underestimates both the power and the resilience of the nation.
A tough nut of a nation
Writing off America is a risky proposition. “Despite appearances, America is one of the most capable countries in the world,” says Rahul Sagar, an expert in political science at Princeton University. “It handles governance in a manner few powers in history can rival.” Facts support his assertion.
Fareed Zakaria argues in his most recent book, The Post-American World: “Its economy has received hundreds of billions of dollars in investment—a rarity in a country with much capital of its own. GDP growth has averaged 3 percent for 25 years, significantly higher than Europe. Productivity growth has been over 2.5 percent, a full percentage point more than the European average. Since 1979, it has consistently emerged on World Economic Forum reports as the most competitive economy in the world.”
At the centre of any doom theory about the US is the argument that the dollar will concede its primacy as the globe’s reserve currency. History shows that the greenback has defied oblivion for several decades now, despite the fears. In 1990, only half of the world’s foreign exchange reserves were held in dollars. Today, the number stands at 63 percent. It is indeed a big hole in any argument that the Euro or Chinese Yuan are emerging as a credible alternative to the dollar. In any case, Europe is in recession and China doesn’t believe in a fully convertible currency. Writing an obituary to the American currency, therefore, would be premature and naive.
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