Struggling to Compete

Stephen Roach (h/t Mark Thoma):

The other 30% is also emblematic of a deeper strategic issue that America faces – a profound competitive challenge. A shift to external demand is not there for the asking. It must be earned by hard work, sheer determination, and a long overdue competitive revival.

On that front, too, America has been falling behind. According to the World Economic Forum’s Global Competitiveness Index, the US slipped to fifth place in 2011-2012, from fourth place the previous year, continuing a general downward trend evident since 2005.

The erosion is traceable to several factors, including deficiencies in primary and secondary education as well as poor macroeconomic management. But the US also has disturbingly low rankings in the quality of its infrastructure (#24), technology availability and absorption (#18), and the sophistication and breadth of its supply-chain production processes (#14).

Improvement on all counts is vital for America’s competitive revival. But meeting the challenge will require vigorous growth from America’s other 30% – especially private capital spending. With the American consumer likely to remain on ice, the same 30% must also continue to shoulder the burden of a sluggish economic recovery.

We've been blowing money by blowing up other places, not reinvesting in our own nation.  No wonder we're getting our asses kicked. To buy into the idea that because we are the United States we are better than everybody else is obviously a farce.  But that fact won't win a politician many red state votes.