Transcript kenned~6

Preparing For the 21st Century
Chapter 13:
The American Dilemma
Chris Calagis, Eric Elliott, Jay Mathias,
Mike Maulone and Serge Svarovsky
The American Dilemma
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There has been much debate over America’s future
Conservatives emphasize achievements
 Winning
the Cold War
 Success of Capitalism
The American Dilemma
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Liberals have a more pessimistic view
 Social
and educational decay
 Decline of middle-class standard of living
 Erosion of economic leadership
 Large military presence abroad
The American Century
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The 20th Century was named “The American
Century” by Henry Luce
 This
expression contained enormous psychological
and cultural power
 Became a source of pride for Americans
United States Armed Forces

The U.S. military is the strongest and most
influential force in the world
 Not
the largest military in the world
 High technology weapons
 Versatility of location

The World’s Policeman
 How
do other countries feel about this?
 Is this important for the world?
Military Spending
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Does military spending hurt the U.S. economy?
 $300
billion dollars spent on national defense every
year - 65% of R&D dollars allocated to defense
compared to 0.5% for environmental protection and
0.2% for industrial development
 Other countries such as Japan and Germany allocate
almost 50% of government monies directly into
their economy
–
RESULT: These countries have made significant gains to
catch up with the US economy
Military Spending
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Diverts other resources away from non-military
production:
 capital,
personnel, materials, skilled labor,
engineers, and scientists

However defense spending can stimulate the
economy
 example:
WW II
post-war economic trends, such as after
U.S. Growth Rates

Steadily declining over the past 50 years
 Kennedy
blames military spending and diversion of
other resources

However, these statements have been proven to be
untrue
 Economic
the book
growth has increased since the release of
Labor Productivity

U.S. has been the world’s labor productivity leader
since the 19th century
 Allowed
for huge war production in both World
Wars
 Still the global leader in productivity but by a much
smaller margin than in the past
 Other countries (Germany and Japan) have
increased productivity at a faster pace than the U.S.
Labor Productivity

Consequences of lower labor productivity:
 growing
indebtedness
 frailty of financial system
 deficits in trade balances
Debt
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Occurs at different levels:
 national
government
 state and local government
 consumer
 corporate
Debt
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The national debt originally arose from the refusal
of lawmakers to raise taxes in order to cover
spending increases in the 1960s
The debt skyrocketed during the Cold War under
Reagan in the 1980s
Debt is now over $5.5 trillion
Each Americans share of the debt is approx. $21k
15% of government spending goes to pay interest
on debt
Debt
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State and local government debts increased in the
1980s when federal grants were cut
Consumer debt has continually increased due to
easier credit
Corporate debt was so high at one point that 90%
of after-tax income was going to pay interest on
borrowed money
Trade Deficit
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Arises from importing more than you export
U.S. had its first trade deficit in 1971
Trade deficit neared $200 billion in 1987
Now stays around $100 billion
Trade Deficit
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Deficit led to a battle over tariffs
Some favored protectionary tariffs on imported
goods
Others were fearful of a tariff backlash by other
countries
Out of this debate came trade agreements
 NAFTA and
GATT
Why worry?
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Even with high lower productivity, high debt and a
trade deficit, U.S. is still #1
Many think that these declines are natural
 U.S.
was simply so far ahead after WWII that it took
a while for other countries to catch up
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Others believe that this trend spells trouble
 borrowing
to pay interest, huge foreign investments,
and reliance on foreign capital could erode
American sovereignty
What to do?
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No matter what you may think, things have
changed
The business world is now enmeshed in a global
marketplace
Leaders of countries and companies must realize
this and react accordingly
U.S. can stay #1 by thinking globally and reacting
to the changing world
Being Debated in America
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Health-care
Drugs and Violence
Political Culture and Taxes
Education
Where we are headed?
In the words of John Chancellor
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“We have weakened ourselves in the way we
practice our politics, manage our businesses, teach
our children, succor our poor, care for our elders,
save our money, protect our environment, and run
our government.”
Health Care in Jeopardy
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1980’s health care workers doubled
37 million lack health care
U.S. has highest infant mortality rate among
developed countries
Drugs and Violence
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U.S. makes up 4-5% of world population but
consumes 50% of world’s cocaine
Highest crime rate in world
180 million handguns and rifles
19,000 killed/year by weapons
Homicide rates 4-5 times higher than Europe
Rape crimes 7 times higher
Social and Political Dilemma
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Americans hate taxes
 Politically
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unpopular
Some European countries’ taxes account for:
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college tuition
health care
public transportation
Education Strong Points
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1989 U.S. spent $350 billion on public and private
education
Best Collegiate system in world
Caters to scientists (nobel prize winners)
Every American has Education privileges
Education Weak Points
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1960 to present - SAT scores decreasing
1/5 of all high school pupils drop out
1/2 of inner city kids drop out
About 25 million Americans illiterate
K-12 pupils behind Japan, S. Korea and Europe
(nearly last in math)
75% can not locate Persian Gulf on map
Education System (cont)
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American schools 175-180 days/year
W. Europe schools 200 + days/year
Japan school 220 + days/year
By age 18 - S. Korea and Japan children have 3
more years of education
American Children’s Priorities
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5,000 hours of TV watched before entering grade
school
20,000 hours by graduation
 Why???
 Babysitter
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U.S. kids learning value system and moral
standards from TV
Americans Want Change to:
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Tax system
Schools
Health Care
Poverty
Crime
Politics
Will America Persevere?
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John Chancellor wrote that the U.S. needs a peace
time Pearl Harbor to invigorate Americans to work
- wake up and realize our troubles
How well prepared is the U.S. for the 21st
Century?

Population forecast
 steady

growth in terms of age and ethnicity
Figures
 1960:
16.5 million Americans were age 65+
 1990: 31 million Americans were age 65+
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Forecast
 2020:
52 million Americans will be age 65+
 2030: 65.5 million Americans will be age 65+
By Early 21st Century, the elderly will
outnumber children in the U.S.
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Retirees’ Organization
Division of Resources
Social Security Funds
Unpleasant Choices
 Slash
provisions
 Other spending
 Increase taxes upon younger Americans
Ethnic composition will change in the
21st century
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Large scale immigration
 legal
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and illegal
Differentiation in birth rates
 ethnic
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groups will have higher rates
Views both negative and positive
 immigrants
have fueled country in the past
 low educational and skill levels
 congregate in inner cities
 additional demands on U.S.
THE WORK FORCE
A WIDENING IN THE GAP
BETWEEN THE SKILLED AND
UNSKILLED WORKERS
This spreading started in the 1970’s
and will continue into the 21st century
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Loss of skilled and relatively high paying blue
collar jobs
Growth in white collar, technical jobs
 advanced
training
 higher education
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By the end of this century, 52% of new jobs will
require some college education
Kennedy’s forecast and possible
solutions
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White males will constitute only 15% in the labor
force
Mismatch between education levels and the
forecast demand for jobs requiring advanced
education
Kennedy’s suggested solutions:
 Set
up a national scheme
 Use the states to have chief contact with population
American Agriculture
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Newer global forces
 Biotechnology
 Global
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warming
Conglomerates to replace traditional farmers
 Pharmaceutical
firms
 Agrochemical firms
U.S. is leader in agricultural output
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Improved technology
Abundance of crops
Foreign market
Subsidization by government
Biotechnology
 artificial
sweeteners
 bovine growth hormone
Impacts of Biotechnology on the
Agricultural Sector (cont)
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Small farms
 mere 10% will be able to adopt biotechnology
 diversified income lessens the impact
Moderate-sized farms
 40% will adopt biotechnology
 will continue to shrink and go out of business
Large farms
 70% will adopt biotechnology
 will grow in size and efficiency: by the year 2000,
50,000 of them will be producing 3/4 of all output
* US Office of Technology Assessment data
Possible Effects of Global Warming
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Depletion of water supplies in southern Great Plains
Northward movement of crop growing regions
Northward forest migration
 threat to the wildlife
Coastal shoreline retreat
 MA will loose 3,000-10,000 acres by 2025
 in SC-NJ shoreline losses will be even greater
Environmental changes outside national boundaries
U.S. May Not Be a “Loser” But It Could Be
Less Than a Clear “Winner”
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Altering demographic pattern
 graying/browning
Environmental problems
Educational and social deficits
Political-constitutional gridlock
Fiscal problems
 National debt
 Consumer debt, etc..
Trade deficit
Nature of American Society Discourages
Any National “Plan”

Tradition of American free enterprise and its
cultural heritage:
 Differentiation
 Decentralization
 Individualism
 Dislike of organized central government

“Muddling through” rather than centralized attack
upon the problems will result
20th Century United States vs. 19th
Century Great Britain
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Both were preemptive world powers
In both countries:
 economic
competitiveness and international
position were less assured at century’s end than
50 years earlier
 alarmed citizens called for changes to improve
national competitiveness
 proposed reforms threatened “coziness” of
established lifestyles
United States today faces the same dilemma
Great Britain faced 100 years ago
To “muddle through” or not to “muddle
through”?
Resistance to “Great Changes”
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National traditions has to be amended in imitation
of foreign ones
Involve costs and redistribution of national
resources
Upset powerful vested interests
–
–
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spending priorities
educational system
patterns of career choice, etc. etc..
Price Paid for “Muddling Through”
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Slow but steady relative decline in
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Living standards
Educational levels
Social provisions
Industrial leadership
Ultimately - loss of national power
United States Cannot Win Without
Becoming a Different Kind of Country
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Serious program of reforms must be undertaken
These reforms might be catalyzed by:
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financial crash
broadly perceived external threat
act of war
other cataclysmic events
Reforms will require leadership very different from any
previous White House administrations
THE END