March 4th, 2011
04:25 PM ET

How to get America's groove back – Q&A with Zakaria

New powers are rising, and if America wants to maintain its economic competitive edge, it needs to make major changes – fast.  But does America have the political will to act? Are Americans willing to sacrifice short-term consumption for long-term investment?

On Sunday night, Fareed Zakaria GPS aired a one-hour special on “Restoring the American Dream,” with scholars Niall Ferguson, Jeffrey Sachs, Dambisa Moyo and Joseph Nye (who will be taking your questions online this week).

I asked Fareed about the U.S. budget and America's future if we don't change course. Check out the interview below, and see Fareed’s cover story in Time Magazine.

Bakshi: Is today’s budget battle on Capitol Hill addressing real issues?

Zakaria: I think the budget battle is incredibly disheartening because what we’re talking about is trivial. We are talking about cutting the budget but not actually dealing with any of the major programs that are going to be the big drivers of cost – Medicare, Medicaid, Social Security. Meanwhile, we’re cutting everything else – all discretionary spending, which is infrastructure, education, air traffic control, NASA, scientific research.

So if you think about it, what we’re doing as a country is continuing to subsidize consumption – which is pensions, healthcare, all of these kinds of things – and we’re doing it not just in the budget but through very low interest rates.  We’re continuing to subsidize consumption while we’re starving investment.

This is exactly the opposite of what produces long-term growth. There is very strong historical data that suggests the way societies grow is by making large, long-term investments. That’s how China is growing today. That’s how we grew for most of our history. That’s how Germany is growing today.

It feels like in Washington, for political reasons, the only thing that people can agree on is to cut the investment part of the budget and no one dares touch the consumption part of the budget. The net effect is that we’re subsidizing consumption and starving investment, which is a recipe for failure.

Bakshi: What do you think it would take to change the political dynamics that are leading to this?

Zakaria: Probably, it would take a crisis. And I say that but I sometimes think to myself, “Wait a minute, we had a crisis; we had the greatest financial crisis since the Great Depression!” And somehow it didn’t wake us up. In fact it resulted in a good set of emergency measures taken by both the Bush and Obama Administrations and I applaud them for it, but it didn’t make anyone stop and say, “Wait a minute, what are the underlying causes of this crisis and how do we make sure that we’re not on that trajectory again?”

The underlying causes of the crisis are cheap money, too much spending, too much borrowing, and too little investment. We haven’t solved any of those problems. We’ve done the emergency Band-Aid to the banks, which is fine – I agree with it, I think we had to do it – but nobody is sitting there trying to figure out, “OK, how do we make sure in the next 20 years we have a very different growth trajectory.

Bakshi: If the situation stays the same – if America doesn’t make significant changes – what lies ahead in 5 to 10 years for the U.S.?

Zakaria: I think it would be a period of very slow growth, very slow employment growth. I don’t want to paint a picture of total gloom and doom. The United States is going to be a rich country, it is going to be prosperous, but it is not going to be able to take the lead in the next phase of global economic development.

Look at what happened to Japan. Look at what happened to Britain in the 1950s. You can be a very rich country, very prosperous, very advanced, but if you get off the groove, it becomes very difficult to come back sometimes.

Bakshi: It’s not the Titanic dropping to the bottom of the ocean – it’d be a slow decline?

Zakaria: It’d be a slow decline.  We will be a very rich country. We will continue to thrive. There will be pockets of incredible excellence. One of the great dilemmas for America will be that American companies will do very well while American workers might not.

There will be a class of Americans – the globalized, “knowledge workers”, if you want to call them that – who will do very well. But the average American will face very, very significant pressures because the work he or she does is not going to be competitive in this new world, and we are not making the investments we need to to help make it competitive. We’re not upgrading the educational system. We’re not upgrading the infrastructure. We’re not upgrading all the areas where you can take that American worker and make him or her super-competitive and super-productive.

For more from Fareed, check out his cover story in Time Magazine.


soundoff (527 Responses)
  1. joe

    maybe Zakaria the global loving idiot should look at some graphs comparing America to the rest of the world.. EVERY country in the world would LOVE to trade places with the USA.. go figure that into your analysis...

    March 7, 2011 at 1:27 am | Reply
    • stan fowler

      joe – please look again the graphic showed where we were and whwere we will be – I hoe we can find a way to change the trend for the sack of our chikdren and even you joe

      March 7, 2011 at 4:32 am | Reply
  2. g3utrb

    oh no i missed the episode.... yes all too true, the times they are a changing. very sad o see the us go from being the leader in so many industries to being virtually non-existent in them....the us govt still valiantly fights a war by beefing up its defense budget (1.4 trillion for 2011) but is too blind to see that the real war is on the economic and educational front....the govt can still resurrect lost industries in the us ... but for that hard choices must be seen – and – chosen and the commonality of purpose and national spirit that drives other nations like china, japan, even india must exist in the us as well..when things become hard every nation and people 'wake up'...when will the us 'wake up'.... i worked overseas in singapore for a year and they are way ahead of the us in high tech jobs, education, public services, construction, infrastructure, etc...etc....

    March 7, 2011 at 1:29 am | Reply
  3. Steve Carter

    America grew from selling the world cotton,tobacco,and oil in the twentyith century. China is growing in middle class from selling the world everything we use as consumers. It's amazing how we as Americans fail to see how the descendants of those cotton,tobacco,and oil barrens are so successfully dividing the lover social economic class. As long as we are casting blame on one another. We will fail to realize that our incomes,and standard of living is stagnated over the past three decades. While they continue to grow expidentialy. Thank god I'm a union member. I can see the doctor and still eat.

    March 7, 2011 at 1:34 am | Reply
  4. Alfred H

    Coming on I'm pretty sure some of ya'll have skills. Why don't ya'll take those skills that you have and used them wisely that will get you where you need to go. I agree with what Mr Zakaria said take those skills and use them. Might as well start speaking Mandarin cause 5 to 10 years down the road or more than that China will be ranked as number #1 as a super power country. My word is starting speaking Chinese cause ya'll just gonna feel stupid if ya'll don't speak there language if your doing business with them. That was I'm proud to be a Chinese Asian American and speaking there language. Wake up all of ya'll and stop depending the federal government for so much support step ya'll game up coming on.

    March 7, 2011 at 1:44 am | Reply
  5. Shell Hari

    Fareed, I want to use this medium to thank you for the important role you play in the lives of Americans and many around the world. Unlike many analysts on various media networks in the U.S., you show through your questioning and responses that your level of thoughtfulness, your "literacy" (i.e. you did not just earn a degree but clearly understand why you pursued that degree), and worldview are constantly evaluated to ensure that what you say is indicative of the conclusions you reach or what you come to believe. This was evident in your response to John King last week, when you told him what you thought about the administration's present stance on the Libyan crisis. I do hope your show lives on into eternity. I do hope you begin to breed new minds who will one day replace you and continue to up the bar you are setting. You will remain in my heart as in many, one of the finest intellectual figures of our time. I am rooting for you!

    March 7, 2011 at 1:46 am | Reply
  6. TOM

    This has moved beyond being in the purview of elections. Elections were meant to give people a choice. Our only choice has become vote for candidate "a" that is controlled by special interests or candidate "b" that is controlled by special interests–usually the SAME special interest.
    The founders knew that the voting system could become ineffective. That is why the Constitution guarantees the right to Assemble, to petition–to become actively involved.........Ironic that the founders feared the "democratic mob", but then wrote the Constitution such that the "democratic mob", through Assembly and petition, would be a counterbalance to the powerful–were they to get out of control.
    So now we must demonstrate the highest form of democracy–take to the streets in huge numbers and make sure we are heard.

    March 7, 2011 at 3:02 am | Reply
  7. Scott R.

    Lot's of good ideas here but the real cause is entirely missed. The real cause is that we have turned our backs on the God of this land who is Jesus Christ. Selfishness and greed are prevalent throughout this once great country. If we would once again lead this world then we had best turn back to those values that we all know very well ie hard work, honesty, integrity, morality, charity and faith. Without these, we will continue down this path and will eventually self destruct. It's started already. All the really great things we once had can be ours again, but we must pay the price and right now we just aren't willing to do that.

    March 7, 2011 at 8:55 am | Reply
  8. Jeff Block

    What would the political system be, if it were designed for the 21st century? -–The goal is “efficient and effective government FOR the people.”

    here is my answer – what is yours?

    http://www.JeffBlock2012.com

    WHAT IF voters could VOTE on a revolution? What would that look like?

    March 7, 2011 at 10:44 am | Reply
    • mbsoho

      I agree with your statement, but modify it slightly to read ">>>> FOR the American people". We need a government that is primarily concerned with the welfare and well being of our own people first and foremost. Once we have those items fixed, then maybe we can start to worry about interfering in the lives of the rest of the world. Maybe we can expand our horizons just slightly to include Canada and Mexico as American people. That will preserve the oil interests and also allow us to work towards an equitable solution to the immigration situation. With healthy economies from Canada down through Mexico, we can put ourselves in the position of being rightfully able to influence the rest of the world.

      March 7, 2011 at 11:05 am | Reply
  9. Andrew

    Thank you Fareed for your excellent show

    my take on America

    The most important thing is the power to vote.

    Politicians need to create lasting political legacies that provide true honest framework for continuing capitalism with proper regulations that co-create jobs and combats the cancerous growth of corruption.

    My solution to politicians

    1.Make into law that the 'voting day' is a national day off ( like MLK or presidents day) – Give the power of the vote a chance to flourish. The data recovered from a national day of voting would turn the panties of pro-pollsters into Gordian knots for decades.
    2.Make into law truth in political advertising – just as commercial consumers have rights to prevent bait and switch tactics, so should political commercials be fact checked and have the nature of the truth unobstructed by false or leading statistics studies. Let politics be politics.
    3.Regulate the false or corrupted statistics produced by every political advertizing organizations. (84% of all Americans agree with my invisible friends) show the methods of data analysis and how the advertiser came to statistical conclusions about X (34% of Americans wearing plaid socks on Wednesdays.)

    March 7, 2011 at 11:49 am | Reply
  10. Jon

    America's GDP is still over double that of China, and we remain the only military superpower in world that can send troops literally to any place in the world in under 24 hours. America's relative power may have declined in the last few years but the US is not going anywhere.

    March 7, 2011 at 4:07 pm | Reply
  11. Robert

    Dear Zakaria
    I’ve spent 1/3 of my life living and working in one of the mentioned advanced western European countries that has been methodically closing the health/ wealth gap with the United States. I also study city building as a profession and I was shocked by Mr. Zakaria’s comment concerning the lack of German innovation (something about- with the exception of SAP) in terms of soft ware applications.
    We are basing our innovative future (or at the least giving it the lions share of media time) on what looks to me like an ever improved smart TV/telephone/computer that you can hold in your hand. Incredible artificial monetary values are assigned to the devices and their software based on the long term wealth created by the potential of advertising. I agree the device is certainly handy and represents the future; it would be even more wonderful if we could make it in the US.
    Which brings me back to the real issues, the question of software versus hardware, its true Germany hasn’t produced a lot of competition for our unique social network soft ware, suffice to say they have built a innovative and dynamic and nearly sustainable industrial system where the population is educated for future manufacturing, the engineers design not only the highest quality infrastructure but the equipment and software required to build that infrastructure. And the local communities benefit because they have access to employment and advanced products. This comprehensive approach has intern created international markets for their products and processes, helping us all.
    If you were to value their transportation and educational/industrial systems their highly efficient settlement patterns and the wonderful quality of life created by these integrated systems, the number would be astronomical. This is where they invest supporting what I would call a first class cultural infrastructure. It is nice to be able to know your friend is having dinner in a restaurant near you or the particular dog food you want is around the corner but it is infinitely more wonderful to know that the way you travel there and the building your dining in is sustainable and all of the other patrons are game fully employed producing both the fun software of life and the other 90% of the real hardware of life.
    I have the highest regard for Mr. Zakaria’s analysis and presentation and hope that future broadcast will begin to show that real and substantial innovation has to be in support of this 90%.

    March 7, 2011 at 4:19 pm | Reply
  12. Not when it's this corrupted...not possible.

    We would have to remove and shut down the Jewish Criminal Network. (not all jewish people, just the criminal types and get the ones that aren't good for this country out of here) The jewish crime network has our military killing 90% civilians in Afghanistan. watch 911missinglinks.com. it will tell you who/what the Jewish Crime Network is. then google video search for War Made Easy. HOW PRESIDENTS & PUNDITS KEEP SPINNING US TO DEATH, and Why We Fight, and The Corporation. (also at Netflix); then go to mitworld video and watch Israel Lobby and U.S. Foreign Policy. They have infiltrated our government at top positions and are using our military to protect their interests (not ours). This country needs help from other countries. There must have been a hostile takeover from within (around Kennedy time?) where dual citizenship Israeli's infiltrated top positions in the U.S. and are now using our military to protect Israel, with no concern whatsoever for the citizens of the United States. Thank you for any help you can provide to get these criminals out of our government.

    March 7, 2011 at 6:17 pm | Reply
  13. Sharon

    America is weak due to weak leadership! Some of the questions and answers listed above stated that the cut backs didn't involve Medicare-Medicare-Social Security. What has made America different from ALL THIRD WORLD COUNTRIES-WE CARE ABOUT LIFE–QUALITY OF LIFE–and that is first and foremost in the minds of strong leaders.

    When you think about all the monies being paid out to some Arab world–the cost of the Afghanistan andd Iraq- is draining monies from keeping Americans alive and being. When QUADFI Lybia leader was allowed back into the USA for the first time since Reagan voided his visa–and under Obama Administration–Quadfi in 2009–was allowed a visa for Quadfi to speak at the United Nations! After speaking at the UNITED NATIONS–Quadfi traveled to the headquarters of the Nation of Islam! Spoke with Louis Farrakhan. Quadfi donated millions to build the headquarters for the Nation of Islam. After the cordial visit and before Quadfi left the USA–OBAMA GAVE HIM $400,000 to go to Quadfi's childrens charity. Now to turn on a Arab leader who has done so much for the Nation of Islam–is one of the biggest SIN a MUSLIM can do-

    If America would stop throwing money around until we are #1 again-and once again earn respect among other countries–WE NEED A LEADER WHO WANTS AMERICA TO BE #1!

    March 7, 2011 at 6:48 pm | Reply
  14. Brian Healy

    Just wanted to say that this was one of the best segments I have ever seen on CNN. Excellent job as usual Fareed!

    March 7, 2011 at 11:50 pm | Reply
  15. Steve Oakes

    Mr. Zakaria,

    It seems like every time I turn on CNN you are focusing on what is wrong with America and how we are losing our Number 1 status in the world in many areas. I wish you were not on the air anymore. Why don't you quit the news and go start an anti-US non-profit organization and then you can spew all you want. I am tired of hearing your anti- American slant on CNN and I am pissed that CNN allows him to keep doing it. Get rid of him or you have lost another viewer.

    March 8, 2011 at 6:18 am | Reply
    • NeptuneRex

      Oh, I see, CNN should not report facts or recent events, only....what? Wait, yea just the "change you can count on" right?

      March 8, 2011 at 7:57 am | Reply
  16. larry kukoc

    Zakaria is no different than any other muslim. In his sofisticated way he tries to screw USA and help muslim cause. Go deep in to his roots. I will never trust this guy. America be careful

    March 8, 2011 at 8:02 am | Reply
    • Dania B

      What is your age, education and religion if I may ask?

      March 9, 2011 at 7:00 pm | Reply
  17. larry kukoc

    I have watched Farid for many years. He is mouth piece for muslims.

    March 8, 2011 at 8:04 am | Reply
  18. Soulcatcher

    I don't usually agree with Fareed but he is spot on in only his initial points on cutting back on investments and encouraging consumption. What he fails to follow is that consumption itself is an exponential multiplier in a modern economy. We are bypassing indirect investments to our future (I'd call this technology level/industrialization level) and directly pumping it into incentives for people to spend. For states relying on sales and use tax this is great, but it will bust older models of states which tax income and real estate. If is another pass-off from the older generations to the younger as older generations live in states that have high sales taxes and low income and real estate taxes.

    What he is talking about is akin to how highly successful businesses run their operations. They tie money/budgets to results/outcomes.

    March 8, 2011 at 9:16 am | Reply
  19. Rick McDaniel

    Our government sold out the people of this country, by allowing Corporate America to take the easy way out, for them, and ship all of our manufacturing to China, or elsewhere.

    The backbone of this country was in manufacturing. We made it better than other countries. Now there's nothing to make, and we are also reduced to buying shoddy products made in China, many of which, contain toxic substances.

    I hold our government responsible, because they did nothing to prevent the wholesaling of America to China. Nothing.

    Until that process is reversed, there is little hope for a return to prominence in the world, and indeed, with Obama in charge, we are borrowing money to give away to other countries, trying to buy our friends. What stupidity!

    March 8, 2011 at 9:27 am | Reply
  20. James Smith João Pessoa, Brazil

    Why does America have to be #1 in everything? That idea is basically not only wrong, but is what drives the USA to spend themselves into the hole that they are still digging.

    Every society seems to have had their place in the sun at one time. The Greeks, Romans, Arabs, Egyptians, English, French, they have all, at one time, been the center of learning, culture, and power in the world. The USA has had its turn. Now it will be the Chinese and the South Americans, perhaps. Get over it, USA, your turn has come and you threw it away.

    March 8, 2011 at 9:39 am | Reply
  21. Outsideobserver

    Fareed's article is very interesting and inciteful. From a non-US citizen's perspective, the US appears to have peaked with the collapse of the Soviet Union in 1989 and entered "decline" after 9/11 in 2001. Although 9/11 was a terrible event, the USA's high cost, military response has been ineffective and is bankrupting the country. As recent events in N. Africa and the Middle East have shown us, the root causes of instability and extremism are large numbers of unemployed, often well educated young men between the ages of 18 and 35 in dictatorial societies that offer little hope for the future. The money spent on attempting a military solution would have been better spent on bringing these people into the 21st century. As Abraham Lincoln wisely stated, the best way to overcome your enemies is to befriend them.

    March 8, 2011 at 10:11 am | Reply
  22. Danka Baudis

    I almost stopped watching GPS after seeing Paul Walfovitz on the previous show. Why Fareed invites people like that who were wrong almost about everything they ever spoke about.
    I decided to give it another chance and watched the special on getting America back on track. It was very informative and interesting but one statistic I did not understand at all – elementary school enrollment at something like 76% ?
    Can someone please explain? How is it calculated, what does it mean?
    Thank you

    Danka

    March 9, 2011 at 6:56 pm | Reply
  23. European living in the US

    The Ugly, Bad and definitelyGood

    I believe that the majority of Americans (regardless Democrats or Republicans) know that the government is not addressing the key areas (especially in the consumption area) to the extent it should/must in order to start positively impacting the debt ratio.

    The Ugly:The majority of the politicians behave like herd-like juveniles having sworn allegiance to their respective teams and the price "The next Presidency".The common objective is lost : reaching the inflection point to start making America healthy again.

    The Bad: Politicians are not only supposed to represent the needs of their constituents but they do also have the obligation to translate and educate their constituents on the policies in the pipe-line. Is it so bad to have a good idea come from a republican or a democrat? How come when an idea is popular both sides want to take credit and hours of speeches by politicians, interviews with the media fill our tv screens. Let those people work and only twice a month have interviews scheduled.... When it comes to politics suddenly the notion of common sense and perspective does not exitst.

    The Good: FINALLY the United States does not see itself (and takes on the responsibility) of being the MORAL COMPASS of the world. Regarding Libya: The President's stance on following the United Nations decision is phenomenal. The benefits simplified: the outside world is looking more favorable towards the US. More importantly nationally: the money saved by not immediately intervening in a foreign country can be used for re-engineering the US – education, health, employment etc.

    I also believe that the majority of politicians want the best for the US – without doubt, however the way they are trying to achieve this is at times puzzling.

    March 17, 2011 at 12:09 pm | Reply
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