By Fareed Zakaria, CNN
This time of year, Americans are meant to be thankful. However, no one is feeling particularly grateful because we're in a deep funk. The United States seems to have stopped working. Discussion of dysfunction and decline now dominate the national conversation.
So, I thought I would try to bring a note of optimism to the Thanksgiving table. Every time I turn on the TV, I hear some politician talk about how Europe's woes should be a warning and that America is next. This is a fundamental mistake. The United States is not Greece.
Countries like Greece and even Italy have a deep economic problem. They don't produce enough goods and services that the world wants at attractive prices. It's a competitiveness problem.
Greece also has a long history of borrowing too much and being unable to pay its debts. Over the past 179 years, it has been in default about 50% of the time. Its debts are huge and could not be paid under any plausible scenario. And crucially, because it is part of the euro zone, Greece does not have control over its currency, which means it cannot make its goods cheaper on world markets.
Italy, which is in much better fundamental shape than Greece, would face no short-term crisis if it had kept the lira. It could devalue its currency and make itself more competitive overnight.
The U.S. by contrast, has control over its currency, which is the reserve currency of the world.
Ok, but what about Japan? Isn't America looking a lot like Japan with its lost decade (actually two decades)?
At a recent debate, former U.S. Treasury Secretary Larry Summers pointed out that Japan's collapse in the 1990s was vastly greater than America's. Housing prices there dropped not by a third but by 75%. The stock market fell about the same. The Dow Jones would have to be at 2,600 to hit the equivalent low. And the GDP output gap was not 5% or 6% as it is in America but almost 50%!
Japan has a complex economy with many sclerotic elements and - perhaps crucially - a demographic decline that it could not solve, unless it took in immigrants, which it did not want to do.
The U.S., by contrast, remains one of the world's most competitive economies. It is home to the leading companies in the most advanced industries, houses the largest capital markets and continues to spawn new companies and, indeed, whole new industries. It exports everything from aircraft to entertainment to healthcare products around the world.
Its demographics are strikingly healthy: It will be the only rich country in the world to actually increase its population over the next 30 years - which means more young workers, producers, entrepreneurs and taxpayers.
America's problems are not economic, demographic or technological. They are political. Simple policy measures can change our fate.
If we built out our infrastructure, kept monetary policy pro-growth and reformed our tax code to encourage business investment, we would have growth, a manageable deficit and a bright future.
So be thankful, Americans, that we live in a great country. And call your Congress member to tell him or her to stop stalling and start actually doing something.
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