U.S. Prosperity Is in Decline – WSJ Article

Here’s an article from today’s Wall Street Journal that I wrote with my CEO, Jeffrey Gedmin.

The article appears on the WSJ website at the following link: http://on.wsj.com/UcZuZz

 

U.S. Prosperity Is in Decline

The latest data on economic well-being show the biggest slide in entrepreneurship and opportunity. Businesses’ start-up costs are rising in the land of pioneers and patents. 

When asked once about the state of the Russian economy, then President Boris Yeltsin responded with one word: “Good.” When asked to expand, Yeltsin paused, and responded gruffly with two words: “Not good.” A week before going to the polls, American voters have some idea of how this feels.

Earlier this month the Obama administration received good news: U.S. unemployment seems finally to be coming down. This week, however, the news is not so good. In fresh data on economic prosperity from countries around the world, the U.S. has fallen out of the Top 10 for the first time ever. If elections were decided by data, today’s findings would spell trouble for President Obama.

The 2012 Legatum Prosperity Index captures not simply the quarterly or annual ups and downs of the national economy, but rather long-term underlying components of national prosperity. Our findings suggest that the American Dream is in jeopardy.

The first problem is well-known. America has saddled itself with crippling debt and soaring entitlement spending. Couple these with projections of low growth—and possibly even another recession—and a bleak picture emerges.

But there’s more. For three-quarters of a century, gross domestic product has been single most important framework for evaluating economic success. In recent years, though, a “beyond GDP” debate has started. An increasing number of academics and policy makers around the world have been exploring the idea that there may be a more comprehensive and meaningful way to look at national prosperity. With 142 countries currently included, the Prosperity Index aims to paint a more complete picture of global prosperity than any other tool of its kind.

How does the picture look for the U.S.? The index identifies eight “foundations” for national success, including factors such as effective and accountable government, personal freedom, national security and personal safety. The news is not good for America. Across the eight components that make up the Index, the U.S. declines in five, including the economy, personal freedom, and entrepreneurship and opportunity. The biggest fall is in entrepreneurship and opportunity, which has declined eight places in the last four years. Businesses’ start-up costs are rising in the land of pioneers and patents. Fewer Americans believe that working hard will get them ahead.

The next U.S. president will also face a rapidly changing global environment. The rise of China speaks for itself, but the Prosperity Index also has Singapore, Taiwan, Hong Kong, Japan and Malaysia ranking within the top 15 countries in its economic rankings this year. Our index also reveals a new group of Asian up-and-comers: Vietnam, Thailand and Indonesia are on the move. Indonesia, the word’s most populous majority-Muslim nation, has experienced the largest increase in prosperity globally since 2009.

Times do change. It seems that even parts of Old Europe, the euro crisis notwithstanding, can teach America a thing or two. Norway, Denmark and Sweden top our rankings this year. Once upon a time the Scandinavians were world champions in big government and social spending. But bloated welfare states have been brought to heel in recent years. There has been deregulation and privatization: The Swedes even privatized air traffic control. Today Denmark has one of the most flexible labor markets in the world.

The path to prosperity is not a mathematical formula or an engineering problem. A country’s size, history and culture all matter. Nevertheless, the Index confirms what experience tells us. Decent, accountable government, rule of law, competition, opportunity and a regulatory environment and culture that promote liberty, responsibility and entrepreneurship are drivers of prosperity everywhere.

It is up to U.S. voters to decide next week whether Barack Obama or Mitt Romney have the right compass for America’s journey forward. We think the data of the 2012 Prosperity Index may offer a helpful map—and some warnings about the road ahead.

Mr. Gedmin is president and CEO of the London-based Legatum Institute, where Mr. Gamester is program director for the Prosperity Index.

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Launching Today – 2012 Legatum Prosperity Index

Today is the launch of the 2012 Legatum Prosperity Index™. The Index is a measurement of 142 countries based on factors that look at both wealth and wellbeing. It’s the most comprehensive Index of its kind. All the data from the Index is available for free at www.prosperity.com so please go there to check it out.

I have various articles being published today, which I will post links to throughout the day. A brief introductory video about the Index is below.

More soon…

 

Hazardous Hazard Lights

I can’t be the only road user who has been duped by false indicators. The situation goes something like this: on the road up ahead of you there are a line of vehicles parked. One of those vehicles is indicating to pull out and so you slow down to let him out. You keep slowing and slowing until you get right up to the vehicle. Only then do you realise that it is not indicating but, in fact, it has its hazard lights on and is stationary.

This may not sound like a big problem. If you are a motorist then it probably isn’t – you feel a little silly, you may have annoyed the cars behind you, but you just speed up and keep going. If, however, you (like me) are a cyclist then it is a bit more dangerous.

As a cyclist you have to slow down because if you don’t, and the vehicle is actually pulling out into the road, then you’ll get hit or will be forced to swerve to avoid it. But when you slow down, other road users may not notice that you have done so or may think that you are about to stop and pull in to the side of the road and so they will attempt to overtake you. This can lead to cars coming too close to you, especially when you begin to speed up again once you’ve realised that the stationary vehicle is not pulling out.

Anyway, all of this leads me to one simple question: why can’t cars, buses, and lorries be designed so that their hazard lights flash differently to their indicators?

Surely we are advanced enough to make those little orange lights flash at different speeds depending on which button has been pressed?! Seeing as we have car seats that can gently warm your bum cheeks while you are driving, I’m sure it is not beyond the minds of our car manufacturers to make a light flash differently!

Heaven is Real

It isn’t often that one of the world’s leading global affairs magazines publishes a cover story like that. But this week’s edition of Newsweek magazine features, as its lead article, a first-hand account of Dr Eben Alexander, a neurosurgeon who “experienced something so profound that it gave me a scientific reason to believe in consciousness after death.

The entire article is worth reading – whether or not you believe in life after death – but here are a few extracts that stuck out for me:

Very early one morning four years ago, I awoke with an extremely intense headache. Within hours, my entire cortex—the part of the brain that controls thought and emotion and that in essence makes us human—had shut down…I had somehow contracted a very rare bacterial meningitis that mostly attacks newborns. E. coli bacteria had penetrated my cerebrospinal fluid and were eating my brain…

While the neurons of my cortex were stunned to complete inactivity by the bacteria that had attacked them, my brain-free consciousness journeyed to another, larger dimension of the universe: a dimension I’d never dreamed existed and which the old, pre-coma me would have been more than happy to explain was a simple impossibility…

…as far as I know, no one before me has ever travelled to this dimension (a) while their cortex was completely shut down, and (b) while their body was under minute medical observation, as mine was for the full seven days of my coma…

Toward the beginning of my adventure, I was in a place of clouds. Big, puffy, pink-white ones that showed up sharply against the deep blue-black sky. Higher than the clouds—immeasurably higher—flocks of transparent, shimmering beings arced across the sky, leaving long, streamer-like lines behind them.

A sound, huge and booming like a glorious chant, came down from above, and I wondered if the winged beings were producing it…

And the article continues.

Dr Alexander writes as a man still trying to work out the meaning and consequences of his experience. Still battling with reason and science, trying to see how this experience fits in with his understanding of the world.

To me, the most fascinating thing about this story is it’s unlikely hero. Dr Alexander is not a religious zealot looking for validation of his beliefs, he’s not an evangelist, or even a very strong Christian (in his own words, he is a Christian “more in name than in actual belief.”). And this makes his account all the more interesting.

I wish him well. I hope he writes more about it so that we can know how he gets on.

*Update: I notice that the Daily Mail has covered this story today.

*Update 2: And there is a book in the pipeline too.

The Big Society is dead. Long live the Big Society

Not that you’d know it, but the summer of 2012 was the summer of the Big Society. Coupled with the country’s phenomenal sporting success was a national mood that David Cameron and his advisors could have only dreamed about when they first thought up their big policy idea, the Big Society.

2012 was the summer of mass volunteering, of victory parades, of street parties, of national pride, of community spirit. It was, in short, a summer of the Big Society.

Whatever you think about the Big Society, the idea is a good one. In a time of austerity, if society can take some of the burden from the state, that’s good. When people are willing to volunteer their time, to get involved in their community, to become more connected with their neighbours, the result will almost always be positive.

And that is exactly what we saw this year. The Queen’s Diamond Jubilee celebrations, for instance, caused people in communities to not only talk to each other but to actually eat, drink, and celebrate together. We even hung bunting in our streets and flew the Union Jack with pride!

And then came the Olympics and Paralympics.

Leading up to the start of the Games, the press coverage made fairly unpleasant reading. Indeed most coverage focussed on how terrible the traffic, the cost, and the weather will be. And yet, when the Greatest Show on Earth began, all of that was forgotten.

Again, we found ourselves in the unfamiliar territory of feeling a strong sense of national pride and togetherness. Again we found ourselves wanting to display the national flag. And perhaps the deepest feeling of all was the immense awe and gratitude we felt towards the thousands of volunteers who made the Games run like clockwork.

If ever a policy needed a springboard from which to propel it upwards, it is the Big Society. And the summer of 2012 has certainly provided such a springboard. And so what has the Conservative Party done to capture this feeling of togetherness and to use it to strengthen the Big Society concept? Unfortunately, very little.

We’ve heard very little recently from the Conservatives about the Big Society. The policy that David Cameron once described as “my mission” seems to have vanished. This was, remember, the party’s flagship policy for achieving “social recovery as well as economic recovery”.

This is a great shame because it is actually a really good idea. As Iain Martin has pointed out, it is “actually a great idea killed by atrocious marketing”, most notably the failure “to realise that the acronym for the Big Society is BS.

And now, we understand that the idea has been taken on by the Labour Party. Good luck to them. I hope they can make it work.

The Big Society is dead. Long live the Big Society.