The End of the American Century

“I'm glad I have a property in Canada,” said my American neighbour, “because I know I have a place to go when the brown hits the blades in the States.”

Wait a minute. This is not some pinko dope-smokin' hipoid radical kid. This is a prosperous middle-aged businessman, an armed forces veteran, whose general political orientation is probably Republican.

And yes, I heard such talk 40 years ago, when the US was in flames: inner cities burning, campus riots, an endless slaughter in Vietnam. Today, with a dishonorable war slowly being lost in Iraq and a lunatic presidency spoiling to start another one in Iran, you might expect the same symptoms. But they aren't there.

True, many patriotic Americans are deeply sad and angry. Read the passionate anti-war speech by Salt Lake City Mayor Rocky Anderson, for example, at http://www.slcgov.com/mayor/. But the Democrats are both complicit and cowardly, and the streets and campuses are not ripping out the country's entrails as they once did. So what is my friend worried about? What does he mean?

“I'm not sure what I mean,” he replies. “But the United States has not discharged its responsibilities well either domestically or internationally, and my intuition tells me that we'll be called to account for that. I don't know whether it will be a lot more al-Quaeda attacks or what it may be. But I'm glad to have a place to go with my family.”

Well.

Soon after that, I read John Risley's investment advice in Atlantic Business. Risley, you'll recall, started out selling lobsters from the back of an old pickup truck. His Clearwater Fine Foods group is now the dominant player in what's left of the Atlantic Canadian fishery. Risley is a very wealthy investor.

Risley's first investment preference is Canada, with its natural resources, strong dollar, robust economy and orderly markets. But one should also diversify into foreign investments. He suggests looking first at London, which is “in the process of replacing New York as the world's financial capital. Why is that? Because the global financial powerhouses can move talent from around the world to their London offices. The paranoia resident within the US immigration policy prevents that from happening in New York.”

Richard Florida makes the same point on a broader scale. In The Rise of the Creative Class, Florida argues that the driving force in today's knowledge economy is human creativity, which flourishes in places that are tolerant, diverse, culturally and intellectually rich, hospitable to innovation.

Thus the US economy has been propelled by its ability to “energize and attract the best and the brightest, not just from our country but also from around the world.” Almost a third of the new businesses in Silicon Valley during the 1990s were created by immigrants from China or India. Enterprises founded by immigrants include Intel, Sun Microsystems and Google.

But, says Florida, Bush's Washington “has stunned scientists across the world with its disregard for consensus scientific views.” Think about stem cells and global warming. Washington has also “inspired the fury of the world, especially of its educated classes, with its my-way-or-the-highway foreign policy. In effect, for the first time in our history, we're saying to highly mobile and very finicky global talent, 'You don't belong here.'”

So the brilliant young immigrants who once competed for entry to Harvard and Berkeley are applying to Cambridge and Copenhagen – and Toronto. Foreign students in the US “complain of being hounded by the immigration agencies as potential threats to security.” Scientists report that they can't hold international conferences in the US because foreign scientists can't get visas. Even distinguished American scholars are emigrating.

These huge trends reflect millions upon millions of individual choices. A Cape Breton couple decides to fly to Nassau via Toronto rather than New York in order to take some food to their hosts and avoid the hassles and delays at the US border. A Brazilian family chooses not to vacation near the Grand Canyon. An small Italian company expands in Germany, not the US.

So there's less demand for the US dollar, and it falls. Did the Canadian dollar strengthen? Yes, slightly – but this year the U.S. dollar has declined against 15 of the 16 most-actively traded currencies.

When George W. Bush took office, his neo-conservative buddies were touting a “New American Century” of world domination. American power seemed limitless. That was an illusion, of course, as unlimited power always is. But Bush behaved as though it were a reality. On his watch, the US has lost much of its power, economic, political, military and intellectual, along with its global good-will.

An increasingly-hostile world is learning to get along without the United States. The “New American Century” is ending. It didn't even last ten years.

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Workers of the World, Where Are You?

Halifax Sunday Herald column, November 4, 2007

“The thing to do,” says Jim McNiven, “is to let the States do the screening for us. Tell them, when they find illegal immigrants working in factories or warehouses, don't ship them south to Mexico. Ship them north to us. We need them.”

What?

Big Jim McNiven is only half joking. That would be Dr. McNiven to you, sonny, the august personage who was once the provincial deputy minister of development, and later the dean of the Dalhousie management school. He's standing before a crowd of 200 at an Assembly of Leaders convened at St. Mary's University by Novaknowledge, the advocacy group which speaks for Nova Scotia's knowledge economy.

Big Jim is talking about Nova Scotia's looming economic crisis – too many jobs, not enough workers.

What?

Look at the numbers, says McNiven. Nova Scotia will run out of workers completely in about eight years. Our economic policies and structures, rooted in the last century, are all upside down. They assume we have a surplus of workers and a shortage of jobs. But those days have vanished.

This dramatic change results from a low birth rate during the past generation. To sustain a population, you need 2.1 births per fertile woman. Nova Scotia's rate is 1.39. The Canadian rate is 1.5. The developed countries all have low rates. European nations range from 1.0 to 1.9. Many countries offer hefty baby bonuses. Russia is proposing “procreation holidays.” The assembled leaders chuckle audibly.

“I gather,” smiles McNiven, “that there's some enthusiasm here for that idea.”

The brutal fact is that Nova Scotia will need 52,000 more workers by 2026. But our population is dropping by 500 people a year, partly from out-migration and partly from attrition. The local kids who will be entering the workforce by 2026 have already been born. We know there aren't enough of them. We have labour shortages already in rural areas and small towns – and those shortages will only get worse as the competition for labour in the cities intensifies.

“We could drain off all our rural workers into the cities and turn rural Nova Scotia into a national park, and it still wouldn't be enough,” says McNiven.

And with too few workers, the economy declines, which has serious implications for government revenues and services, entrepreneurial opportunities and general quality of life.

Big Jim puts up another slide. There are only three ways to make up the shortfall. One is to increase the participation rate – the proportion of the population that's actually in the work force. We can make better use of now-marginalized groups like the disabled, for instance. We can encourage more women to work. We can discourage older workers from retiring. Never mind Freedom 55, says McNiven. Think Freedom 75.

The second approach is increased immigration, but that's not a complete solution. To get 52,000 new workers, we'd have to attract well over 100,000 new citizens, but most immigrants actually go to “TMV” – Toronto, Montreal and Vancouver.

“I'm half serious about the illegal immigrants in the US,” says McNiven. “Those people are so intent on getting work that they walk 80 miles in the Arizona desert after crossing the border. They're highly motivated, they have work experience, and they speak some English. They're just the kind of folks we want. The Americans haven't caught on yet that they need them too. We should take them off their hands.”

The third solution is productivity – getting more output from each participant in the work force. It sounds awful, like Scrooge squeezing Bob Cratchit, but in fact we see it all the time. When I got my first computer, for example, I couldn't believe how much more work I got done. That's productivity, and it came directly from a capital investment.

“Productivity” really means making much better use of our people. Pay employees well, and give them the best possible tools. Automate what can be automated. Provide decent benefits for part-time workers. Expand day care. In general, recognize that the key to prosperity in this strange new world is the effectiveness of working people.

McNiven makes other unorthodox suggestions. Lower the school age to three or four, freeing up young mothers for the work force. Abolish the school-leaving age and provide flexible high school and college education on the Internet. Double the payroll tax, to encourage businesses to get more production from their existing workers rather than hiring additional ones.

Big Jim would also increase the inheritance tax dramatically, which will encourage parents to give their savings to their children early. The kids will spend it quickly and foolishly, and so both parents and kids will have to keep working.

“These suggestions are somewhat frivolous, and may not be the way to go,” McNiven concludes, “but doing nothing is not the way to go either.”

The assembled leaders nod. It's a remarkable moment. We've just seen a man plant a topic squarely on the public agenda. And I'd bet we'll hear a lot more about it, on the road to 2026.

-- 30 --

Silver Donald Cameron received an honorary D.Litt. degree from Cape Breton University yesterday.