Throughout the week, Clay Risen, the managing editor of Democracy, will be covering economic developments for us on The Plank. Here's his first post:
I have a lot of respect for Dan Gross over at Slate, and I enjoyed his new book Pop immensely. That said, I have some significant reservations about his article currently headlining the site, "The Rise of American Incompetence." Dan posits that America's failure to get its financial house in order is causing foreign investors in our currency to look elsewhere. So far so good. But then he uses this to argue, without strong evidence, that such flight from American public-finance mismanagement shows the world is giving up on American business management. "Thanks to widespread incompetence," he writes, "American management is on its way to becoming an international laughingstock."
This is, first off, a category mistake, conflating two types of management. There's the management of the budget and the economy, and then there's corporate management. Regarding the former, he's on solid, if debatable, grounds: The U.S. budget and trade deficits, along with the Fed's mismanagement of the housing bubble, don't bode well for the U.S. government's reputation for financial wizardry (though the twin deficits are hardly new). But on the latter point, Dan leaves us dry. Where is the evidence that because of poor decisions on the government's part, our executives and corporate titans are now "laughingstocks"?
If Dan is right, how come six of the top 10 schools in the Financial Times's survey of "global MBA" programs are in the United States? And what does his assertion say in light of the fact that America invests 16 times the amount of venture capital into high-tech startups as Europe? The richest man in the world is Warren Buffett, who built his wealth on precisely the skills that Dan says we now embarrassingly lack. 751 of the Forbes Global 2000 are U.S. Firms. Hardly signs of American incompetence. If there's a dark cloud on the horizon--and there very well could be--Dan doesn't identify it. (Bizarrely, he points to foreign frustration with U.S. airport-security requirements as a major data point.)
True, he does note that too few American businesspeople speak foreign languages, and that's a detriment in global business. But only a minor one, and the reality undercuts his point. Too few Americans speak foreign languages because they know they don't have too--American corporate power is so strong that business the world over is conducted in English.