The US economy is slowing down, but the long-term trends for the country are more favourable than many think. There has also been a sharp improvement in many of America's social pathologies, such as violent crime and drug abuseby Michael Lind / February 29, 2008 / Leave a comment
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Anyone who reads the serious press about the condition of the US might be excused for believing that the country is headed towards a series of deep crises. This impression is exacerbated by economic slowdown and by the presidential primaries, in which candidates announce bold plans to rescue the country from disaster. But even in more normal times there are three ubiquitous myths about America that make the country seem weaker and more chaotic than it really is. The first myth, which is mainly a conservative one, is that racial and ethnic rivalries are tearing America apart. The second myth, which is mainly a liberal one, is that America will soon be overwhelmed by religious fundamentalists. The third myth, an economic one beloved of centrists, is that the retirement of the baby boomers will bankrupt the country because of runaway social security entitlement costs.
America does, of course, have many problems, such as spiralling healthcare costs and a decline in social mobility. Yet the truth is that apart from the temporary frictions caused by current immigration from Latin America, the US is more integrated than ever. Racial and cultural diversity is in long-term decline, as a result of the success of the melting pot in merging groups through assimilation and intermarriage—and many of the country’s infamous social pathologies, from violent crime to teenage drug use, are also seeing improvements. Americans are far more religious than Europeans, but the “religious right” is concentrated among white southern Protestants. And there is no genuine long-term entitlement problem in the US. The US suffers from healthcare cost inflation, a problem that will be solved one way or another in the near future, long before it cripples the economy as a whole. And the long-term costs of social security, America’s public pension programme, could be met by moderate benefit cuts or a moderate growth in the US government share of GDP. With a linguistically united, increasingly racially mixed supermajority and a solvent system of middle-class entitlements, the US will remain first among equals for generations to come, even in a multipolar world with several great powers.
Let’s begin with the alleged “balkanisation” of America by race and ethnicity. Almost everything that is written about this subject is misleading, not least official US government reports. For example, a 2004 press release by the US census bureau, based on analysis of data from the 2000 census, had this sensationalist title: “Census Bureau Projects Tripling of Hispanic and Asian Populations in 50 Years; Non-Hispanic Whites May Drop to Half of Total Population.” Headlines like this have inspired leftists to declare that multiculturalism is inevitable in a post-white America, led nativists and racists to lament the supposed untergang of white America under a demographic avalanche from the third world, and caused Europeans to wonder whether in an America with a non-white majority, the focus of foreign policy will shift to Mexico and Central America, or Africa or Asia.
There’s just one problem: there isn’t going to be a non-white majority in the US in the 21st century. And probably not in the 22nd or 23rd, either. The “coming non-white majority” myth is based on a misuse of the arbitrary racial classification system adopted in the 1970s, which assigns all Americans to the categories of white, black, Asian, native American or “Hispanic.” According to the government, “Hispanics” may be of any race as long as they are of Latin American ancestry. So, a blond, blue-eyed Argentinian-American whose grandparents showed up from Germany in Argentina mysteriously in 1946 is a “Hispanic” while an Arab-American Muslim is a “non-Hispanic white.”
The myth of the non-white majority is based on treating “Hispanic” as the name of a race. Adding all Hispanics to all blacks and Asians makes it possible to claim that California and Texas already have “non-white” majorities, and that the US as a whole will follow in the second half of this century. But if you don’t treat Hispanics as members of a single race, then the picture looks quite different. According to the census bureau, the US population in 2050 will look like this: non-Hispanic white, 50.1 per cent; Hispanic, 24.4 per cent; Asian, 8 per cent; black, 14.6 per cent, with a small residuum in other categories. The non-Hispanic white share of the population will drop from 69.4 per cent in 2000 to a bare majority in 2050.
But what if instead of bracketing all Hispanics together (white and non-white), we bracket all whites together (non-Hispanic and Hispanic)? In the 2000 census, 48 per cent of Hispanics identified themselves as “white,” 2 per cent as black, 6 per cent as belonging to two or more races and 43 per cent as members of “some other race.” Let’s assume, for the sake of argument, that the pattern of Hispanic self-identification by race is the same in 2050. If 48 per cent of the Hispanic population in 2050 calls itself “white” and that group is added to the non-Hispanic white category, then the combined non-Hispanic white and Hispanic white group in 2050 would be 61.8 per cent. So, instead of the decline in the non-Hispanic white population from 69.4 per cent in 2000 to 50.1 per cent in 2050, there would be a more moderate reduction in the white majority from 74.5 per cent in 2000 to 61.8 per cent in 2050.
Even this understates the proportion of the “white” population in 2050, because it ignores intermarriage. While fewer than 10 per cent of foreign-born Hispanics marry non-Hispanics, by the third generation the out-marriage rate is half. If the children of Hispanics and non-Hispanic whites are treated as white, then the white majority in 2050 will be even larger. Then there is intermarriage among whites with Asians and blacks. Black intermarriage rates, though rising, are low—around 15 per cent. Already about half of Asian-Americans (migrants from India, China and elsewhere) marry outside of their official “race,” mostly to non-Hispanic whites, and whatever the government calls them, their children tend to be seen as generic whites. So let’s take half of the Asian population in 2050 and add it to the white population. This increases the white majority to 65.8 per cent in 2050. Here, then, is the real story: the white American population will decline from 75 per cent to about 66 per cent between 2000 and 2050. Big deal.
Nor is there any long-term danger of the US becoming permanently polarised between anglophones and Spanish speakers. Among second-generation Hispanics, roughly half speak no Spanish at all, while fewer than 10 per cent speak only Spanish. By the third and fourth generations, Hispanics in the US are almost completely anglophone. In their rate of linguistic assimilation, they resemble the European immigrants of earlier generations. The claim that in a globalised, wired world the incentives for linguistic assimilation are weakened appears to be false, at least in the case of American Hispanics. And they are the only group that count, in this respect, because all other linguistic minorities in the US are negligible, as a percentage of the total population.
If you put these trends together, you get a mega-trend that is the opposite of the conventional wisdom: when the most recent, yet-to-be-assimilated immigrants are factored out, the long-term trend in the US is towards less racial, cultural and linguistic diversity. There are some causes for concern, notably the possibility that the bipolar white/non-white system will give way to a black/non-black system, with blacks excluded from an informal social definition of “whiteness” that includes Hispanics and Asians. Nonetheless, the melting pot, which blends previously disparate groups into a single group, is still working in the US. In the 20th century, the melting pot turned once-distinct Anglo-Americans, Germans, Irish, Poles, Greeks, Jews, Italians and Lebanese into boringly similar “non-Hispanic whites.” In this century, the American melting pot will blend most of today’s old and new racial groups into a single English-speaking American cultural majority of mixed, mostly European ancestry.
So the US is not going to fall apart along ethnic lines, like Yugoslavia or Iraq. Will it be taken over by religious fundamentalists? Many observers abroad have the impression that Americans are growing more religious, while Europeans are growing more secular. This simply isn’t true. Americans are far more religious than western Europeans, but in the US, no less than in Europe, the long-term trend is towards greater secularism.
In a 2001 study of religious attitudes among Americans, researchers at the City University of New York discovered that the number of Americans who profess no religion had grown from 8.16 per cent in 1990 to 14.17 per cent in 2000. Americans with no religion at all are now the third largest belief group in the US after Catholics and Baptists, and their number, around 30m, is almost as great as that of Baptists, who number around 34m. Moreover, the number of Americans who, even if they believe in God, do not belong to any religious organisation went from 46 per cent in 1990 to a 54 per cent majority by 2000, according to the study.
When the subject is actual church attendance rather than vague spiritual belief, the gap between the US and Europe shrinks further. According to the Gallup millennium survey of religious views, the number of North Americans (the US plus Canada) who attend church at least once a week is 47 per cent, compared with the west European average of 20 per cent. And some scholars say that the number is inflated, because many Americans are embarrassed to tell pollsters how rarely they attend church.
According to the Gallup poll, the number of North Americans who believe that the Bible is “the actual word of God” has fallen from 65 per cent in 1963 to just 27 per cent in 2001. At the same time, attitudes among Americans toward homosexuality, sex out of marriage and censorship are growing steadily more liberal. Abortion is the major exception; younger Americans tend to be more opposed to abortion than their elders. Possibly this reflects the growing use of ultrasound by parents to view their offspring in the womb, a practice which may be inadvertently undermining the distinction that supporters of liberal abortion laws have tried to make between foetuses and babies.
If the American people are getting less religious, then why is “God talk” growing in public life? But the truth is that it isn’t growing; it’s always been part of public life. Liberal presidents of the 20th century like Wilson, Roosevelt, Truman and Johnson referred to God and the Bible and Christ more often than most of today’s conservative politicians. During the second world war, Franklin D Roosevelt tended to use the phrases “western civilisation” and “Christian civilisation” interchangeably. At the 1941 Atlantic summit in Newfoundland, Roosevelt and Churchill joined the British and American sailors in singing “Onward, Christian Soldiers,” “O God Our Help in Ages Past” and “Eternal Father Strong to Save.” Bush and Blair may have prayed together but they never would have sung hymns together in public.
The trend towards European-style secularism is most advanced among the “blue states” of the coasts. The American south is much more conservative. But even the south is far more secular and liberal than it was a generation or two ago. Religious southern politicians simply sound like the midwestern and northeastern politicians of previous times.
In fact, the “religious right” is almost entirely a phenomenon of white southern Protestants. It is as much an ethnic and regional movement as a religious movement. Before the civil rights movement, white southern Christians identified themselves as… well, white southern Christians. But after the civil rights era, talk about “whites” or “white southerners” sounded too much like the rhetoric of racists, so white southern conservatives emphasised the Christian part of their identity (hadn’t Martin Luther King been a Christian minister?). White southerners never pursued another option, defining themselves in secular ethnic terms as “Scots-Irish” or “Anglo-Celtic,” because as members of the majority in the south, and as descendants of pre-1776 settlers, they think of themselves simply as “Americans” or “southerners” rather than members of an immigrant group like Italian-Americans or Greek-Americans. In the same way, in Britain the majority English tend to think that the Scots, Irish and Welsh are “ethnic” while they are not. In short, the language of religion in the US, as in the Balkans and Iraq, has less to do with theology than with ethnocultural politics. Religious right conservatism is the ethnic identity politics of Scots-Irish and Anglo-American southerners in the former confederacy.
White southern populists and black Americans, a majority of whom still live in the south, have one thing in common. Because the now moribund southern planter aristocracy dominated secular political, commercial and educational institutions, the community leaders of blacks and poor whites alike tended to be Protestant pastors like Martin Luther King and Jesse Jackson—and Jerry Falwell and Mike Huckabee. And for outsiders to assume that American fundamentalists are mere pawns of the capitalist elite is a mistake. According to polls, the only group as hostile to big business and big banks as the radical left are members of the religious right. When Mike Huckabee, the presidential candidate from Arkansas and former Baptist minister, thunders against Wall Street, he is as serious as William Jennings Bryan was a century ago. (The white and black strains of southern religious populism were briefly united in the 1990s, when the Reverends Jerry Falwell and Jesse Jackson teamed up to protest against the conditions of mostly white coal miners in Appalachia.)
The US, then, is no more likely to become a Protestant version of theocratic Iran than it is to become a Yugoslavia. Yet the conventional wisdom says America is still in danger of bankruptcy and economic collapse as a result of the looming costs of government entitlements for the retiring baby boom generation. But when alarmists talk about the “entitlements crisis” in the US, they conflate two programmes—social security (the public pension system) and Medicare (the public health insurance system). The growth of social security, as a share of GDP, will be modest until the end of this century, and any shortfalls can be dealt with by minor adjustments in how it is paid for. There is a bigger problem with Medicare, whose costs, if they continue to grow as at present, will eat up an additional 10 per cent or more of GDP by the mid-century. But Medicare’s budgetary problem is a reflection of the healthcare cost inflation that is affecting the entire US economy, private and public alike. The bad news is that there is no consensus about the cures for healthcare cost inflation, much less its causes. It is much easier to ignore the spreading cancer of healthcare costs while focusing on the toothache of long-term social security funding. To date the healthcare plans of many Democrats and Republicans alike have focused more on the spread of coverage than on the harder challenge of cost containment. But we can be sure eventually that the US will face and deal with healthcare cost inflation, perhaps by unpleasant methods, like rationing by government, employers or insurers.
In comparison with the problem of healthcare cost inflation, the alleged crisis of social security is puny. Claims of a “crisis” revolve around two dates: 2017, when the social security surplus runs out and the programme becomes a pure pay-as-you-go system based on annual payroll taxation; and 2041, when payroll tax revenues fall short of expenditures. Even in 2041, social security will be able to pay most of its obligations. The crisis, then, is nothing more than the fact that taxes will have to be raised or benefits cut before 2041 in order to supplement a mostly sound system. (Great confusion is spread by the phrase “unfunded liabilities.” The only programmes with “unfunded liabilities” are those, like social security, paid for by dedicated taxes, in this case a payroll tax. This permits calculations of future divergences between dedicated tax revenues and expenditures. The Pentagon budget is paid from general tax, so the concept is inapplicable.)
The use of dates like 2017 and 2041, moreover, gives a specious precision to claims that in fact are extremely dubious. This is underlined by the fact that the US government regularly revises the date of the alleged social security apocalypse, as it reconsiders its assumptions. The “intermediate” calculations on which current estimates are based are almost certainly unrealistic. They assume a low rate of productivity growth in the US over the next half century of 1.7 per cent. This is only slightly higher than the average of 1.5 per cent in the long period of low productivity growth from 1973 to 1995. But from 1996 to 2006, US productivity growth boomed at an annual rate of between 2 and 3 per cent in most years. Productivity growth slowed after 2004, but surged ahead in the last quarter at 6.3 per cent. Nobody knows whether the resumption of high productivity growth in the last decade was a blip or the beginning of a new pattern. The point is that if US productivity grows at a rate near the historic average of 1945-2008, the picture for the solvency of social security is much brighter. (This is not the place for a full discussion of economic prospects, but it is worth noting that US industrial output rose nearly 35 per cent in the past ten years, faster than any other G7 country.)
Moreover, what the doomsayers neglect to tell the public is that if the cap on the amount of income subject to payroll taxation were lifted, the result would be such a flood of money from high earners that the problems of social security would be solved forever. And even if payroll taxes were raised on all workers, as a result of productivity growth the average earner in 2050 may well have wages that in real terms are at least 60 per cent higher than today’s. As a share of my income, I pay far higher taxes than my great-grandfather, but I am much better off because less of a lot is greater than more of a little.
It is possible, and in my opinion likely, that in the future congress will choose to infuse general revenues into the social security system, as an alternative to raising payroll taxes on all workers. If that is the case, then the only question is whether social security is affordable. The answer is clearly yes. The share of government at all levels as a percentage of GDP is lower than that in almost all other industrial democracies. In the US, government expenditure at all levels—federal, state and local—as a share of GDP hovers just above 30 per cent (despite spending a staggering $626bn on military-related costs in 2007, over 22 per cent of the federal budget). By comparison, the EU-25 average was 47 per cent in 2005. An additional 2 per cent of GDP can be added to social security over the next half century without altering America’s position as one of the least statist economies in the world.
Indeed, the baby boom generation caused an increase in US government expenditures once before—when they were children. In the 25 years from 1950 to 1975, expenditures on public education (in the US, a local and state responsibility) rose from 2.5 per cent to 5.3 per cent. What counts is not the ratio of workers to retirees—which will have gone from 18 to 1 in 1950 to slightly more than 2 to 1 in 2050—but the dependent-to-worker ratio, with dependents defined as children under 20 and retirees over 65. The dependent to worker ratio will be less in 2050—80 to 100—than it was in the 1960s, when there were 90 dependents to 100 workers because fewer women worked and there was a large cohort of baby boomer children. What’s more, American workers in 2050 will be far more productive than they were in the 1950s.
Barring catastrophes, the US in 2050 will be much more racially integrated; will remain culturally and linguistically quite homogeneous; and will be much richer, easily able to afford to pay for social security and decent healthcare. And partly as a result of this unity and prosperity, the US will continue to be a major power, though not a solitary hegemon.
The rise of China, India and other Asian powers is indeed shifting the balance of global wealth and power. On this point the conventional wisdom is correct. But the relative rise of Asia will come at the expense of Europe, whose share of global GDP will decline, chiefly because its population will be stable or shrinking. Not that relative proportions are all that important. The Europeans of 2050 will still be much richer than the Chinese and Indians in per capita income, and, thanks to productivity growth, much richer than the Europeans of today too. According to Goldman Sachs, the Nafta (the US plus Mexico and Canada) share of global GDP in 2050 will be 23 per cent. This is close to the US shares of global GDP in 1960 (26 per cent) and 1980 (22 per cent). And per capita income in the US will be far higher than that in China and India into the 22nd century, if not beyond.
Why is there such a gap between the conventional wisdom about America’s future and the actual trends? Part of the answer involves the bias toward sensationalism that afflicts all commercial media. Another factor is the distortion of the facts by special interests. For example, the myth of the social security crisis has been spread by, among others, people in the securities industry who would like to see this successful public pension programme privatised.
The US is facing major challenges—but they are not the ones usually identified. Long-term racial and linguistic balkanisation may not be a problem, but class lines in the US are hardening; there is now less social mobility in the US than in Europe. The US is not in danger of becoming a theocracy, but it is in danger of becoming a plutocracy. Social security does not threaten to bankrupt America, but healthcare cost inflation does. The US is not going to be eclipsed any time soon by another superpower, but it may exhaust itself by allowing its commitments to exceed the resources that the public is willing to allot to foreign policy. The sooner the mythical problems can be dismissed, the sooner the genuine challenges to America’s future can be identified and addressed.
Discuss this article at First Drafts, Prospect‘s blog
This piece was published in Prospect alongside an edited essay from the conservative American magazine Commentary . Commentary is normally pessimistic about cultural trends in the US, but in this case Peter Wehner and Yuval Levin produced a surprisingly upbeat piece.