The Americans don’t get it

I spent the last couple of days in the USA,(not at the public expense) to see how the recession is affecting them, and to see if there is any tangible sign of recovery. I visited the Chicago area, to see if the rust belt is still rusting, and to feel the pulse of the heartlands of automotive country.

There were plenty of cars for sale, signs of job losses and short time working, and downward pressure on house prices. In other ways what was remarkable was how normal, how American everything was. The restaurants were busy and noisy. Huge helpings were sold for modest prices. The roads were busy. The freeways and turnpikes still are well worn by the procession of enormous trucks. Pick ups and large SGVs are still popular.

The great strength and enormous resource of the world’s superpower was still much in evidence. Land is used profligately. There is plenty of waste. Diets and energy use have not suddenly conformed to Mr Obama’s planet watch. Green remains a colour for the political and chattering classes, rather than a way of life for middle America.

Whilst there was some talk of hard times and job losses, some concern about recession, there was a general feeling that what goes down must go up again. There was no great dread of the extent of federal borrowing, no alarm about the size of the twin deficits, no expectation that anything serious would dent the great society. China may be the nation’s bank manager, but the people have yet to feel her wrath on their overdrafts. The US living standards may rest more than ever on the goodwill of the international community, and depend on the attitude of surplus governments and world savers, but there is no sense that people expect crisis any time soon. America will go on doing what it does well – going to the shopping mall and restaurant by car, parking right outside, and enjoying the rest.

This great continent of a country still sees itself as a world apart. Its economy, even in recession, even debt ridden as it is, shows vitality and breadth that is impressive. Meanwhile the dollar tumbles, the Chinese flex their muscles with the Treasury Secretary, and markets fret about the amount the USA still wants to borrow. The US does not fancy cutting it appetite for spending. It just assumes it can go on borrowing. Someday there has to be path out of public debt, but in the meantime the authorities want to create the impression that it is business as usual. Greenery is still greenwash, not a daily reality.

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23 Comments

  1. Richard
    Posted June 13, 2009 at 11:10 am | Permalink

    A few key differences between the US & the UK (Mr Brown to be reminded of this when he claims the virtue of association with Obama):-
    – The US economy is much larger, much more diverse & more competitive than ours
    – The US’s level of tax/GDP and total state spending/GDP is significantly lower than the UK’s
    – The US’s capacity to borrow is much greater becasue the $ continues to be the global reserve currency. Mr Brown & Co cannot rely on the same for £
    – The US economy is very flexible. Employment and wages rise and fall easily in different sectors unconstrained by restrictive social legislation and unions (except in the car & a few other industries).
    All your points are well taken, and the US must find a way to control its budget deficit. But what we should remind people here, is a British Government doesn’t have the same public spending options as a US government due to the profligacy and waste of Labour’s 12 years.

  2. Acorn
    Posted June 13, 2009 at 11:23 am | Permalink

    I guess you didn’t go to Detroit Michigan, where the median price on a foreclosed home sale, in the metro area, is down to $26,000.

    BTW. If you’re wondering what the international casino bankers are doing with taxpayers money, have a look at this one (See link). Mind you there must have been a bit of skulduggery going on as you will see in the reply concerning “clean-up rights”.

    I know this is a bit off the wall for this site, but it gives you an idea how the crazy world of investment banking started the credit crunch.

    http://www.econbrowser.com/archives/2009/06/how_to_lose_on.html

    • Bazman
      Posted June 13, 2009 at 3:14 pm | Permalink

      A fool with someone else’s money are soon parted more like.

  3. Working Class Tory
    Posted June 13, 2009 at 11:46 am | Permalink

    I suppose one of the few *good* things about the recession is that everyone, not just the political classes, knows it’s happening, knows the past, current and potential consequences of it, so knows we all have to tighten our belts to combat it. As you say, America is largely decieved by its own inability to realise the sheer enormity of the mess it is in.

  4. oldrightie
    Posted June 13, 2009 at 12:25 pm | Permalink

    Sounds exactly the atmosphere sought by Labour. Trouble for them is that debt is still greater per capita than the USA.

    • jean baker
      Posted June 13, 2009 at 4:04 pm | Permalink

      Americans have “hope” having ousted the Bush regime and the US is no bound or hindered by the (reportedly) corrupt machinations of the EU. US patriotism is to be applauded whereas Nulabor loathes the word.

      Margaret Thatcher’s leadership qualities inspired faith, hope and hard work which put Britain back on track after Labour when she inherited the mess left by a Labour government.

      • oldrightie
        Posted June 14, 2009 at 5:56 pm | Permalink

        Thank you for an excellent reply.

  5. adam
    Posted June 13, 2009 at 12:43 pm | Permalink

    Obama is planning to bulldoze houses as part of his New, New Deal.
    This is the absurdity of the new western sustdev economics, not only are politicians in this country being paid to destroy their own political institutions, Americans are now being paid to destroy their own assets. This is a war economy gone domestic.
    Pretty soon people wont need to bother with an education, all you will need is an experience in criminality and a the subsequent will to destroy.

    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5516536/US-cities-may-have-to-be-bulldozed-in-order-to-survive.html

    • chris southern
      Posted June 13, 2009 at 1:11 pm | Permalink

      sounds like the compulsory purchase scam that UK councils use to make money.
      Compulsory purchase farm land for peanuts for a project that will never get underway, then sell the land at a later date for a profit to the public or, sell it to business that you want in the area.

      It’s just joe public being scammed once again, although in America they do it on a bigger scale.

    • Stuart Fairney
      Posted June 13, 2009 at 1:23 pm | Permalink

      If Flint anounced a twenty year moritorium on all state and local taxes then the utterly absurd asset destruction would come to an abrupt halt. The town is being strangled by taxes and quite possibly poor law enforcement. If this happened, I predict it would be about three months before someone started whining about gentrification and how their kids couldn’t afford to live there etc

    • jean baker
      Posted June 13, 2009 at 4:05 pm | Permalink

      Don’t believe all you read in the media !

  6. Mike Stallard
    Posted June 13, 2009 at 4:06 pm | Permalink

    Tempting for me to compare the USA with Europe.
    Both are meant to be huge democracies with their own parliaments/congress, their own presidents and their own foreign policy, police forces, common justice and economies.

    I think USA does all these things with great success as you point out.

    Meanwhile, I feel no affinity with the French and they feel little or none with me. I taught a Latvian lady yesterday evening. She did not even know the English for “Hello” any more than I could greet her in Lat.
    As for the idea of a common justice policy and common police force throughout Europe! YUK! I am innocent until proven guilty, not the other way round, thank you Emperor Napoleon. I also would like a jury, please, in open court.
    And, as for rust buckets…..

  7. Demetrius
    Posted June 13, 2009 at 4:14 pm | Permalink

    Try this comment by William Buiter in the FT of 12 June:

    http://blogs.ft.com/maverecon/2009/06/the-fiscal-black-hole-in-the-us/#more-1864

    A lot of the hurt in the USA is hidden, but the worry is what may happen if more are affected, and they all begin to emerge.

  8. Bazman
    Posted June 13, 2009 at 4:55 pm | Permalink

    Americas problems are still in the post, but America is a very large politically and technologically advanced country. Making it able to have a more extreme society. Never in the history of mankind have so many had such a high living standard.
    The atlas at the start of the comedy New Statesman which showed Britain to be larger than the continent of Asia always amused me.

  9. Man in a Shed
    Posted June 13, 2009 at 10:02 pm | Permalink

    You have to fear that the US is in decline. It can’t afford the wars it fights ( or at least not the way it fights them ), or the grand schemes and dreams of its politicians. Its hard to conceive they can ever pay of their debts.

    Someday soon they are heading to their Suez moment, where a course of action that the US would always have taken as a matter of course will be denied to them by their new financial masters threatening to call in the IOUs.

    After all its what the US did to effectively kill off the British Empire, and then the Soviet empire – both of which where crushed financially.

    Its time for those in Taiwan and its neighbourhood to make their accommodation with a rising China, because the sheriff isn’t what he used to be.

    • Citizen Responsible
      Posted June 14, 2009 at 6:40 pm | Permalink

      I agree with your comment on Taiwan, as their independance from China has relied upon American support. The Chinese bided their time and claimed Hong Kong. I think Taiwan is also in their sights.

  10. alan jutson
    Posted June 14, 2009 at 6:16 am | Permalink

    Interesting comments John.

    We have just spent a week on the Isle of Wight, like you if we did not read the papers or watch the TV we would have no idea that the Country was in such a mess.

    Not a bad meal all week, with good pubs and restaurants full, no traffic jams, easy parking.

    A nice rented furnished house on a tidy farm surrounded by interesting countryside.

    Many visitor attractions, well run and reasonable value for money if you chose well.

    Excellent country walks (could have done with a few more sign posts)

    Yes there were some areas in some towns where there were empty shops, and clearly you had the feeling that not all shops were doing good business, but on the whole most properties commercial and residential, were well looked after with clean and tidy gardens.

    Whilst the Sun was not present all of the time, it was warm and comfortable.

    Guess that things would look much different in the winter when its raining and cold, visitor attractions are closed, and pubs and restaurants empty.

    Not until we visited Osbouine House, Queen Victoria’s holiday home with all of its history did it fully remind us of the Country we used to be, compared to the state we are in now.
    What a contrast in only 100 years.
    How the mighty have fallen.

    Perhaps we should ban newspapers, television, radio and the internet, and then we may all feel better for a short while.
    That is until we examine our bank statements.

    Oh well, good to get away from reality for a week.

  11. charles
    Posted June 14, 2009 at 8:03 am | Permalink

    If the Americans are not noticing what is going on with their finances then, I presume, that the mainstream media are not talking enough about the problems – a bit like they did over Iraq.

    (It took some two years before the Americans became aware of the fact that Saddam Hussein had nothing to do with 9/11, so deceitful was the media in revealing the truth.)

    And this is why it is so important for the Tories to rein in the BBC. It is far too powerful and far too biased to be allowed to continue as it is.

  12. Citizen Responsible
    Posted June 14, 2009 at 8:24 am | Permalink

    America has been the paragon of capitalism whose manufacturing has dominated the globe for more than half a century. However, in the economic sphere, government control of private companies is more like fascism than capitalism and has been called the “Third way”. This is a major policy shift for the US.
    Now that General Motors has filed for bankruptcy, and the US taxpayer has put first $20 billion and now another $30 billion into the company, the government has a 60% controlling interest. The spin put out was that the taxpayer would get some of this money back but that now seems less likely. In fact there is no guarantee that there won’t be more tax payer funded bailouts for GM in the future. GM is just one of many US corporate giants to go down the pan in recent times. Many states are also struggling to balance the books, California being the most publicised example.
    I take no comfort from any of this, unlike America’s enemies. I think it is deeply worrying for the free world.

  13. APL
    Posted June 14, 2009 at 10:19 am | Permalink

    Jr: “America will go on doing what it does well – going to the shopping mall and restaurant by car, parking right outside, and enjoying the rest.”

    Shopping for Chinese made goods! I hope this isn’t you opinion of what a sound economy is.

  14. Leon
    Posted June 14, 2009 at 3:57 pm | Permalink

    Mr. Redwood,

    Having now read your article twice, (and having been born in Worcester, England, but now living in San Diego, California), I’m still not sure what it is that you contend Americans “don’t get.”

    The United States is a very big country, with a very large population (more than 300 million). It is, in every sense of the word, a massive democracy. Opinion varies by region, much as it does in the UK. Also, opinion shifts over time, again very much like the UK.

    Currently, the U.S. federal government is led by those who would prefer to increase domestic spending to something approaching the UK’s percentage of GDP. And, like the government at Westminster, the current American administration is borrowing huge amounts of money to finance these new government outlays. Is it the error in this approach to government you contend Americans don’t get? If so, I assure you that the current approach is only temporary.

    In next year’s Congressional elections, a more conservative Congress will be elected (even if the Democrats retain a majority) and there’s a decent possibility that, in 2012, President Obama won’t be re-elected, particulary if inflation approaches the double-digit levels of the 1970s, or if the current administration fails to properly handle the next major international crisis. (If Alaska or Hawaii get nuked by North Korea, or if the country experiences another horrific terrorist attack, on par with 9-11, the country’s government will swing dramatically to the right.)

    Right now, the American public is largely giving President Obama the benefit of the doubt, but polling indicates that, even if Obama remains personally popular, support for his left-wing positions and policies is in decline.

    I think it is fair to say that the American public is generally more skeptical/sceptical of global warming than the UK population currently seems to be. The particularly-European phobia about “genetically modified” foods strikes Americans as downright batty, equivalent to membership in the Flat-Earth Society. That said, Americans do tend to be strong conservationalists and they are committed recyclers. They are simply more concerned with environmental impacts closer to home (i.e. the local park or beach) than, say, global CO2 emissions — that they can’t hear, touch, or smell.

    Americans also tend to be more individualistic, more libertarian, yet, at the same time, more evangelical than the British. (Many of Britain’s Methodists came to the U.S.) Interestingly, there has never been a strain equivalent to Red Toryism or “One Nation” conservatism in American political thinking. I would argue that this is because the United States has never had a landed aristocracy fearful of revolution from below. (And having no such aristocratic tradition, the American population has, and has always had, “vulgar” middle-class, commercialist attitudes.)

    So if your contention is that Americans are too large, that development is too spread out, that they consume too much, that their meals are too massive, that their cars are too big, that as a people they’re too loud, that they’re too crass, too pushy, or that they’re too optimistic that things will turn around, I would suggest that those cultural differences result from the self-reliant, individualistic, expansive, democratic culture that has been present since the American colonies were founded some 400 years ago. Compared to the UK, America still is a very young country, a relative adolescent.

    But I don’t think it’s fair to patronisingly say that, because of these differences, Americans just don’t “get it.” Indeed, if that’s your standard, mere differences in culture, I’m sure that there’s quite a lot that Americans might say that their friends and cultural cousins, “the Brits,” don’t get either, including that rather revolutionary doctrine that all men are created equal.

    Reply: I am a great admirer of US enterprise and freedom. My point is a simnpler and more limited one. The US I visited does not seem to sense that the US cannot go on living beyond its means for much longer, and needs to grasp the changing power balance vis a vis China.

    • Fool
      Posted June 16, 2009 at 5:41 pm | Permalink

      As an American living in Britain, I agree completely with Leon.

      All outsiders, not just Britons, view America as a “waste-land”. But, it is a difference in culture.

      Even in recession, there will be many people whose lives will be unaffected by the downturn. They cannot be expected to sit back and fret. They have to assume as much normalcy as possible for the sake of their children.

      Consumerism is also big. That, combined with the disbelief in global warming, has encouraged people to buy big houses, big cars, big meals (hence, the problem of obesity). It appears wasteful to those who have lived prudently and do not value the “keeping up with the Joneses” mentality. Land is widely available and definitely not at the premium it is in the UK. Overall, cost of living in the US is lower, so they can afford to spend more.

      The UK is a small island. The population is rather concentrated. No one can escape the news and everyone seems to be involved in discussions about the economy and politics, etc. You wouldn’t understand it unless you lived there, but many parts of the US are so insular (Chicago’s not one of them, though) that they wouldn’t know much about what was going on outside their little community. It would take a long time for all Americans to be on the same page.

      And the point about China: well, there’s a lot of grumbling about that. However, if people are trying to save money, sometimes they have to resort to buying cheap Chinese goods. They would love it if America could produce similar items for the same price. Unfortunately, the way international trade goes, that’s impossible.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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