The American Economy
The coming of the New Millennium was greatly anticipated. For centuries the term year 2000 was the stuff of legend. Now, this generation is about to experience it. With it came the doomsayers and the now laughable Y2K scare. But what many did not expect was the coming of a new breed of terrorism and a whole new problem that affected America’s way of life.
A year after a joyous celebration of the coming of the 21st century, Osama Bin Laden struck terror into the heart of America. The whole world saw a new side of United States that was not seen before. The vulnerability of the government, the people and its defense system was in full display. Many thought that it was the beginning of the end.
In fact those who are from the outside looking in, blamed it all on 9/11 – every negative thing that happened since that event. When the economy experienced a period of recession, it too was attributed to the terrorist attacks. But those in the know and the experts who had been closely following the economic health of America knew for a fact that not everything should be heaped on that infamous September 11 incident.
James Cortada and Edward Wakin were both right when they said that things tell-tale signs were there but no one noticed. They wrote, “…major changes develop relatively unnoticed and unannounced. Then suddenly, a shocking turn of events calls attention to changes that are well underway […] The world then seems to change suddenly when actually, changes were already taking hold” (Cortada & Waking, p.1). Still, the September 11 was a marker in the history of America where one can pause for a while and think what has become of the United States. This study takes a look into the American Economy using the September 11, 2001 see things in a different light and hope to see it more clearly.
After the Twin Towers fell down, questions began to come like a flash flood. There were many queries regarding terrorism, the military, the security of American citizens, imminent attacks, the economy, etc. But the most nagging question came from no less than President George Bush, “Why do they hate us, when we’re so good?” (as qtd. in Chomsky, Junkerman, & Masakazu) This query by the President should awaken the average person regarding how others view the United States. Once understood, this new knowledge should help transform foreign policies and strategies that will guide this nation forward. With regards to economics, the answer to that question raised by President Bush should form the basis for reforms. This is the revelation made after 9/11. But after that there are other events that revealed the weaknesses in the economy and coincidentally it also happened right after September 11. The corporate scandals figured prominently in 2002.
Before going further it must first be understood that the economy was already slowing down even before the deadly planes were even able to take-off. Robert Pollin acknowledged that, “The September 11 terrorist attacks were a horrible human tragedy that also created immediate economic costs to the travel and tourism industries while also spreading a sense of vulnerability among investors” (p. 5). Yet at the same breath Pollin also conceded that, “On balance, American capitalism’s economic beating as of mid-2002 was not being inflicted by Osama bin Laden” (p. 5).
This means that after 9/11, US businessmen learned two major ideas. The first one is that there are many countries around the world that hate the US. The second pertains to the economic imbalance present and the various weaknesses in the system that needs to rectified as shown in the domino-like stumbling of giant companies like WorldCom, Global Crossing, Tyco International, and other major U.S. corporations (Pollin, p. 4).
In order for the U.S. economy to fully recover and to gather full steam, it must change. The wisest thing to do is to answer that query made by President Bush. Why is it that much hate America where this nation is full of good intentions? This country has to stop dealing with the rest of the world on its own terms. The U.S. has to learn to be more diplomatic and most of all it must bravely do a cross-culture leap and patiently try to understand how others think. As the saying goes, try to think in the other person’s shoes. How does the rest of the world view America? In places of extreme poverty it is very possible that America can be viewed as a place of excess and the people living in it selfish beyond compare, content only in exploiting others just so they can prepare an excellent retirement fund. This is enough to make those in the Third World very angry.
America has to move quickly to address these issues or another 9/11 is just around the corner. Aside from opening minds and thinking out of the box. And aside from becoming culturally sensitive Americans need to have serious introspection. Economic recessions are no longer enigmas that could not be understood. The second the stock market crashes, experts can already explain why. There is no secret to it. The agents may change but the principle remains the same just like what happened in the Great Depression almost a century before. Pollin succinctly explained the root cause of any major recession while using events before and after 9/11 as a basis:
… a fragile foundation – a stock market in which prices had exploded beyond any previous historical experience, inducing an enormous expansion of, first, private consumption spending, then investment spending. But because neither household incomes nor corporate profits rose at anywhere near the pace of the stock market boom, the result was unprecedented borrowing to pay for the spending spree. (p. 6)
It is not surprising that under these conditions, accounting firms hired by troubled companies will be forced to “cook the books.”
The world has changed dramatically. Globalization and technology has transformed the way things are done. This includes how people do business. There is now a new buzzword New Economy. As mentioned earlier this is brought about by the shrinking of the globe either by a new understanding on the interdependency of economies or the advancements in Information technology that contributes connects the whole world in one web of networks.
Using the lesson learned after 9/11 – as discussed earlier – and using an understanding of the NE will compel policy makers and businessman to adopt changes. For instance it is not enough to rely on macro indicators to make accurate forecasting. Macroeconomic tools and data do not provide the whole picture. As Teodoro Togati has pointed out:
…standard indicators such as Gross Domestic Product (GDP) or employment or labour productivity do not fully allow us to distinguish between stable and unstable outcomes […] First, these aggregates are influenced by macroeconomic policies and the existence of automatic stabilizers […] Second, these aggregates provide an insufficient early warning system for policy makers. (p. 5)
Technology and Human Capital
The NE is characterized by high-tech. There is no indication that things will change. According to Togati it would be wise to become acquainted with various nuances that comes with it and he remarked:
…if we want to grasp the peculiarity of the NE, it would be useful to define it in terms of a few irreversible trends, such as the acceleration of technological change and to evaluate it in terms of corresponding new pieces of empirical evidence, such as Moore’s law – according to which computing power doubles every eighteen months (p. 5).
Togati’s view was supported by finding written in the book, “Strategic Management in the Knowledge Age” where the authors asserted that:
Just when managers think they have developed a strategy for future success, a new technology, process, competitor or customer behavioral pattern emerges. While a sharp focus and “sticking to the knitting” are sometimes the key to success in more stable conditions, the turbulent knowledge-driven markets of today require dynamic new strategic management approaches and tools. (Leibold, Probst, & Gibbert, p. 14)
The New Economy dictates a new manner of doing business because technology and human capital drive the NE. Leibold, Probst, and Gibbert summarized the major effects of these forces into the following:
· Information to knowledge and wisdom
· Bureaucracies to networks
· Training/development to learning
· Local/ national to transnational/global and metanational
· Competitive to collaborative thinking
Single connections to multi-connectivity to biocorporate systems in relationships among individuals, organizations and nature.
The world has changed since September 11. America has moved on since then but there are others who would not easily let go of their preconceived nations and their persistence to hold on to tools and learning strategies that were long been rendered obsolete (p. 16).
The realization that 9/11 is the not the only sole culprit in causing an economic recession months after the terrorist attacks is very insightful. With these businessmen and policy makers can easily pinpoint where the problem lies. Instead of putting all the blame on the terrorist attacks, the policymakers will not be side-tracked and place all their resources on the war in Irag. Another major thing to consider is to answer the query made in the introductory part of this paper. Why is there too much hatred directed against the United States? There is a need for America to change its image and to project a more gentle side. If America will not lead the way in helping the world’s poor then the Osama bin Laden’s of the future may perhaps recruit poor young boys from the marginalized members of society.
The post 9/11 American economy also revealed a weakness in the system that was entirely due to imbalances and weaknesses in the economy and has nothing to do with terrorists. The lessons learned here would truly be a gigantic step in reforms and how to secure the stock market from those who are more than willing to take advantage of any deficiency.
Yet even when America learns how to bridge the cultural gap, lessen the hostility of other nations and correct flaws in the way it does business there are still other important things that an American businessman must learn about. This is the New Economy and how it is affecting the world and the United States every single day since the 1990s.
In the NE new rules apply and the players who are ignorant of the new game book will suffer immensely. Thus, in this new game US businessmen must be knowledgeable about the lightning fast changes occurring in the tech world. This includes not only learning about the technology but also on how to deal with human capital that has to be developed, nurtured and sustained throughout the different phases of change. Experts are saying that it is key to create businesses that are sustainable and can handle the mind boggling changes that occurs at shorter intervals. Take for example Moore’s Law that uncannily predicts how and when computer technology evolves. This law has not yet been proven wrong and therefore businesses must expect that every two years or so human capital needs upgrade and not just the computer equipment in the office. This alone is significant in terms of strategy and decision making.
When all these things are considered, then American businessmen can now correctly make economic forecasts and be well prepared in designing tools and systems to deal with recessions and economic boom whenever they come.
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