Transporting goods by water is 12 times cheaper than by land – US Economy Strong Despite Public Gloom

4 Dec

Fareed Zakaria: US Economy Strong Despite Public Gloom
http://www.newsmax.com/FareedZakaria/Economy-Japan-Recession-United-States/2014/11/21/id/608853/Friday, 21 Nov 2014 12:25 PM

Fareed Zakaria hosts CNN’s “Fareed Zakaria GPS,” and makes
regular
appearances on shows such as ABC’s “This Week” and NBC’s
“Meet the
Press.” He has been editor at large at Time magazine since
2010, and
spent 10 years overseeing Newsweek’s foreign editions. He is a
Washington Post (and internationally syndicated) columnist.
He is
author of “The Post-American World.”

Two-thirds of Americans believe the country is on the wrong
track, a
poll number that has not shifted much in three years. The
midterm
election results were just another reflection of this pervasive
discontent. And yet, if one looks at the rest of the world, what’s
striking is how well the U.S. is doing relative to other major
economies.
Japan is back in a recession and Germany has barely avoided
slipping
into one, which would have been its third since 2008. President
Obama says the U.S. has produced more jobs in its recovery
than the
rest of the industrialized world put together.
Why is this? Many believe that the American economy has
some
inherent advantages over its major competitors–a more
flexible
structure, stronger entrepreneurial traditions, and a more
demographically vibrant society. Along comes a fascinating
new book
that says you ain’t seen nothing yet.
Peter Zeihan’s “The Accidental Superpower” begins with
geography,
pointing out that America is the world’s largest consumer
market for
a reason–its rivers. Transporting goods by water is 12 times
cheaper than by land–which is why civilizations have always
flourished around rivers.
America, Zeihan calculates, has more navigable waterways–17,600
miles’ worth–than the rest of the world combined. By
comparison,
he notes, China and Germany have about 2,000 miles each. And
all of
the Arab world has 120 miles. That’s just the beginning. “The
world’s greatest river network … directly overlies the world’s
largest piece of arable land, the American Midwest.”
Add to this deep water ports, which you need in order to get
goods
to and from the rest of the world. Many countries with long
coastlines have very few natural harbors. Africa, for example,
with
a long and dramatic coastline has, according to Zeihan, “only
10
locations with bays of sufficient protective capacity to justify
port construction.”
The contrast in America is, again, striking. Puget Sound, San
Francisco Bay and the Chesapeake Bay are the world’s three
largest
natural harbors. “[The] Chesapeake Bay alone boasts longer
stretches
of prime port property than the entire continental coast of Asia
from Vladivostok to Lahore,” Zeihan writes.
All of these factors have created the world’s largest consumer
market, which in turn creates surplus private savings and a
dynamic,
unified economy that is remarkably self-sufficient. Imports
made up
just 17 percent of the American economy in 2012, according to
the
World Bank, compared with Germany’s 46 percent and China’s
25
percent–and the U.S. number will fall as America imports less
and
less foreign oil.
Many people have argued that America’s energy revolution will
give
it great economic advantages. Zeihan agrees, but emphasizes
the
degree to which this strength will insulate America from the
rest of
the world. For most of modern history, the vital sources of
energy,
in the Middle East, lay far away from the centers of economic
production–in Western Europe and North America.
But now, thanks to shale and tight oil, North America has much
of
the energy it needs at home. It has less need to police sea
lanes in
the Persian Gulf, a task that now mostly ensures the safe
passage of
oil from Saudi Arabia to China.
For Zeihan, oil was one big reason America needed to be
involved
with the world. As the world gets messier, he argues, there are
fewer compelling reasons for America to pay blood and
treasure to
stabilize it. In a sense, Zeihan sees some of the same
international
disorder that Bret Stephens does in his spirited new book,
“America
in Retreat.”
But Zeihan would argue that its cause is not Obama’s
weakness but
America’s logical return to its traditional, pre-1945 strategy, to
prosper far from the ills of the world.
I am not as sure as either Stephens or Zeihan that the rest of
the
world is going to hell. And I’m not as sure as Zeihan that
America’s
advantages are chiefly structural.
If one looks at the last five years, again in comparative terms,
American public policy actually comes out looking impressive.
To
combat the global economic crisis of 2008, Washington acted
speedily
and creatively in three ways–through aggressive monetary
policy,
aggressive fiscal policy, and aggressive reform and
recapitalization
of the banking sector.
Every other rich country did less and has seen a more troubled
return to normalcy.
Since the response to the financial crisis, Washington has been
paralyzed and polarized. But this is not the entirety of American
politics.
Beyond the Beltway, mayors and governors are reaching
across party
lines, partnering with the private sector, and making reforms
and
investments for future growth. When de Tocqueville wrote
about
America in the 1830s, he was struck by the bottom-up vitality
of its
towns and villages. This genius of America is still alive,
whatever
most Americans think.

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