America’s economy is powering away, but in other ways the nation is increasingly divided

The US culture wars rage on, even as the economy soars

One nation under God?

The US economy continues to impress. Following hot on the heels of recent GDP figures that showed growth at a handsome 3.2%, comes a strong set of productivity numbers.

Such a combination of strong growth and improving productivity can only be dreamed of by the other major industrialised nations, China aside, and it looks particularly successful in the context of the economic performance of Britain, where growth is anaemic and productivity stagnation has been a significant issue for years.

How has the US managed this economic feat?

What answer you get to that question depends of course on who you ask. The President, Donald Trump, will ascribe a great deal of US growth to his own policies, particularly his tax cuts. He’s also been highly vocal about challenging companies to do business in the US rather than outsourcing. And anecdotally, there is some evidence for success.

Economically literate Democrats, such as they are, would argue that actually the foundations of the current growth period were laid down in the Obama era by former Fed chair Janet Yelland, and President Obama himself.

And a politically neutral bystander might take a little of the arguments from both sides and arrive at something approaching a partial truth.

America’s traditional strengths remain as solid as ever: it’s a huge market that offers massive economies of scale to domestic producers, and it’s highly innovative. Indeed, it remains the most innovative nation in the world by some margin. The Chinese and Japanese are nowhere near, while the Europeans for all the theoretical virtues offered by the single market, remain a collection of much smaller nations, unable really to scale up what innovation they can produce.

America has scores of entrepreneurs for every British entrepreneur like James Dyson, and it has a truly integrated domestic market that’s grown up organically, and hasn’t been stitched together by legislative Frankensteins like the European one.

It’s no accident that one of the major issues in the ongoing trade spat between the US and China is that China is ripping off American ideas. China’s march to greatness has very little that’s original about it at all, it’s all about the American model and making cheaper knock-offs.

Americans should take heart that this is the case because while the rate of Chinese growth continues to outpace America’s, the country that knows how to innovate will in the end always have the competitive advantage.

The real risks to the USA’s position in the world lie more in the spheres of domestic politics than in economics. Electronic media has significant portions of the population at each other’s throats all the time, raging ideological war on Twitter and Youtube, and the fragmentation of the political discourse is beginning to have serious consequences. President Trump can argue with some justification about the fake news media that impugns him without justification, whilst also claiming to remain objective.

Only this week, the man who looks most likely to be President Trump’s main rival in the upcoming 2020 elections, Joe Biden, launched his campaign with a mischaracterisation of Mr Trump’s words after the Charlottesville violence that was drawn largely from the ongoing mainstream media narrative.

On the other hand, Mr Trump’s slapdash treatment of the normal forms of democracy has understandably raised alarm bells.

Encouraging violence against the press, even in a jokey way, is certainly not in the tradition of former Presidents. Publicly admonishing the chairman of the Federal Reserve is also unprecedented, particularly when it’s the policies of the Fed that have underpinned the current wave of prosperity in America. Mr Trump has a different narrative on that, but then Mr Trump is not an economist.

That this is all just the cut and thrust of politics in the modern era is arguable. But there are cracks in the surface that may or may not widen. When a white supremacist shooter in New Zealand cites US conservatives and British-based Youtube stars as major influences, it isn’t hard to make a case that globalisation isn’t all good.

On the face of it, American is becoming less and less united, even as its economy begins to revitalise. The real question in the months and years ahead will be how much disconnect there is between US economic performance and the concerns and welfare of its citizens.

After all, well-being is by no means always about GDP, as Brexit clearly showed.

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