How Long Will America Lead the World?

There are some who see the decline of science and technology as part of a larger cultural decay. A country that once adhered to a Puritan ethic of delayed gratification has become one that revels in instant pleasures. We're losing interest in the basics--math, manufacturing, hard work, savings--and becoming a postindustrial society that specializes in consumption and leisure. "More people will graduate in the United States in 2006 with sports-exercise degrees than electrical-engineering degrees," says Immelt. "So, if we want to be the massage capital of the world, we're well on our way."

There is a puzzle in all this, however, which is that these trends and features have been around for a while, and they do not seem to have had an impact--so far at least--on the bottom line, which is GDP growth. Over the past 20 years, America's growth rate has averaged just over 3 percent, a full percentage point higher than that of Germany and France. (Japan averaged 2.3 percent over the same period.) Productivity growth, the elixir of modern economics, has been over 2.5 percent for a decade now, again a full percentage point higher than the European average. In 1980, the United States made up 22 percent of world output; today that has risen to 29 percent. The U.S. is currently ranked the second most competitive economy in the world (by the World Economic Forum), and is first in technology and innovation, first in technological readiness, first in company spending for research and technology and first in the quality of its research institutions. China does not come within 30 countries of the U.S. on any of these points, and India breaks the top 10 on only one count: the availability of scientists and engineers. In virtually every sector that advanced industrial countries participate in, U.S. firms lead the world in productivity and profits.

The situation with regard to higher education is even more dramatic. A new report, "The Future of European Universities," from the London-based Center for European Reform, points out that of the world's 20 top universities, 18 are American. The U.S. invests 2.6 percent of its GDP on higher education, compared with 1.2 percent in Europe and 1.1 percent in Japan. The situation in the sciences is particularly striking. A list of where the world's 1,000 best computer scientists were educated shows that the top 10 schools were all American. Our spending on R&D remains higher than Europe's, and our collaborations between business and educational institutions are unmatched anywhere in the world. America remains by far the most attractive destination for students, taking 30 percent of the total number of foreign students globally. These advantages will not be erased easily because the structure of European and Japanese universities--mostly state-run bureaucracies--is unlikely to change. And while China and India are creating new institutions, it is not that easy to create a world-class university out of whole cloth in a few decades.

The American economy is also particularly good at taking technology and turning it into a product that people will buy. An unusual combination of an entrepreneurial culture, a permissive legal system and flexible capital markets all contribute to a business culture that rewards risk. This means that technology is quickly converted into some profitable application. All the advanced industrial countries had access to the Web, but Google and the iPod were invented in America. It is this skill, as much as raw technological brain power, that has distinguished the American economy from its competitors'.

And then there are the demographics. The United States is the only industrialized country that will not experience a work-force or population loss in the coming decades, thanks to immigration. Germany and Japan are expected to see their populations drop by 5 and 12 percent, respectively, between now and 2050. China will also face a demographic crunch. By 2040, it will have a larger percentage of elderly people than the United States. The one-child policy has led to something that China's demographers call the "4-2-1 problem"-- four grandparents and two parents will have to be supported by one worker.

The United States' share of the global economy has been remarkably steady through wars, depressions and a slew of rising powers. It was 32 percent in 1913, 26 percent in 1960, 22 percent in 1980 and 27 percent in 2000. With the brief exception of the late 1940s and 1950s--when the rest of the industrialized world had been destroyed--the United States has taken up about a quarter of world output for about 120 years and is likely to stay in roughly the same position for the next few decades if it can adapt to the current challenges it faces as well as it adapted to those in the past .