PressNewsCompanyPoint of view: Reawaken the American dream: An Open Letter from Germany

Reawaken the American dream: An Open Letter from Germany

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In an open letter, Allianz CEO Oliver Bäte calls for concerted action by the United States to restore social consensus. Investments should be made to both reinforce the democratic foundation of the country and overcome the structural problems hurting the competitiveness of the economy

 

Allianz SE
Munich, Oct 26, 2016

Allianz-Oliver Bäte, CEO of Allianz SE: The core element of this democratic leadership was always the

Oliver Bäte, CEO of Allianz SE: The core element of this democratic leadership was always the "American dream".

The world followed the United States in the 20th century primarily because it was the leading democracy, not so much because of its economic and military might. Only a return to this democratic strength will ensure America's success in the future.

 

At the heart of this democratic leadership was the “American Dream”: the proverbial opportunity for all citizens and immigrants to work their way up from rags to riches. It involved basic democratic elements of an enterprising and fair society: equal opportunities with social mobility, free markets and entrepreneurial spirit, personal freedom and security.

 

The attractiveness of the American way of life is evident in the high levels of immigration to the country from all over the world.

 

In the 25 years that followed the fall of the Berlin Wall – an event that brought a new wave of globalization – some 25 million people migrated legally to the United States. Even those who didn't become millionaires could, with sufficient personal effort, lead a socially and economically fulfilling life, with each generation doing better than the one before.

 

For a couple of years now, that has not been the case. Even with last year's strong rise, the average real income of households remains significantly lower than its peak in 1999. The shrinking middle class and the poor sections of society experienced a disproportionate decline. During the last three decades, only families with high income have enjoyed a significant growth in real income.

 

Today, 15 percent of Americans live in poverty, a percentage higher than in most other industrialized countries.

 

Educational opportunities also are unfairly distributed. According to an Organization for Economic Co-operation and Development study released in 2015, about 37 percent of engineers and scientists worldwide will be Chinese by the year 2030. In sharp contrast, only about 4 percent will be American.

 

Simply put, too many children in the US leave public schools, leading to woeful gaps in knowledge. At the same time, education at top US universities is still the gold standard for every knowledge-driven society but it is a privilege, meant only for the elites.

 

Inequality is rising also in the corporate world. Since the banking and economic crisis, large firms have remained in a relatively good position but small companies have been struggling hard. We have also seen a rise of entities that borders on monopolistic, for example, in the credit sector.

 

Structural problems, not cyclical ones, are undermining the US economy’s competitiveness and widening the divide between the rich and poor. The pension gap is widening. Despite reforms, only the rich can afford high-quality healthcare, even though eight years after the financial crisis, the average annual US growth is 2 percent, unemployment has halved to 5 percent and real wages have started rising recently.

 

A more visible sign of standstill is the country’s infrastructure, which sometimes resembles that of a developing nation. A greater cause for concern is the near stagnation in labor productivity.

 

Recently, President Barack Obama made this point in The Economist. The average growth of 2.5 percent in labor productivity between 1949 and 2005 has slowed in the past three quarters to 0.5 percent. The last year with such weak growth in productivity? 1979!

 

Americans sense that these developments threaten their prosperity. The country’s claim that it is the world's leading democracy has been wobbly since the failed wars in the Middle East and the global financial crisis, which began on Wall Street.

 

However, many overlook the structural problems because of the strength of private American companies and the country's military dominance. Without the United States, Europe would scarcely be able to defend itself. And of the 10 most valuable companies in the world, the top nine are American.

 

Nevertheless, undeniable strengths must not make America blind to a self-critical analysis of its shortcomings and the need for reforms. Otherwise, polarization and paralysis in many sections of US society will linger: a partisan cold war in Congress, excesses in the presidential campaign and conditions resembling a civil war in big cities with a large population of minorities.

 

For that reason, after election day, US politics must make a concerted effort to put the country's interests over any special interest. Opportunities that are not fully available to broad sections of the population must be reopened, with the same optimism and pragmatism that symbolized the United States once upon a time.

 

There is a need for greater investment, innovation and efforts to spread the wealth wider. It’s time for a growth policy that doesn't exclude extensive parts of society and strengthens American small and medium-sized businesses.

 

Among the tasks awaiting the new government are: equal opportunities in education and social mobility, modernization of public and social infrastructure, and support for personal freedom and security. If social consensus isn't achieved, there is reason to fear that the fissures in US society will become bigger, despite the internet millionaires.

 

I wish to see the United States regain its social and economic unity under the great idea of the American Dream, so the country once again becomes the land of unlimited opportunities.

 

We, as friends and partners, should do all we can to help America return to its democratic strength and implement required reforms. That will be good also for Germany and Europe.

 

 

This article is an edited version of a column published by German publication Handelsblatt on October 25, 2016 and by Handelsblatt Global Edition on October 26. The opinions expressed are those of the author.

  Forward Looking Statement disclaimer

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:

 

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Christian Kroos
Allianz SE
Phone +49.89.3800-5043
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