USA vs SA 2012

Ok, so I’ve just finished a roadtrip though the USA: 41 days, 13 states, 10,000km.

This is my 9th trip to the USA since 1999, during which I’ve worked, lived, studied and holidayed through California, Nevada, Arizona, Texas, Oklahoma, Illinois, Florida, Louisiana, Texas, Alabama, Mississippi, Tennessee, Kentucky, West Virginia, Virginia, DC, Massachusetts, South Carolina, and New York.

Conclusion: I’m happy and grateful to live in South Africa!

Don’t get me wrong. The States is an amazing place… beautiful landscapes, world-class roads, great beaches, friendly people, awesome cities, tasty steaks, and the land of convenience.

But it has problems.

To me, the biggest danger is consumerism. Its difficult to understand what the word “consumerism” truly means without seeing it for yourself, but suffice to say America is the pinnacle, an uncontestable fact when confronted with the all-pervasive advertising, the easy availability of debt, and the magnificent convenience of buying “stuff”.

1.             You are bombarded by advertising ALL THE TIME. Every five minutes the radio or TV broadcast is interrupted by advertising. Children’s TV is saturated with adverts for sweets, followed by adverts for medicine to deal with obesity and constipation, followed by one last sweetie ad, before reverting to SpongeBob Squarepants.

“Eat food that will make you feel sick, then pop a pill to make yourself feel better.”

The roads are littered with billboards. They are everywhere, like futuristic forests, topped with neon signs that shout “Burger King, McDonalds, Taco Bell, Pizza Hut, Etc.

2.             Everyone is geared (with debt, not just guns) to the teeth. Why? Because credit allows consumers to buy more stuff with money they don’t yet have. Forget about creditworthiness, the sale is more important. It’s easy to see how sub-prime happened, and it’s easy to see where the next bubbles have formed.

3.             Lastly, it is super-easy to buy stuff. Arriving back in SA I find myself becoming quickly irritated by waiting twenty seconds for the machine to read my credit card, then spending another five seconds typing my PIN, and then another twenty seconds waiting for the machine to print a receipt.

In the States, for purchases under $100 the transaction is instant. Swipe, take receipt, go.[i] Ten seconds max. I have a suspicion that the banks don’t even check whether your account has funds, so desperate is everyone to make sure the music doesn’t stop.

Why is consumerism the problem? Personally, it made me feel a bit sick after a while. The incessant crowd of voices shouting at you to buy stuff, and no one, ever, telling to keep your wallet in your pocket can lead to some serious decision fatigue! And the shameless marketing to children makes the pressure worse by an order of magnitude.

The country is saturated with useless “stuff”, debt, and low prices. Many people are almost frantic in their rush to get more stuff, buying bigger houses to simply store the excess!

After three decades of allowing the US dollar to appreciate (the strong dollar policy makes imports cheaper and fuels consumerism, whilst simultaneously destroying exports and hollowing-out the local manufacturing industry), the government has started printing money (see Inflation in America).

Result: Due to a weakening dollar imports will become more expensive. That, coupled with the de-gearing of the US consumer as the hangover of 2008 sub-prime crisis drags on, and you’re confronted with an existential challenge to the consumer-driven economy.

That’s not happy news for the average American. It’s no longer about avoiding a lowering of the average standard of living, it’s about managing the process.

Politics

The Republicans seem to be finished. The extreme right wing (funded by special interest groups such as the National Rifle Association and the Koch brothers) has fatally tainted the more moderate Republican candidates. The current mess of the “fiscal cliff” is the best example. Until the 90s, the core of traditional Republican policy was balanced budgets, i.e.: do not spend more money than you earn.

Today, the party has veered to the unbendable mantra of “No tax increases, ever”. A refusal to budge on this issue has led to the current gridlock on the budget and an ostrich-sized egg on the face of the Republicans in Congress.

Winston Churchill once said: “A fanatic is one who can’t change his mind and won’t change the subject.”

By this definition the Republicans are as fanatical as Al Qaeda. But when I look at the Democrats (funded by special interest groups such as the trade unions and Google) I don’t get a happy feeling. On the one hand you have the stronghold of San Francisco, comprising highly educated (and liberal) voters (think Google employees). On the other hand you have the teachers union (the single biggest reason education in America is going pear-shaped is that the union refuses to allow non-performing teachers to be disciplined, sound familiar?)

The worldviews of Googlers and unionists could not be more different, and yet they find themselves voting for the same party due to a lack of alternatives.

What is the solution? I’m sure things will work themselves out, but, as with the economy, it will be at least a decade before the Republicans come to their senses and balance is restored. Until then, be prepared for political disillusionment on a scale even grander than under George W Bush.

Economy

Whilst the US economy will be the world’s biggest for a long time still (regardless of what the China-nuts say), for most people it is no longer the land of opportunity.

Any gains in GDP are being invisibly erased by inflation. The three-decade-old  “Strong Dollar” policy has hollowed out the manufacturing sector, effectively outsourcing blue collar jobs and allowing Asia to grab a greater share of the “value capture” component of industry[ii], whilst America is left with the revenues and jobs generated by “value creation.” (Value creation vs value capture.)

That works great for locals like Mark Zuckerberg and immigrants like Elon Musk. It spells doom for Average Joe.

For Joe, the weakening dollar is the light at the end of the tunnel, boosting the competitive advantage of American exports, encouraging local manufacturing and creating blue-collar jobs.

But, it will take a long time before the economy has created sufficient opportunities for unskilled and semi-skilled workers.

For the middle class the USA is no longer the Land of Opportunity. It is the Land of Keeping-Your-Head-Above-Water.

Education

Watch a movie called “Waiting for Superman”, and then spend some time traveling and working in America. The inevitable conclusion is that, as in South Africa, education is a disaster for the majority of Americans.

Problems? Curriculum. Texas has voted to allow “creationism” to be included in the schools curriculum, and because they are such a dominant force in the textbook market, their curriculum is de facto forced upon the rest of the country.

Literacy and numeracy rates are falling, and the consensus is that the majority of schools are simply not producing useful participants for the economy.

Teachers seem to be the biggest problem, most of whom seem more interested in collecting their paycheck than it educating children. Headmasters and administrators are unable to discipline non-performing teachers due to political pressure brought to bear by the powerful teachers unions.

In other words, education in America is no better than education in SA. If you have money your kids will get a great education. If you don’t, they won’t.

Healthcare

Until recently, if you didn’t have a job and you needed medical attention, you died. Obamacare has extended coverage to the unemployed, but seems to have created a further problem: You receive better healthcare if you are unemployed than if you earn an income below a certain threshold, thereby incentivizing low-wage earners to join the ranks of the unemployed to receive healthcare benefits.

It is a massively contentious issue in the States, with enormous special interest groups (healthcare, pharmaceutical and insurance companies) creating noise in the periphery and thousands of professionals protesting against a seeming end to the private sector monopoly on sick people.

The consequence of decades of all-private healthcare is that most doctors cram as many consultations into a day. Forget about spending thirty minutes discussing that funny rash behind your ear, at most you have ten minutes to get a prescription and get out (the doctors seem to make more money from pharmaceutical kickbacks than from paying customers!)

And, care is expensive. My wife went for a standard 14-week pregnancy scan and it cost $600!

If you’re rich, America is a great place to be sick. If you’re not, its not.

Food

For detail on the food problem, read “The quickest way to improve health in America”.

Suffice to say we can be grateful we haven’t gone down the road of America with regard to fast food. It is everywhere, it’s extremely tasty, and it’s cheap.

The standard portion in the USA makes a South African super-size look like a starter at a French restaurant. The most ironic moments are when someone (weighing in at over 150kg) orders the super-size Big Mac and fries, with a Diet Coke.

Alrighty then.

I’ve never been a fan of regulation, but when you see how powerful some industries have become, ranging from gun control to healthcare, it is clear there is a role for a strong player that has no profit motive. And that player can only be government, and his weapons are regulatory.

“You are what you eat.” When one considers that the cause of most health problems are nutrition-related, a simple solution is to introduce “sin” taxes on junk food, as we do with alcohol and cigarettes. Use price to nudge consumers towards more healthy behaviour, making them happier and saving you money in government-supported healthcare.

Good luck getting that past the Big Food lobbyists in DC.

Taxes

A common gripe of South Africans is we pay too much tax, and the tax we do pay is misspent. Whilst I don’t contest that much of our tax money could be better spent, it’s always good to put things in perspective.

The major tax rates in America are as follows:

Marginal income tax                                    42% (budgeted to increase to 48%)[iii]

Dividends tax                                    19% (budgeted to increase to 48%)

Exit tax (renounce citizenship)      45% of net wealth

Sales tax (varies between States) 0 to 10%

Not so tempting is it now, Nigel? For more on taxes read “Some perspective on taxes in SA”.

Inequality

Someone once tried to convince me that it is better for society for everyone to be poor than for a minority to be rich and the majority to be poor. His point was that inequality is the root of discontent, and to have a visibly unequal society is the path to disaster.

After reading many books on the subject I’ve come to two conclusions:

1.             He’s right that inequality is the root of many social problems. For an excellent read check out The Spirit Level by Kate Pickett and Richard Wilkinson. Turns out there is plenty of proof that inequality is a cause and not just a symptom.

2.             He’s wrong that the answer is for everyone to be poor.

I’m not sure what the answer is, especially in a country with the highest Gini coefficient in the world (i.e.: South Africa), but I do know that America ain’t exactly egalitarian. Visit Memphis sometime, all is not well in Graceland.

And it’s getting more unequal. The economic issues I’ve described above will necessarily move more of the middle class into the lower class, whilst the richest get richer.

The result will be greater visible inequality and discontent in society (already manifested in the Occupy Wall Street movement), as if America doesn’t have enough challenges.

As a random aside: Touring the French Quarter of New Orleans, our guide explained that whilst all the houses have a very modest street-facing façade, the interior extends into massively luxurious living areas, including pools and gardens.

Reason: The wealthy French understand not to rub their wealth in the noses of the masses.

Dora the Explorer

Between Dora the Explorer and SpongeBob Squarepants, pretty much all goods in America are covered.

Car seats, crayons, bubbles, carrots, clothes, drinks, and fish fingers. You name it, it has been “endorsed”.

And, speaking from personal experience, it is very difficult resisting the repeated pleas of a four year old to buy the Dora Explorer Lawnmower. I was tempted to get blinders (as in horse blinders) for my kids whilst walking through Wal-Mart…

It has finally clicked for me that if you can create a character loved by children, you can take over the world.

RVs

Having spent most of our time driving an RV, I have some insight into this way of life. Firstly, don’t knock it till you’ve tried it. There’s a lot to be said for sitting outside your vehicle, tending the fire, in your foldout chair, beer in hand, and watching your kids play on the communal jungle gym.

Pools, jacuzzis, fast free Wi-Fi, the parks are better than most hotels! And don’t worry about having a truck driver’s license. As a fellow trailer park resident explained to me: “This is America. You pay, you drive.”

There are RV parks everywhere, and it seemed to us that most of the inhabitants were elderly (in fact, many of the parks are for over-55’s only). I’m sure there are some places where the Jerry Springer people hang out, but we didn’t see them.

For some tips on RV life, read “7 rules for RV’ing in America”.

Guns

To get a taste of the views of many millions of Americans, read “4 arguments for less gun control”.

The gun debate is completely polarized. A big chunk of Americans believe life would be empty without at least three semi-automatic assault rifles. You are as likely to change their minds as you are of convincing the Pope to accept Allah as the One True God.

For my part, I can see both sides of the argument, and although I would go with the guys in favour of a gun-free society, who am I to force the gun-nuts to change their way of life? Let them keep their guns, but keep them away from my kids.

Which brings me to the most obvious solution to America’s socio-political-culture woes. Secession. Just as Sudan was split into south (Christian) and north (Muslim), let America split into The South (conservative) and The Rest (liberal).

To a sane person, assuming I am sane, the divide seems un-crossable and is at the root of most of the problems in that country. On the other hand,maybe the tension created by the constant tug-of-war is what creates America’s magic…

Coffee

Outside of places like Boston, NYC and San Francisco, the average coffee in the States is on a par with the average coffee in the Karoo. Super-kak.

Travelling on business, I spend most of my time in the afore-mentioned places… this led to me to have a high regard for American coffee and a low regard for Starbucks, the great evil of the coffee world, he who is responsible for the best Arabica crops in the world being replaced with Robusta in order to produce beans cheaply enough to make a profit selling to Starbucks… (robusta beans are more robust, funny that, and therefore less prone to being wiped out by pests or inclement weather.)

And then I drove across America. I now love Starbucks. Sweet sweet Starbucks, where would I have been without you? It may not be the best coffee in the world, but it is above average, and more importantly, it is consistent. That is the secret to marriage, business and world peace. Consistency.

For the record, outside of major coastal cities (and maybe Chicago and Austin), coffee in the States is rectal-pr0lapse-inducing.

Opportunity

There are just as many problems in America as there are in SA. Our problems seem far more existential, but when you see how frozen and corrupt US politics is, it doesn’t seem so bad at home.

Imagine being confronted with five more years of Bush?

In fact our problems present opportunities that Americans can only dream of. 25% unemployment means that a quarter of our workforce is not contributing to the economy. Solve that problem and you can exponentially grow GDP, nevermind the benefits to social problems such as crime.

Education a disaster? We’re already one of the most powerful countries in the world, if we can fix numeracy and literacy in our schools imagine what our growth would be?

Tourism is a fraction of what it should be. Why? The world thinks SA is filled with murderers and racists. Why? Because the ex-pats spend all their time providing horrific stories of crime in SA to explain why they no longer live here. And our media shines a giant spotlight on all our failings, proudly showing the world how bad we are.

Leadership? Say no more! Plenty room for improvement there, in all spheres…

Crime? One great thing about America is that you feel safe (notwithstanding the odds of being taken out by a psycho in camo gear and armed with three semi-automatic assault rifles.) There is a lot to be said for personal security, and we still lack this at home. But places like New York were war-zones in the 80’s and early 90’s, and they fixed it. If they can, we can, and that one act would completely change perception of our country.

Fix the problems and SA can take off like a rocket ship, leveraging its geographic advantage as the gateway to Africa, the fastest growing economic region in the world, blessed with resources and a demographic dividend that has Europe, Asia and America reaching for their napkins to wipe away the drool. (PS: check out In Defense of Big Families for a short note on why having kids ain’t such a bad idea.)

That’s why a trip to America makes me even more excited about SA. Aside from the soft factors like sport, humour and people, we have something that the rest of the world is desperate searching for:

Opportunity.

Opportunity comes in different flavours. For example, in a business context you can start an audit firm or you can start Google. An audit firm has far less risk but your upside is capped by the number of hours you can sell.

Google, on the other hand, is much much harder to get right, but your financial upside is virtually unlimited! (Google now makes $100million every single day.)

America is like an audit firm, South Africa is like Google. We have much bigger risks, but living in SA brings much bigger potential for upside.

This applies to business, politics, or social good (which includes journalism). There is so much to do here, and it all has big impact!

Conclusion

One thing I must give the Americans is they have a firm grasp of the importance of branding, marketing and communication. The guys are genii. Look at Congress… “The Patriot Act”, “The No Child Left Behind Act”, “The Coalition of the Willing”. Who would vote against names like that?

They know how to sell, and they know how to repeat their message to the point where you dream of little M&M’s stitching your head to the carpet.

That is where we fall short. Saffers believe in substance over form. If you build it they will come. Modesty over bragging.

It’s a noble (and personally appealing) way to think of the world, but it is simply not realistic.

How on earth is the average European, Asian or American supposed to form an accurate opinion of SA (and Africa) unless we tell them our good stories?

In the real world, people are busy. They don’t have time to scratch beneath the surface, unless you grab their attention they will not give you the time of day.

Selling the dream starts with belief.

America will survive because Americans believe they will succeed, regardless of the truth on the ground. And they tell you.

South Africa succeeds in spite of a lack of belief. Whilst many of us are fully invested in our country, there are also many who do not believe we’ll succeed, and every five years we awaken surprised to find the lights still work.

“You miss 100% of the shots you don’t take.”

Sometimes you just gotta believe. We have the substance, all we need is the form.

[i] USA banks chose not to comply with the global move to “chip & pin” cards, probably because it would have meant a slightly less convenient retail experience for buyers and less credit utilisation!

[ii] If you think this is theory, take a drive through the “rustbelt” some day. It is like a scene from a dystopian future, it’s not hard to see where the inspiration for Hunger Games came from.

[iii] http://marginalrevolution.com/marginalrevolution/2012/12/how-much-might-marginal-tax-rates-be-going-up.html