Yet there is also another America, where things work. One hint comes from what those bosses like to call the real economy. Recent numbers from the jobs market and the housing sector have been quite healthy. Consumer balance-sheets are being repaired. The stockmarket has just hit a record high. Some of this is cyclical: the private sector is rebounding from the crunch. But it also reflects the fact that, beyond the District of Columbia, the rest of the country is starting to tackle some of its deeper competitive problems. Businesses and politicians are not waiting for the federal government to ride to their rescue. Instead, as our special report this week shows, they are getting to grips with the failings Congress is ignoring.Of course let's note not all states are working the way you see in the examples here. Illinois continues to struggle and in fact there is even a debate over fracking here as well. This state is certainly looking for answers to jobs and economic growth and fracking is one although there are certain constituencies that want to get into the way of that.
One reason for optimism is that America’s inventors are as busy as they have ever been, and its entrepreneurs are seizing on their ideas with the same alacrity as always. Investment in research and development as a share of output recently matched the previous record, 2.9% of GDP, set at the height of the space race. America is home to 27 of the 30 universities that put out the most-cited scientific research—and it is still good at developing those ideas. Although many countries possess big reserves of oil and gas trapped in impermeable rocks, American businesses worked out how to free that energy and then commercialised that technology at a rapid pace; the resulting “shale gale” is now billowing the economy’s sails.
Some of the money for fracking technology came from the federal government, but the shale revolution has largely happened despite Mr Obama and his tribe of green regulators. It has been driven from the bottom up—by entrepreneurs and by states like North Dakota (see article) competing to lure in investors with notably more fervour than, say, France.
This fits a pattern. Pressed for cash, states are adopting sweeping reforms as they vie to attract investments and migrants. Louisiana and Nebraska want to abolish corporate and personal income taxes. Kansas has created a post called “the Repealer” to get rid of red tape and pays a “bounty” to high schools for every vocational qualification their students earn in certain fields; Ohio has privatised its economic-development agency; Virginia has just reformed its petrol-tax system.
In this second, can-do America, creative policymaking is being applied to the very problems Congress runs away from, like infrastructure spending. While the federal government twiddles its thumbs, states and cities, which are much shorter of cash, are coming up with new ways to raise money for roads, bridges and schools. Chicago has a special trust to drum up private funds to refurbish decrepit city buildings. Indiana has turned to privatisation to raise money for road-building.
Even education is showing some signs of change. The states are giving America’s schools their biggest overhaul in living memory. Forty-five of them are developing new curriculums. Tests are becoming more rigorous, and schools and teachers are at last being held accountable for results. Thirty-eight states have reformed teachers’ pay, tying it, in many instances, to their students’ exam results. Forty-two now allow independently managed, but government-funded, “charter schools”. It is too soon to tell what this upheaval will yield, but a long overdue shake-up is finally under way.
Regulation, innovation, infrastructure, education: each of these is crucial to competitiveness. Put together the small things happening in the states, and they become something rather big. That is the essence of the America that works.
In the meanwhile, the federal government is doing what it does and well certainly many are still waiting for leadership there.