An American nightmare

Nations, like people, occasionally get the blues; and right now the United States, normally the world8217;s most self-confident place, is glum. Eight out of ten Americans think their country is heading in the wrong direction. The hapless George Bush is partly to blame for this: his approval ratings are now sub-Nixonian. But many are concerned not so much about a failed president as about a flailing nation. One source of angst is the sorry state of American capitalism. The 8220;Washington consensus8221; told the world that open markets and deregulation would solve its problems. Yet American house prices are falling faster than during the Depression, petrol is more expensive than in the 8217;70s, banks are collapsing, the euro is kicking sand in the dollar8217;s face, credit is scarce, recession and inflation both threaten the economy, consumer confidence is an oxymoron and Belgians have just bought Budweiser, 8220;America8217;s beer8221;8230;

Economic envy, once seen as a European vice, is now rife. The rich appear in Barack Obama8217;s speeches not as entrepreneurial role models but as modern versions of the 8220;malefactors of great wealth8221; denounced by Teddy Roosevelt a century ago8230; Globalisation is under fire: free trade is less popular in the US than in any other developed country, and a nation built on immigrants is building a fence to keep them out8230;

America has got into funks before now. In the 8217;50s it went into a Sputnik-driven spin about Soviet power; in the 8217;70s there was Watergate, Vietnam and the oil shocks; in the late 8217;80s Japan seemed to be buying up America. Each time, the US rebounded, because the country is good at fixing itself. Just as American capitalism allows companies to die, and to be created, quickly, so its political system reacts fast. In Europe, political leaders emerge slowly, through party hierarchies; in America, the primaries permit inspirational unknowns to burst into the public consciousness from nowhere. Still, countries, like people, behave dangerously when their mood turns dark. If America fails to distinguish between what it needs to change and what it needs to accept, it risks hurting not just allies and trading partners, but also itself.

Excerpted from a leader in 8216;The Economist8217;