The dollar's decline means the U.S. might no longer be the leader of the economic pack on the world stage. But that doesn't mean the U.S. will fade into oblivion, although we will no longer have the economic clout to dictate outcomes.
The decline of the dollar is the result of a long list of self-inflicted economic ills, including an impossibly large federal budget deficit, our huge international trade deficit, weak savings practices by Americans and the cost of the Iraq war. As a consequence, Americans might receive the ultimate culture shock: the need to adjust to a lower standard of living.
These factors will lead to significant inflationary pressure. This sudden lower standard of living will be hard for the public to tolerate while wages and the cost of living move up and interest rates climb to keep inflation under control.
However, there is a silver lining behind these dark clouds. The historic decline of the dollar is finally having a positive impact on exports. This is good news indeed in that many U.S. manufacturers were not competitive on a global basis due to high wages and costly benefits at home compared to incredibly low wages and few benefits in some parts of the world. U.S. manufacturers will gain a new sense of competitiveness over the next few years.
There is no escaping the fact that 2008 will be a critical time for U.S. business, labor and government leaders to come together to galvanize cohesive policies to make our economy more competitive and appealing to a global marketplace. This is literally a once in a lifetime opportunity, and I only hope we have the selfless leadership and sense of purpose needed to reignite our powerful economic engines.
There is something every one of us can do to help. As a culture, we need to stop taking our success for granted. We've got to understand why our global competitors are winning. Who has succeeded and why? Who is beating our brains out and why? We need to understand what global customers want and need. We need to understand why we are hated in many parts of the world and what is causing the decline of our brand image among friends and allies.
I'm not suggesting that we need to change our culture entirely, but we certainly need to re-evaluate how we communicate our culture.
If the American brand is the sum of everything we say and do, when you look at our cultural communications objectively, it's not pretty. We need to rethink who we are, not by government mandate, but because it makes economic sense. And that is something Americans understand.
James R. Gregory is CEO of CoreBrand. He can be reached at firstname.lastname@example.org.