Roger Altman: America's Revival Defies Washington's Sclerosis
It is hard to find someone who is not pessimistic about America. Two-thirds of our citizens see the country on the wrong track, particularly because they hate Congress and do not much like the president. Internationally, there is much hand-wringing over American decline.
Such gloom mistakes Washington for the country as a whole – an error that has often been made during the periods of federal dysfunction that are a recurrent theme of US history. We are again hearing that because Washington is stuck, the country is too.
It is not. The US is actually making a comeback. Stunningly positive social and economic changes, unthinkable even a decade ago, are taking place, driven by traditional American strengths of local leadership, private enterprise and individualism, which always dwarf Washington’s impact.
Look at crime. Twenty-five years ago, this was the top public concern. But better local policing and lower hard drug usage have halved America’s crime rate. Violent crime fell 32 per cent during the past 25 years, and a remarkable 64 per cent in big cities. Property crimes have fallen 75 per cent in New York City.
Second, years of grassroots efforts at school reform are paying off. High- school graduation rates have reached a record 80 per cent level and could hit 90 per cent by 2020. This progress is all local – including improved teacher recruitment and training, stronger curriculum materials and better use of data in evaluating students. Parental groups, non-profits, businesses and educators have led the way.
Third, we are seeing healthier practices regarding sex education and contraception. As a result, teenage pregnancy and abortion rates have fallen to the lowest recorded levels, down 51 and 70 per cent respectively over 25 years.
Fourth, private enterprise has produced a momentous turnround in energy production. Only six years ago, oil output was half its 1970 peak, but technology breakthroughs reversed that. Now, the US is again the world’s largest producer of oil and natural gas, and we have decades of low-cost supply. This surge is boosting output and manufacturing competitiveness, creating millions of jobs and reducing our reliance on the Gulf.
Yet a huge swath of American society is not participating in this progress. These are families that own no financial assets, and so have not benefited from the Federal Reserve’s monetary largesse. Indeed, almost 40 per cent of Americans face falling annual incomes of $40,000 or less. The great challenge is to improve their economic security as a matter of fairness and improved purchasing power. Fortunately, the same combination of enterprise and local initiative can make progress.
Stunningly positive social and economic changes, unthinkable even a decade ago, are taking place.
Take infrastructure investment, which creates jobs and improves competitiveness. States and localities are relying on user fees to finance new initiatives. Chicago, for example, raised water rates to pay for a $4.5bn water system upgrade. Five states raised gas taxes to fund road improvements. Denver tapped private capital to help build a new light rail system. Private investment triggered the much-discussed redevelopment of Brooklyn.
States and cities have also expanded pre-kindergarten education, which can help raise lifetime earnings. Non-profit organisations have worked with 43 states to adopt detailed achievement standards for school-age students. The goal is to raise proficiency and, ultimately, college readiness.
Many believe that when Washington is paralysed, the country is too. But, this overstates the role of the federal government in America’s evolution. Other than in wartime or the Great Depression, the nation has never been as dependent on Washington as many think. The progress even now being made is proof of that.
The writer is executive chairman of Evercore and a former deputy US Treasury secretary. He contributed this article to the Financial Times.
Evercore Wealth Management, LLC ("EWM") is an investment adviser registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. EWM prepared this material for informational purposes only and should not be viewed as advice or recommendations with respect to asset allocation or any particular investment. It is not our intention to state or imply in any manner that past results are an indication of future performance. Future results cannot be guaranteed and a loss of principal may occur. This material does not constitute financial, investment, accounting, tax or legal advice. It does not constitute an offer to buy or sell or a solicitation of any offer to buy or sell any security/instrument, or to participate in any trading strategy. The securities/instruments discussed in this material may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Specific needs of a client must be reviewed and assessed before determining the proper investment objective and asset allocation which may be adjusted to market circumstances. EWM may make investment decisions for its clients that are different from or inconsistent with the analysis in this report. EWM clients may invest in categories of securities or other instruments not covered in this report. Descriptions provided in this material are not substitutes for disclosure in offering documents for particular investment products. Any specific holdings discussed do not represent all of the securities purchased, sold or recommended by EWM, and the reader should not assume that investments in the companies identified and discussed were or will be profitable. Upon request, we will furnish a list of all securities recommended to clients during the past year. Performance results for individual accounts may vary due to the timing of investments, additions/withdrawals, length of relationship, and size of positions, among other reasons. Prospective investors should perform their own investigation and evaluation of investment options, should ask EWM for additional information if needed, and should consult their own attorney and other advisors. Indices are unmanaged and do not reflect fees or transaction expenses. You cannot invest directly in an index. References to benchmarks or indices are provided for information only. The securities discussed herein were holdings during the quarter. They will not always be the highest performing securities in the portfolio, but rather will have some characteristic of significance relevant to the article (e.g., reported news or event, a new contract, acquisition/divestiture, financing/refinancing, revenue or earnings, changes to management, change in relative valuation, plant strike, product recall, court ruling). EWM obtained this information from multiple sources believed to be reliable as of the date of publication; EWM, however, makes no representations as to the accuracy or completeness of such third party information. Unless otherwise noted, any recommendations, opinions and analysis herein reflect our judgment at the date of this report and are subject to change. EWM has no obligation to update, modify or amend this information or to otherwise notify a reader thereof in the event that any such information becomes outdated, inaccurate, or incomplete. EWM’s Privacy Policy is available upon request. EWM is compensated for the investment advisory services it provides, generally based on a percentage of assets under management. In addition to the investment management fees charged, clients may be responsible for additional expenses, such as brokerage fees, custody fees, and fees and expenses charged by third-party mutual funds, pooled investment vehicles, and third-party managers that may be recommended to clients. A complete description of EWM’s advisory fees is available in Part 2A of EWM’s Form ADV. Trust services are provided by Evercore Trust Company, N.A., a national trust bank regulated by the Office of the Comptroller of the Currency and/or Evercore Trust Company of Delaware, a limited purpose trust company regulated by the Delaware State Bank Commissioner, both affiliates of EWM. Custody services are provided by Evercore Trust Company, N.A. The use of any word or phrase contained herein that could be considered superlative is not intended to imply that EWM is the only firm capable of providing adequate advisory services. This material does not purport to be a complete description of our investment services. This document is prepared for the use of EWM clients and prospective clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of EWM. Any unauthorized use or disclosure is prohibited. The Chartered Financial Analyst and CFA trademarks are the property of CFA Institute. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and CFP® in the U.S.
IRS Circular 230 Disclosure:
Pursuant to IRS Regulations, we inform you that any U.S. Federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for (i) the purpose of avoiding IRS imposed penalties or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. This information is provided for information purposes only and does not constitute financial, investment, tax or legal advice.
©2016 Evercore Wealth Management LLC. All rights reserved.
