We used to be No. 1. Now we’re No. 3. We probably ought to be satisfied with that.
The United States has recovered some lost ground in the World Economic Forum’s annual competitiveness rankings, which provide useful snapshots of what’s going right and wrong in 144 economies. The United States came in third this year, behind Switzerland and Singapore. As recently as 2008, the United States ranked No. 1. It dropped to seventh place in 2012 and has since bounced back. Rounding out the top 10 are Finland, Germany, Japan, Hong Kong, the Netherlands, the United Kingdom and Sweden.
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The WEF rankings are based on surveys of business leaders, so they’re weighted toward factors that might be more important to businesses than to ordinary people. Still, they tend to reflect important trends that matter to ordinary people, as Lauren Lyster and I discuss in the video above. The WEF breaks down its rankings into more than 100 indicators that provide insightful detail on each country’s economic performance.
Here’s what America is doing right. Innovation and technology adoption are close to the best in the world. Investor protections are strong. America still attracts and retains top talent from everywhere. U.S. businesses are sophisticated, with highly efficient logistics and distribution.
But there are three big problems with the U.S. economy that have been showing up in the WEF rankings for several years: Government, healthcare and education. It’s hardly a secret that the federal government is a sclerotic mess, especially to business leaders who can’t comprehend political pranks such as threatening to default on U.S. debt and shutting down the government.
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The biggest gripes about Washington involve a convoluted tax system, a thicket of regulations (including state and local rules layered upon those at the federal level) and bureaucratic inefficiency that can make things like permitting and licensing a nightmare. One way these problems have been showing up in the real world is a spate of corporate tax inversions—maneuvers in which a U.S. company mergers with a foreign one and relocates overseas, where taxes are lower and more rational.
Related: Moving overseas is a last resort for U.S. companies
But business leaders seem to think the U.S. government is a bit less lousy than it used to be. An improvement in America’s fiscal standing is the reason the United States rose from fifth in last year’s WEF rankings to third this year. That’s mainly because the U.S. budget deficit has been improving, although the national debt—the aggregation of all budget deficits—has continued to swell and is now a staggering $18 trillion or so.