United States, Inc.

Everyone seems to be rowing, but in what direction?

If the United States were a company, would you invest? Would you work there? Buy its product? Take on its debt? We should use business competition frameworks to help build a comprehensive national economic strategy. We need a public-private, multidisciplinary team to develop this strategic roadmap to keep us competitive. We need a plan.

Today the United States competes on the world stage through its economy. Our industrial capability and flexibility brought national success during the Second World War as we built trucks and tanks for war in Europe, aircraft carriers and planes for the Pacific, and launched up to three liberty ships per day1 to move people and supplies around the globe. After the war, the Marshall Plan funneled reconstruction aid to European nations, enhancing the dollar’s role and ushering in reserve currency status for the U.S. dollar.

But now we see reports from the Center for Strategic and International Studies (CSIS) that indicate China built a shipbuilding industry hundreds of times more productive than that of the United States2 and, in a conflict, U.S. forces likely run out of missiles in mere weeks.34 Rising national debt, debt ceilings, a desire from some to lower interest rates, and potential substitutions for the dollar seem to constantly offer a threat to the country’s reserve currency status. Trying to hold a lead is not easy.

We need strategy, leadership, and incentives to keep stakeholders working toward the shared goal of international competitiveness. There are frameworks to help organize this.

First, we could look to the ideas from Harvard strategist Michael Porter. In 1979, Mr. Porter introduced a model of five competitive forces for any given industry: rivalry among competitors, the threat of substitutes, the threat of new entrants, bargaining power of buyers, and bargaining power of suppliers.5

Just looking at suppliers, we felt the risks of just-in-time production and trade on our national supply chains during the disruptions of Covid-19. We saw shipping disrupted by the Ever Given in the Suez and ships held up at ports on the West Coast of the United States. In 2022, our trade deficit with China peaked6 and—in the lens of Porter’s Five Forces framework—offered China strong supplier power over us. Our strategic policymakers see comparable risks in other critical supply chains, such as semiconductor chips, rare earth elements, and energy. We are making great strides to reduce the imbalance, but we should still be looking forward to the next hurdle. Evaluating Mr. Porter’s other four forces would provide additional guidance. 

As we consider our role on the world stage, we can remember another Harvard strategist, Clay Christensen. Mr. Christensen’s work7 introduced theories of disruptive innovation that describe how new products or services can replace established market leaders.

To avoid being replaced, we need to carefully consider why other nations would want to engage with us—what is our “customer value proposition?” Whether trading partners and allies want to work with the United States for its foreign aid and soft power, weapons and security, technology innovation, or low-risk bonds on a stable economy, we need to provide—and ensure we can keep providing—that value.

This is how we build a national economic strategy.

Once we have identified our specific value proposition to other countries, we should defend our competitive position on the world stage from foreign disruption. Usually this is through innovation—the U.S. needs to continue improving on the value it offers the world. Rather than wait a few decades to find out that the People’s Republic of China (PRC) successfully used Belt and Road financial leverage to replace U.S. foreign aid and soft power influence with more attractive deals, we can be proactive. Rather than allow another “China shock” of imports to attack the next Rust Belt manufacturing industry, we can forecast ahead to determine necessary pivots.

That, or without a strategy, we can wake up one day to discover we lost a war we did not even realize we were fighting.

The next great power competition is and has been underway in the form of unconventional warfare, economic competition, and grey zone operations, but we are too distracted by TikTok and the like to see it. When we consider how to respond, it is useful to consider the tools of national power—diplomatic, informational, military, economic. But if we are going to talk about using integrated deterrence and whole-of-government solutions to defend the United States’ position, we should ensure the actions are coordinated, not piecemeal.

Different government entities have initiated a flurry of actions that dance around economic strategy. In recent years, Congress passed ad hoc, de facto industrial policy through the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act. This year, the Department of Defense published its first Defense Industrial Strategy8 while the Departments of Treasury and State levied sanctions on various countries. Even this last week, the Department of Commerce published its own distinct strategy to support national security9, the Federal Reserve lowered target interest rates, and Congress again struggled to agree on funding the government after last-minute calls for changes to the debt ceiling. Meanwhile, our adversaries and allies look on and take notes.

We need a comprehensive economic strategy to guide all these interrelated policy moves.

Absent an overarching economic strategy, leaving all the decisions around sanctions, tariffs, interest rates, and national budgets to a single person could prompt an imperial presidency like historian Arthur Schlesinger warned about, allowing tremendous power to be concentrated in the executive. Instead, we should build a team to coordinate such efforts, merging perspectives from the interagency, different levels of government, and the private sector. We could copy the National Security Strategy playbook for organizing the process. We could leverage strategic thinkers from business and government to formulate a cohesive narrative on providing value and defending international competitiveness.

If we don’t fight to stay competitive, some other country will.


— How does national strategy look in the Age of AI?

Footnotes

  1. https://americanhistory.si.edu/collections/object/nmah_842604 ↩

  2. Seth Jones and Alexander Palmer, Rebuilding the Arsenal of Democracy: The U.S. and Chinese Defense Industrial Bases in an Era of Great Power Competition (Washington, DC: Center for Strategic and International Studies, March 2024), 1. ↩

  3. https://features.csis.org/preparing-the-US-industrial-base-to-deter-conflict-with-China/ ↩

  4. Mark Cancian, Matthew Cancian, and Eric Heginbotham, The First Battle of the Next War: Wargaming a Chinese Invasion of Taiwan (Washington, DC: Center for Strategic and International Studies, January 2023), 88. ↩

  5. On Competition ↩

  6. https://www.cfr.org/backgrounder/contentious-us-china-trade-relationship#chapter-title-0-2 ↩

  7. The Innovator’s Dilemma, The Innovator’s Solution ↩

  8. https://www.defense.gov/News/Releases/Release/Article/3643326/dod-releases-first-ever-national-defense-industrial-strategy/ ↩

  9. https://www.commerce.gov/data-and-reports/reports/2024/12/decisive-decade-advancing-national-security-department-commerce ↩