The Future Starts Here

The old certainties have been blasted away and tomorrow is full of doubt - yet in New York hope is already rising from the ashes. Hamish Mcrae, economist and futurologist, explains why
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The Independent US

The best view of the southern tip of Manhattan is from Brooklyn Heights, just across the East River, where there is a promenade 100 or so feet above the water. Looking across to the skyscrapers, you feel so close that you could almost touch them. The balustrade has inevitably become a shrine in memory of the people who lost their lives on the other side. Of the many tributes I have found there in these past few days, the one I found the most moving was a child's picture of the Twin Towers of the World Trade Centre. It showed the falling bodies – but they were flying with little wings, for they had become angels.

It is the young who will determine the future of the world over the next 20, 30, 40 years; and it is particularly the young people of America. The United States is – and will remain – the world's only superpower for another generation at least. Whatever unfolds in the next few weeks and months, the ideas, attitudes, beliefs and values of America's youth will be shaped by the events of 11 September 2001. And those values will shape the world.

There could, I suppose, be two broad paths that the world might follow over the next generation. We might go backwards. The 12 years between the fall of the Berlin Wall and the terrorist assault on the US might be remembered as a high point of the liberal market economy. The US would pull back into itself and this would herald the start of a period of withdrawal, of shrinking world trade and rising protectionism, of greater restrictions on the freedom of travel and a rise in repressive laws and regimes. We have had such periods before and we know that were this to happen, the hardest hit would not be the rich people or rich nations, but the poor.

Or we may go forwards. In this scenario, the challenge presented to the liberal order by global terrorism will be beaten back. These attacks, and whatever is to follow, will sharpen US resolve in its defence of democratic values not just now but for a generation and more. This is not simply a question of government policy. Rather it depends on how the whole country responds: its big corporations, its banks and other financial-service institutions, its media and entertainment industries, its universities, and especially its youth.

Having spent the past few days in New York studying the key indicators, I am overwhelmingly convinced that this latter outcome will prevail.

Start with the economy. America was almost certainly in recession when the terrorists struck. Now that recession will been deeper and probably longer than it otherwise would have been. Demand had been held up by consumers, many of whom were financing their lifestyles by borrowing. But now the idea of borrowing to buy some luxury item somehow seems wrong. Sales of big-ticket items such as cars have slumped. Meanwhile the disruption to industries such as airlines and leisure is throwing thousands of people out of work, with knock-on effects there.

The economic damage is nation-wide, but in New York it is devastating. "I may not be here in a month," a restaurant owner told me, looking at a roomful of empty tables. "I need to take $30,000 a week just to keep going and last week we took $20,000."

You see the damage in the hotels, the shops, even the streets. Many small and medium-sized businesses will go under. But – and looking ahead this is the key point – there is also evidence of extraordinary resilience. Without going downtown it is impossible to conceive of the scale of the devastation. Now, two weeks on, many other blocks around the still-smoking ruins are still unusable. The Wall Street area has lost some 40 per cent of its office space. Yet the businesses are functioning, moving to midtown or out to the suburbs. Lehman Brothers has taken over an entire hotel. People are working from home or from friends' offices. I heard a loss adjuster quietly doing his work with his mobile phone and laptop over breakfast in a diner.

The downtown infrastructure is also being hooked up with astonishing speed. The demolition crews at the World Trade Centre are working round the clock, 12-hour-shifts, 6am to 6pm, 6pm to 6am, but the less dramatic effort is the one to get power and phones running in the nearby but undamaged buildings. The dusty streets are strewn with cables and portable generators. Verizon, the main (and hitherto somewhat unloved) New York phone company, has become something of a local hero, with its free public phone calls and (also free) portable public mobile phone booths. Crucially, the banks, insurance companies and other financial institutions may have taken a physical beating, but as businesses they are functioning fine.

Of course it is not business as usual; how could it possibly be? The New York economy was already turning down before the terrorists struck and it will be years before the office space is replaced. But there is a sense of economic resilience that bodes well for the city and, by extension, for the US economy as a whole. Enormous resources will be piled into reconstruction and the effect will ripple out across the nation. It is perfectly possible that the attacks will concertina the recession, increasing the speed of the downturn but also making the recovery more secure.

So while it is possible that America will lose some of the sheen of economic self-confidence as recession bites, I can't see the US being a slow-growing economy for, say, the next ten years. Indeed I would expect it to continue to be a faster-growing economy than continental Europe or Japan. If consumption grows rather more slowly than in the past as resources are switched to providing greater security for its citizens, that may be no bad thing. The pattern of spending will probably be less frivolous, less self-indulgent, and the economy will emerge stronger as a result. So too will society – and that, ultimately, is even more important than the economy.

The immediate, obvious response to the attacks has been a blaze of patriotism. The flags are everywhere: in shop windows, on T-shirts, on the aerials of cars, on backpacks, on lapel badges. And this is cynical, wisecracking New York, not the suburbs with the flagpoles on the lawn. New Yorkers themselves are amazed; they have never seen anything like it. They are accustomed, when they travel around the rest of the country, to being treated with a certain coolness. Now they are fêted as heroes, which, of course, many of them are.

This new unity shows in President Bush's 90-per-cent approval ratings; elected nine months ago on a minority of the popular vote, he has a higher rating that any president in history. If the terrorists had hoped to undermine the nation's unity, they have managed to achieve exactly the opposite.

But that is now. How will American social attitudes be changed in ten or 20 years' time? There are, so far, only scraps of evidence, but they are enough to suggest that this will mark a great turning point in attitudes: a movement from individualism towards community, the end of "me first", the beginning of "us together".

One-off shocks are most likely to have lasting effects when they reinforce social trends that were already in place. You can see some signs of a trend towards order and conformity, such as the fall in births to single parent teenagers or the decline in crime. There are other signs of a retreat from corporate excess: criticism of the income paid to top executives in Fortune magazine a couple of months ago and a hostility to the bail-out of airlines now. People don't mind the bail-out as much as they resent the chiefs still earning their millions as they lay off their workers. But on the core measure of civic behaviour – willingness to vote in a presidential election – this generation was, last November, the least committed ever.

Now something has happened that makes everyone question their fundamental values. The heroes of today are not the pampered stars of Hollywood, nor the investment bankers, still less the ex-millionaires. They are the fire-fighters and the police officers, the office workers who shepherded their colleagues down the fire escapes – suddenly America has real heroes, not fake ones.

The change in attitudes has been caught in a programme, as yet unscreened, made by the American TV network CBS. It held group interviews with two sets of people who had survived the attack: service workers, often immigrants, who were doing low-wage jobs in the area; and the well-educated professional 20-somethings who were climbing their well-paid career ladders.

The first group – which you can catch a feeling for from the hundreds of sad "missing" notices on the subway pillars – were shattered but would slog on. The immigrants among them had come to America for safety and a better life. Now this happened. But they had no alternative but to march on and do their best.

The second group had been the puppies of the 1990s boom. They too were shattered but for them the events of 11 September had made them rethink all their priorities. All the things they had worried about like promotion and bonuses were suddenly irrelevant and slightly shaming. They would use the fact that they were still alive to do something not for themselves, but for their fellow citizens. The long tradition of American civic service has been given an enormous boost.

Will this change of mood really last and more specifically will the country's determination to combat global terrorism be sustained? Americans are not noted for their long attention span and it is possible that in a few years' time when the threat seems more contained the political support for a long slog will wane. Why should the US continue to protect free-market democratic values when it is rewarded by hatred from its enemies and less-than-wholehearted support from its supposed friends? Why not go back to Hollywood hedonism?

There seem to me to be two answers to that. One is that it cannot isolate itself from the rest of the world. That is surely one of the overwhelming lessons of the past two weeks: not just the attacks, but the way in which the enemies of the US have used its freedoms to attack it. The open entry on the borders, the easy enrolment to flying schools, the ability to short-sell insurance and airline shares on the financial markets. If you want to preserve those freedoms you have to take the battle to the world and slog on for years on many different fronts.

The other answer is that the young of America will be utterly changed by this experience. Each successive generation is shaped by the times in which it grows up. The sense of civic duty of the immediate post-war generation was shaped by the sacrifice of its parents, the next by the indulgence of the 1960s and the military failure in Vietnam. This one will be shaped by an experience America has not known for nearly 200 years, an attack on its homeland. The people who have been killed are not soldiers sent abroad; they are young mums and dads. Some 1,500 children of the employees of Cantor Fitzgerald have lost a parent. Heavens knows what the future may hold, but even assuming there are no further serious attacks, an event of this magnitude will push America in a different direction for a generation.

If this is right, it also means that liberal democratic values everywhere will be secure for a generation, for this change in the American psyche will affect the whole world, not just the US. Most people in Britain realise that, hence the widespread staunch, intuitive support for America. If this is right, then America will change in ways that will buttress that support. It will become less self-indulgent, less legalistic, more gritty, more civic-minded. Maybe the child that drew the picture of the angels at the Brooklyn Heights esplanade understood this: that out of something terrible comes something better.