We’re Number Two

The fact remains that Main Street is in trouble. The nation requires an economy in which new businesses are created and existing ones can afford to expand. That is not happening

The U.S. was the world’s number one economy prior to World War II, but it took off bigtime after the war and there has not been a day of my long life in which we were not number one—until now.

The International Monetary Fund recently released its calculations regarding the world’s economy and concluded that China is the number one economy, producing $17.6 trillion in terms of goods and services, as compared with the U.S. producing $17.4 trillion. It’s not an overwhelming gap, but it is a warning that our economy is going in the wrong direction and has been before and since the financial crisis of 2008.

Writing in Market Watch, Brett Arends, put it succinctly. “As recently as 2000, we produced nearly three times as much as the Chinese.”

Of course, keep in mind that on a per-capita basis, each resident of that territory once known as “the United States of America” enjoys about eight times the goods and services now provided to the denizens of the Peoples Republic of China, on the same per-capita basis.

But then, there are more Buicks being sold in China than in the North American region sandwiched between Canada and Mexico.

“The nation requires an economy in which new businesses are created and existing ones can afford to expand.”

While new businesses are always needed, perpetual expansion is a modern phenomenon and cannot last.

Businesses have a life cycle, much like the seasons. We have long seen a “Spring” cycle of innovation and new growth, as we tend to focus on this. But businesses typically enter a “Summer” period, where they fill an existing need, but their emphasis is on doing so efficiently, not innovating new products and services.

The “Fall” cycle is more complex. In some cases, businesses have become stagnant and are failing; but in many others, efficiency now means to build surpluses and resources for an economic downturn. As with soon to be hibernating animals, building up fat for the winter.

The “Winter” cycle is the shake out of businesses that are not in good condition and need to fail.

Importantly, some businesses reach a structural point where they just continue doing what they are doing for generations, jobs passed from parents to their children.

The Canadians nor the Canadian Free Press know much about America as this country was in a depression. In fact we still had some 14% unemployment around 1941 or so. It took WWII to put America back to work. It took the AA CRA to break us with NINJA loans for every minority.
These are US unemployment figures back then.
http://www.infoplease.com/ipa/A0104719.html

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