Posted on 01/13/2008 10:59:02 AM PST by grey_whiskers
It is a commonplace now in certain circles that the era of the West is over. We are soon to be supplanted by the growing powers in Asia. Everyone knows about the pro-globalization, anti-American slant to the annual Davos conference in Switzerland. In another, similar conference in Dalian, China, (billed as the Asian version of Davos) one reporter stated that “several people described the United States as the Great Britain of the 21st Century and nobody disagreed..” And super-investor (and Soros crony) Jim Rogers is on record too, as quoted in Business Week: ”This is the China century," says Jim Rogers, standing amid moving boxes in his opulent Manhattan townhouse. "It's time for them to rule the roost."
Many things go into this: the demographic aging of the West and the burgeoning of the population of India and China; wage arbitrage; lack of environmental regulations, and a lack of ambulance chasers in Asia compared to the United States. There is also a perverse “you scratch my back, I’ll scratch yours” economic relationship whereby the despots of the East can provide employment by manufacturing for export (instead of for domestic consumption, which might create a middle class, and political liberalization), and the United States gets cheap consumer goods.
Which brings us to another consideration. Why does the United States need cheap consumer goods? One reason of course is that in some cases, this does provide a higher standard of living – the oft-used example is that of computers and other electronics.(*) But there is another reason. That is, the explosion of household debt, the explosion of the trade deficit, the explosion of the national debt. All of these items, if tracked over the last (say) fifteen or twenty years, are increasing exponentially, and in a way that is simply unsustainable over the long term. Could it be that the indebtedness of the consumer and the government is forming a “debt” or “credit” bubble, akin to the much-discussed housing bubble?
If so, there are two commonly accepted scenarios, both bad. One of them is a Weimar-republic or Argentine like bout of hyperinflation, in order to render the debt harmless by making the underlying currency worthless. And the other one is a long, painful bout of deflation, similar to Japan in the 1990’s. I am not here to discuss which of these scenarios is worse, nor to suggest which one is more likely. Instead, I think that another outcome is even more likely – one which has not shown up on most people’s radar screens yet.
If we couple the fall of the United States as the sole economic driver of the world, with the rise of the East, there is another possibility. The United States could become the poor backwater, while all of the interesting and cutting edge work moves to the countries that are younger, more productive, and which have larger markets, leading to the prospect of higher profits. Zhu Min, an economic adviser to the president of China, was met with silence--at a dinner during the 2004 Davos conference)--when he asked Americans at the conference how their country planned to finance its economy when both blue-collar manufacturing and white-collar service jobs were going elsewhere. And during the 2006 Davos conference, India advertised itself to globalists with a string of billboards:
"15 years, 6 governments, 5 prime ministers, one direction. 6 percent average annual GDP growth."
"23 stock exchanges, 91 'billion dollar' companies, over US$500 billion market capitalization. The most attractive democracy for global investors."
"Youngest and fastest growing population of consumers and professionals; consumer demand growing five times faster than the economy."
But that itself is not the nightmare.
Recall the statement (commonly attributed to deTocqueville) that “a democracy will last until the voters discover that they can vote themselves largesse out of the public treasury.” This is pretty much what has happened to the United States during the past generation. This has been combined (on a personal level) with the development of relatively new, sophisticated financial products (first charge cards, then credit cards, then lines of credit and HELOCs), and an onslaught of marketing, all encouraged in order to support short-term profits for the companies involved, and all without regard for the long-term economic viability of individuals or the country. In fact, many individuals, and the U.S. as a whole, have come perilously close to a future of indentured servitude. See this article for a program which “allows” senior citizens to “work-off” their tax liability which they cannot afford on Social Security.
Sutton said he robbed banks because “that’s where the money is”; and P.T. Barnum said, “There’s a sucker born every minute”. Much of the problem is that the United States has had the money sucked out of it, then its future earnings; what will be the result when the same thing happens to the emerging economies?
(*) However, this does not explain why other goods whose production has also been moved offshore, such as Nikes, cost as much as they always have.
HSBC international brokerage accounts. Be able to move out of currencies when the time comes.
Cheers!
Do China's demographics look better than those of the US?
Cheers!
It seems relevant all of a sudden, given much of Barack O'bama's(*) spending and the bailouts.
I thought you might like it.
(*) He's Irish, too, didn't you know? Happy St. Patrick's Day!
Cheers!
The main threat to US sovereignty is the enemy within. There is no way for the Pubbies to get the minority vote, the illegal alien vote, the feminist vote, the Muzzie vote, most of the union vote, most of the Jewish vote, or the college kids. In fact, there’s no way for the Pubbies to get a good bit of the conservative vote either.
China is our beeotch. They have been financing our federal gov’t deficits using hard-won foreign exchange acquired by defacto devaluing their own currency and selling us stuff below our local cost. They’ve been mining and burning loads of coal from their own subsoil, and turning some of that coal into synfuels to run a slowly growing fleet of autos. They can’t develop their economy without us, but the benefits of that development have not been all that beneficial to most of the population. China can’t unload its piles of US gov’t paper without committing financial suicide. It has no strong allies, it has growing troubles in its western territories, and is surrounded by either enemies, or former enemies, or fake allies (such as the nutty regime in N Korea).
Meanwhile, most of the US population lives better all the time (despite the crisis doomsayers) as a consequence, despite the decades-long decline in highly-paid low-skill (and mostly unionized) jobs. All it would take to make the US into an even more dominant economic power would be control over our own energy supply. Ideally, we’d be an energy exporter. There are a variety of ways for that to happen over the near- middle- and long-term.
:’) Anyway, thanks for the ping.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.