How do you see the economic future of the world and of your country?
I pose this question, because I firmly believe that we are at a crossroads and each of must think seriously and logically about what the future may hold so that we can plan accordingly. As is often said, a failure to plan, is a plan for failure.
So, are my two cents regarding where we’re headed. Long term the World economy will be fine, but short-term, we’re in for some pain.
Europe: The European Union, the grand experiment that it is, is in choppy water and doesn’t appear to be headed for calm seas anytime soon. And the bad news is that breaking up the EU and taking off a single currency might make things worse for inventors even if it actually helps the situation in the long run. That’s because the markets hate uncertainty, and speculation of doom will run rampant if they are forced to part ways.
East Asia: China’s rapid expansion was not and is not sustainable, so there was bound to be some pull back. Japan, like the US, will suffer, but will continue to keep its head above water because of the productivity of its workers (Only in the US and Japan, do workers, unforced (child labor & extremely poor laborers) work so many hours and take so little time off (Although, in Japan its cultural, and it may have been that way too in the US before, US workers seem to be working scared these days). Australia will be fine. Stable government, plenty of room for expansion, attracts lots of outside money, a young populace and folks want to move there.
South Asia: Pakistan is a mess and may not even exist 5 years from now. I see India as a mixed bag. The expansion of technology isn’t going to stop anytime soon, and India is at the center of that boom. unfortunately, I don’t see the markets of India keeping pace with the pace setters in IT, and I see much of the capital they earn moving offshore in the years to come (5 to 10). Meaning that college educated Indians will continue to make marked gains, but I don’t see much of it trickling down to the masses.
– South America: Natural resources abound and many of the economies are early in the growth stage, like India and China were 10 years ago. Because of the global economic slow down, exports may suffer, but look for SA countries to boom between 2017 and 2027, even Venezuela.
– Africa: There will be winners and losers. Within the next 10 years, educated folks will refrain from referring to Africa collectively when speaking about its economies. Countries like Botswana, South Africa and Nigeria will be seen fully as the global stars of Africa. Unfortunately, there is still not enough internal capital and political will, to avoid the severe influence of outside investors (China, US and EU countries). But I do believe, and it just a belief at this point, that the “stars” of Africa will step up their investment in their neighboring African countries some time in the next 10 to 12 years. Political and social unrest will continue to plague north africa. I don’t see an end to it. In fact, if theocracy does continue to spread there, I see those countries actually going backwards. A mini-dark ages, if you will.
-North America: Canada is a lot like Australia, except that they appear to be much more tightly bound to the US and Economies. That’s not good and may, in my mind, cause some bumps and bruises along the way as the countries of west, hopefully work their way out of their current mess. Mexico’s fortunes roll with the US and South America. I do see the becoming less dependent on their citizens working abroad sending money home to float their economy, but they will, in my eyes remain the western version of India for some time to come. The United States of America (how shall I say this?) is not so united. We’re like a ship sinking in shallow water, with plenty of life boats. But we’re all gonna drown if these fools don’t get themselves together. Everyone in Washington (well, almost everyone, we got a lot folks elected the last time around who are a little suspect) knows that in the short-term we have got stimulate the economy and in long-term cut entitlements. Meaning that the central government needs to spend money (preferably building infrastructure like bridges and power grids) and we need have too many retirees coming unto the books and not enough workers to support them (thank you baby boom). Any economist, worth his salt knows this. They also knows that this cutting taxes in a time of was is crazy. Who does that? Check your history books, countries typically raise taxes to pay for wars. But we are our own worst enemy, or shall I say our fear and political system is. So many people in fear that someone is going to take something from them are easy targets for self-centered politicians and oligarchs to take advantage of. And the declaration of personhood for corporations hasn’t made this any better.
But here’s the kicker. We all see the flatten of the world. This will continue. But the next wave I see is the lowering of boarders, making it easier for workers to move back and forth between countries (physically or virtually). If the suits have their way, this is the future. The Romney’s of the world (i.e. Those with capital to invest that 99.9998% of you will never see) truly believe that protecting markets is just delaying the natural selection process between economies. I’m sure if Romney is elected, visas granted to in demand jobs will go up. I also see tax breaks for companies sending jobs overseas (it’s called “developing markets) to continue or increase. Of course, as Elizabeth Warren points out, the taxes paid by the workers of this country or any country paid to educate your employees, to pave the roads on which your trucks could run, to run the electric cables to your plants and to protect your boarders so that you might conduct business in peace. But the point of this post is not make a value judgement one way or another, but to simply suggest how we might respond to this changing world.
So, if things play out like I think they will, keeping your skill set global may be the best investment you can make. Secondly, you must be flexible. If you have a skill set that is in demand globally, then you have to be prepared to use it. Consider, how the middle east attracts engineers, they pay them very well there. And how the US attracts the best doctors in the world, we pay them well (well, at least we did comparably). So, if you don’t have a passport, get one. The next realization, is that the US will continue to be destination for wealth earned around the world. Rich folks will continue to buy property here (NYC, SF, Hawaii and the list will grow), because they know that compared to the rest of world, their money is safe here. We have the strongest military by far (almost in a paranoid, psychotic way…but that points back to our fear issues) and we take care of our rich folks (we sell the dream and everyone plays the game). Now, I say these things knowing that I and my personal safety benefit too, in the powers that be keeping the masses fat and happy. Meaning, people take to the streets and riot when they’ve got nothing to lose and nothing to keep them entertained. Our subsidized food sources and mass media are the modern-day version of Rome’s bread and circus. Keep the people fed and entertained and you too can rule for a thousand years. So, the point here is, that I suggest for my US folks, is to think on how to benefit from the US remaining a haven for financial winners from around the world to stuff their cash? Another thing to consider, is that the US worker is the first or second most productive worker in the world (along with Japan), so I firmly expect that whatever global economic meltdown that may be coming, we will see the US weather it better than most other countries. That’s because we work ourselved to death around here.
So, what do you see? How do you see society evolving to adapt to the growing global economy and the interconnectedness of us all? You comments are welcome.