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The Relative Economic Position of the USA is Likely to Decline

The economic clout of the USA has been huge since the end of World War II. The relative position has been decreasing recently with the rise of not only Europe and Japan but Korea, China, India, Brazil and many more. This means the risks to the USA of failing to deal with perennial problems (the most costly but not most effective health care system, spending beyond our means, weak diplomacy, excessive legal costs, poor management practices…) is higher today than it has been.

Fareed Zakaria’s Post American World is a good explanation of some of the current global economic forces in play. He comes to the same conclusion I do that the USA is still in the strongest position today. But the world is changing and the relative position of the United States is declining. The new world requires working with others and the USA needs to adjust to this reality. Too many think the USA can continue to act as though the rest of the world must comply with the wishes of the USA.

Foreign students and immigrants account for 50 percent of the science researchers in the country and, in 2006, received 40 percent of the doctorates in science and engineering and 65 percent fo the doctorates in computer science. by 2010, foreign students will get more than 50 percent of all Ph.D’s awarded in every subject in the United States. I n the sciences, that figure will be closer to 75 percent. Half of all Silicon Valley start-ups have one founder who is an immigrant or first-generation American.
…
The litigation system is now routinely referred to as a huge cost of doing business, but no one dares propose any reform of it. Our mortgage deduction for housing costs a staggering $80 billion a year, and we are told it is crucial to support home ownership. Except that Margaret Thatcher eliminated it in Britain, and yet that country has the same rate of home ownership as the United States. We rarely look around and notice other options and alternatives, convinced that “we’re number one.”
…
America has become a nation consumed by anxiety, worried about terrorist and rouge nations, Muslims and Mexicans, foreign companies and free trade, immigrants and international organizations. The strongest nation in the history of the world now sees itself as besieged by forces beyond its control.

The book focuses quite a bit on the USA, China and India and provides good overviews of the economic strength and weaknesses of those countries. The USA is in a leadership position but the future requires an understanding that others deserve to be treated as partners not allies to be dictated to. If not they will just partially disengage with the USA and create stronger relationships with others. That would not be in the interests of the USA.

Related: Best Research University Rankings (2008) – Dr. Deming’s 7 Deadly Diseases of Western Management – Science leadership and economic growth – Easiest Countries for Doing Business (2008) – Top 12 Manufacturing Countries in 2007 – Why America Needs an Economic Strategy – Country H-index Rank for Science Publications – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007

June 15th, 2009 John Hunter | 7 Comments | Tags: Economics, quote

Comments

7 Comments so far

  1. China May Take Car Sales Lead from USA in 2009 at Curious Cat Investing and Economics Blog on September 7, 2009 4:13 pm

    Partially due to the strong internal Chinese demand (and partially due to Chinese regulation) India actually exports more cars than China. 5 times as many cars are purchased in China as are bought in India…

  2. Mark Mobius on Emerging Markets at Curious Cat Investing and Economics Blog on September 13, 2009 2:27 pm

    Looking out 20 years it seems likely (not certain but likely) that Brazil, China, India, Mexico, Thailand, Vietnam, Costa Rica, Ghana… will grow economically more quickly than the USA, Japan, UK, France and Germany…

  3. Dennis on January 24, 2010 3:10 pm

    Perspective:
    http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_cd&idim=country:USA&dl=en&hl=en&q=gdp#met=ny_gdp_mktp_cd&idim=country:USA

    Relative Economic Position of the USA is Likely to grow in fact.

  4. John Hunter on January 24, 2010 4:27 pm

    Absolute growth is not the same as relative position. I agree that the USA economy will grow. It will grow more slowly than others thus the relative position of the USA will decline.

  5. India Grew GDP 8.6% in First Quarter at Curious Cat Investing and Economics Blog on May 31, 2010 11:09 am

    The economies of India, China, Brazil, Mexico, Thailand, Vietnam… are still a fairly small fraction of global GDP but their share continues to grown. And the next few years look to continue this trend…

  6. Manufacturing Output as Percent of GDP from 1980 to 2010 by Country at Curious Cat Economics Blog on October 1, 2012 2:04 am

    the overall manufacturing GDP percentage was 24.9% of GDP in 1980 and dropped to 17.7% in 2010…

  7. Huge Proposed Increases in USA Government Science and Engineering Support » Curious Cat Science and Engineering Blog on April 3, 2021 6:12 pm

    […] – The Politics of Anti-Science (2011) – Engineering the Future Economy (2006) – The Relative Economic Position of the USA is Likely to Decline (2009) – Science and Engineering in Global Economics (2006) – Diplomacy and Science […]

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