Παρασκευή 16 Νοεμβρίου 2018
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America. Predictable.

Can one safely predict what the future holds for America?

America. Predictable.

by Capricorner

It used to be that America was predictable, but lately not quiet so. Its most popular beverages are still coffee, soft drinks and beer. Its most popular ice cone is still vanilla. Its most popular fruit is still Orange and America is still hooked on Shrimp. That Americans are not splurging on themselves like they used to is a new characteristic of the American consumer, presumably due to the crisis, the need to feel self restraint, or the idea that this is not the time to spend but to save. All right with that but finding irresistible the urge to have an I-pad, yet saving on other normal purchases? That Americans are spending hundreds of dollars a piece to dress their dogs with designer “coats” yet becoming price conscious for items concerning themselves, is not “American”. Of course showing off one’s wealth has always been American, but in ways slanted to self denial?


Americans used to retire at age sixty five. The recent crisis has forced many to keep working in to their seventies. The investments of their pension funds and those of their I.R.As have lost value, consequentially reducing their incomes. The g o l d e n years as they are known are no more, for many an American retiree. How will things shape for the baby boomers and those still working, when they reach retirement? Predictions are not safe.


 

America used to produce wealth for its people. The American standard of living was, on average, the highest in the world, aligned to its industrial might. The American middle class was the backbone of American society. Nowadays the gap between the rich and the poor has begun widening. The American “Homo Economicus” is now finance not production oriented. Wall street institutions, not factories, produce great wealth now, but how and for how many? The recent crisis started with the subprime loans packaged and sold as financial products, for investors, such as financial institutions, pension funds and the like. What will the future bring to the American Economy? What shape will it take? America is the undisputed leader of innovation. Americans are quick to adapt. But the world is not standing still. New Economic Powers are ascending, challenging the U.S. How will America respond to this? Not easily predictable, given the invasion of the political landscape by the TEA PARTY and lately the “protesters” who were removed from their gathering places but not from the political scene. Social turmoil can not entirely be precluded. Glen Beck is not the only one who loves his country, others do as well and in more realistic ways.


There is security in predictability. One knows what to expect. So when there are signs in the horizon indicating difficulty in the predictability of America’s future ways, there is a certain degree of insecurity. One comforting thought is that maybe America is not as predictable as it used to be, but it is always predictable in its response to challenges and there are many.


 

The backbone of America, its middle class, is now fading.


63% of Americans fear their standard of living will go down. That’s very disturbing, not as a risk of a self fulfilling prophecy, but as sign that the “can do” America doubts it can. The crisis is over but recovery is anemic and in peril from developments in Europe which can affect the Global Economy. In addition America is in a process of a restructuring which alters the economy, the employment spectrum, the prospects of the American middle class. Technology has produced massive efficiencies and companies have improved their managerial systems so that they can do more with less people. Globalization has also reduced the number of jobs in the US. The S&P 500 companies generate 46% of their profits abroad, some even higher than that. The quintessentially American company COCA COLA operates in 206 countries. With many American companies operating GLOBALLY their domestic operations require less people, fewer jobs, as their foreign operations enjoy easy credit and skilled, but cheap, labor. Rich country, high wages, technology, globalization, stacked up against American jobs, the middle class. The effects of global competition are impacting the American lifestyle. In GM plants, in Michigan, the Unions agreed to an hourly wage of $14 for 40% of the work, which is a $36000 annualized income … below the median American family income. At the same time Mexican workers in the GM plants in Mexico earn half that sum and they are as good in their work as their American counterparts. OK, one may argue, the threat from low wages is for manufacturing jobs, service jobs are more numerous and they are not easily substitutable by workers abroad. WRONG. Why do Americans hear an Indian accent when calling for customer service? Because their calls are routinely routed to India where a host of Indian service reps answer their calls. Service jobs are also declining in numbers.


 

How are Americans adjusting to the new growing trends? Those who can, increase their spending. 70% of GDP is consumption. Household debt is at an all time high, exceeding 13 trillion. America keeps spending, democrats or republicans notwithstanding. Democrats spend on programs, Republicans reduce taxes to encourage spending. Spending sustains the Economy for a while but is not the answer to America’s problem. The answer is the capitalization of America’s higher education.


 

The US has some of the best Universities in the world. They educate Americans AND non-Americans. Their educated minds can form the foundation of a “knowledge” Economy. An Economy based on what the Americans have excelled, INNOVATION. The US can innovate its way to the Economic leadership it is now loosing. To this end it should endeavor to retain some of the world’s best and brightest which it educates in its top academic institutions. Instead of letting them return to China, India and other upcoming countries to help them advance with the knowledge they bring to them, they should be encouraged to stay in the US and, thus, contribute to the advancement of its Economy. With their degree they should also receive the “green card” which makes them permanent residents of the US and eventually citizens. America must create new industries based on knowledge and innovation where it has a competitive edge. America also has inherent strengths, like openness, diversity, dynamism. This enables it to think bravely and exploratively. This is what makes America strong, this is what can sustain the American Dream. In his book The Epic of America in 1931 James Truslow Adams defined the American Dream … “a better, richer, and happier life  for all our citizens of every rank, which is the greatest contribution we have made to the thought and welfare of the world. That dream or hope has been present from the start. Ever since we became an independent nation, each generation has seen an uprising of ordinary Americans to save the American Dream from the forces which appear to be overwhelming it”.


The knowledge advantage of the US will keep the American dream alive. America will find the way. You can bet on that. History shows that there is no impasse for US progress. America, born from armed struggle and developed with a revolutionary spirit, which inspired its formation as a country and its continuous technical progress, is still predictable.


 

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