World Economy

For those of us alive today in America, we have lived in a period where America had the highest standard of living of any country in the world. Now, there were other countries in Western Europe that over time came fairly close, but the American economy simply dominated the world and ultimately drove the old Soviet Union into bankruptcy trying to match our defense spending.

Of course prior to the 20th century, the richest countries were Great Britain and Germany but two disastrous wars and the growth of America changed that relationship.

Can America maintain its economic dominance. The odds are against us but it may very well depend on how you want to measure it. If you measure it on a countrywide basis, the sheer numbers of people in China and India would assure that the GDP of those countries are clearly going to pass America's at some point in the future. In a number of lists, the Eurozone, consisting of most Western European countries, is either slightly larger or slightly smaller in GDP than the US.

Clearly, as the world becomes a global economy, the standard of living around the world is likely to equalize over time. If you live in a poor country, this is clearly a good thing. If you live in a rich country, not so much. Growth has to be greater in emerging markets in order to create balance over time. Of course another way to achieve that balance is to have negative growth in the rich countries. It would clearly be better for people in wealthy countries to grow slower, and watch an overall increase in world standard of living as emerging markets grow faster.

In fact, this emerging market growth is a wonderful investment opportunity for many years to come. We do need to make sure that our export industry has an opportunity to sell to those emerging countries in order to maintain jobs and profits in this country.

The most significant economic trend of this current century will be the rebalancing of world economic power. If you look at development in the US since World War II, you saw great growth in the sun belt states at the cost, to some extent, of the North. Jobs and Industries moved to lower cost sub belt states. I see a similar situation in respect to the world economy as jobs and industries migrate to lower cost developing countries.