The United States is in a unique position in the world.
We have all the necessary ingredients for economic growth and we are pretty much unique in that position.
Let’s review what is needed for economic growth.
- Natural Resources
Of these four key ingredients our only possible deficiency is labor and this can be largely offset by capital. Capital can permit the displacement of labor through automation. This means that manual labor will be replaced by skill.
Some decry the loss of jobs in manufacturing and agriculture, but does anyone really want to return to an agrarian society where people were essentially self sufficient? I’m very happy with the mechanization of agriculture that allows 1% of the population to feed the other 99%.
In the wake of the financial collapse of 2008 we have seen tepid economic growth combined with increases in regulation, and increases in government spending.
This has put us in an economically perilous position. Our national debt has grown to an astronomical amount that makes us dependent on the dollar being the basis for world currency. It is only this fact that keeps our debt payment relatively low and allows us to continue as a viable economy.
It we were to lose our favored status our cost of borrowing would increase overnight and leave us with no money for defense, social security or medicare. Taxes would have to increase to an unbearable level.
Frankly I’m concerned that Obama’s use of economic sanctions on Russia could lead to the dollar losing its status. I suspect China would like to see their currency become the base for the world economy. I know that the Arab states have already floated the idea of using oil as the base for the world economy.
This administration’s insistence of ‘greening’ our economy is largely responsible for our tepid growth. Other factors are the denigration of ‘big business’, profit and the desire to ‘distribute the wealth’.
As a result our GDP has been growing at 1.5 to 2.0% instead of a more robust 3 or 4%.
What difference does 1% make in growth? Not so much on an annual basis, but a LOT when compounded over 10 years.
Using 2012 as a starting point (16.4 trillion) a 1% difference in growth is only $164 billion, but compounded over 10 years the difference becomes 1.9 trillion!
If we were able to stop our debt from growing (currently 17.3 trillion) this difference would represent a start on paying down that debt.
Every 1% increase in growth adds another almost 2 trillion over 10 years.
To ever hope to get out from under a debt that holds the potential to destroy our country, we need to promote economic growth and control spending.
If only we can find leaders, representatives and administrators, that recognize the controlling spending will automatically promote economic growth, we have a chance to stop our economic demise.
We have all of the necessary ingredients for outstanding growth. Our ability to finance and innovate is unparalleled. Our natural resources can provide an advantage over virtually every other country. I believe our people are capable of learning the skills needed to maintain their productivity advantage.
We simply need the leadership to encourage the use of those resources.