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Alex Hutchins

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An economic perspective from a non economic educated person as to the future of the US in the global marketplace.

According to the author of The World is Flat, globalization started with the fall of the Berlin Wall. Why, you might ask? Because those living on the East Berlin side of the wall could finally see what the rest of the world had, and wanted it too.

The second point I would like to make is that as the population of China grows and participates more in the world economy, the more their middle class increases and the more their middle class wants what the American middle class has and takes for granted.

As other countries grow, like India for example, they will begin to naturally produce a middle class as well that will want what the American middle class has and takes for granted.

Since economics can be defined as: :the study of the allocation of scare resources that have multiple purposes," we can easily see that we might have a little bit of a problem globally in the years ahead with our scarce resources. That being said, the American middle class will have to start sharing its scarce resources with the rest of the world and in so doing, will inflate the cost of these scarce resources.

In other words, the supply and demand curve that nicely fit as an overlay over the US must now be used as an overlay over a map of the world, that will automatically shift our equilibrium outside of the continental boarders of the US. Consequently, as the middle class around the world comes up to this new global equilibrium, the US will have no choice but to come down.

I am not sure what the new look will be but I an tell you this, the middle class will not look like nor have the purchasing power that it has today or that it had 30 years ago.

And, in my economic novice opinion, it will start to be seen around 2025 and will gradually escalate and stabilize around 2050. About that same time, the demographics of the US will also be different. Asians/Hispanics will be fighting for the top spot with Blacks in third and Caucasians in fourth, changing our politics forever.


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  • Jun 22 2013: Just because the rest of the world is catching up with us, does not mean we are in decline. We will continue to be the largest economy on earth for a least 5 to 10 years. Currently our economy is larger than China and India's combined with 2.5 billion people and our little 310 million. It will be a generation or so before the larger countries (30 + million in population) catch up with is in per capita GDP.

    Our declining standard of living is based on our "protectionism". By that I mean we do not want to lose what we have, but we are unwilling to take risk to grow. An example is in education, we all know we need better public education system, when some one tries something new vouchers, charter schools, home schooling, state-wide open enrollment- vested interests teacher unions, school districts feel that they are going to lose something rather than taking those changes as an opportunity to grow their influence.

    Our standard of living in this country is dependent on our ability to change with, no- in spite of, the world. To take advantage of those changes that can make us grow. We have killed the geese that laid the golden eggs by over regulating, micro-managing every aspect of our lives to insure equal outcomes. We cannot continue to do this.

    The rest of the world catching up with us is a good thing - they now can afford to buy more of our goods and services. Our under employed society can gear up to sell to the world versus just the first world. A funny thing with commerce, it is not a zero sum game, the more that participate in it the better off all parties are concerned as long as they stay competitive and do not take their customers for granted.

    Customers come in a wide variety- public school students, businesses in a county, employers, and consumers. Everyone has to step up their game and be competitive. If you want to sit on your laurels , you will be crushed.

    We are the masters of our own fate as country and as individuals.
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      • Jun 22 2013: We are competing in a world economy. Money moves over borders as fast as it does across the counter at McDonald's in any where in the world. It is not about keeping money static, it is about taking your piece of it as it passes through your hand or local economy. The rest of the world, mostly understands that, we as a country don't.

        Changes in education are necessary. On-line education, lowering college costs are fought just as hard as vouchers and open enrollment because somebodies losing their piece of the pie. As far as vouchers, who said they have to be used for religious schools, what about going to a better public school in the next district over. Public schools, all schools, need to treat parents and students as valued customers not as a cog in their local monopoly.

        Raising minimum wage only creates wage inflation. It is a short term, feel good panacea for politicians to beat their chests about. If you are not being paid what you are worth, go find an employer that will pay you that wage. If there are no employers that will meet that challenge, create your own business and earn it.

        Affordable healthcare? A misnomer. I have seen my health insurance go up by 30% over the last 2 years in the name of affordable healthcare.When I graduated college I had to buy my own health insurance because I was an independent contractor. My policy cost $75 a month with a $1000 deductible. If we asked all 22-26 year olds to buy their own policy, we would see underwriting and higher deductibles as their consumer sides of themselves kick in. Giving them a free ride on their parents policy is hurting everyone.

        The US has the highest corporate tax rate of the developed world. If you want to see their overseas profits repatriated don't double tax it. It is not patriotic to pay more taxes than you owe. The last I checked, tax law was created by legislators for the benefit of their constituents. It is up to each of us to push for the changes we want.
        • Jun 22 2013: I don't agree that our tax monies are being spent for our mutual benefit. I.e.my taxes don't benefit me when they are being spent and wasted on unneeded armaments, wars, political "junkets", CEO's and greedy Wall-Streeters.
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      Jun 23 2013: I think you have made some good point and it is difficult for anyone to believe our country, as great as it is, is in decline... and, it may take several years to happen or it may not. I have read accounts where some (so called experts) believe China's economy will exceed ours in a couple of years. And, about the time Bush went after Sadam, the Euro Dollar was seriously being considered by the IMF as the international currency of exchange - however, the Euro Zone has followed our example and is now a weak economy. As more and more countries seriously participate in the marketplace, the richer these countries become. The richest man in the world in not an American but a Mexican. There are companies like Blackstone and Thomas Lee who are opening up offices globally due to deteriorating financial conditions in the US.

      What we focus in on in our education system is to help students pass tests which is not learning. I have talked with sales reps from publishers and the same textbooks that are used in small colleges are being used in the Ivy League schools, so the knowledge base is the same. The only real difference is retention, how that knowledge is used, and can the graduate add value to the company?

      Why aren't investors investing?
      Why aren't homes selling?
      Why aren't consumers spending?
      Why is Wall Street a gambling casino?
      Why has greed replaced common sense and responsibility?
      Why is our Congress unable to function?
      Why is our divorce rate at 50%?
      Why do we buy more porn and drug than any other country?
      Why are our jails full?

      These are not questions that need to be asked of a healthy country.

      Maybe my economic knowledge is not the best, nor is my ability to argue intelligently, but I do have legitimate concerns that are being shared by more and more people in respected positions... But, I also fear that we are like Nero who fiddled while Rome burned.

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