The U.S. Economy Remains #1 in 2021, But What About Our Future?

Townhall.com ^ | January 10, 2022 | Timothy Nash

[Kaslin]

The International Monetary Fund (IMF) deemed the United States’ economy as the world’s largest in 2021, producing an estimated $22.94 trillion or 24.4% of global Gross Domestic Product (GDP). The number is especially impressive when considering the population of the United States is just over 333 million and it has a per capita GDP of roughly $68,700.

Many public policy concerns

While many public policy issues are greatly concerning – from COVID-19 to the crisis at our southern border to education gaps relative to our ability to compete economically – in our opinion, the following three are paramount for the U.S. Congress and Biden Administration.

1. The shrinking influence of the United States and North America

In 1960, North American total global GDP was $597.42 billion or 43.7%, with the U.S. contributing $543 billion or just under 40 percent of the total global GDP of $1.367 trillion (China’s 1960 global GDP by comparison was $59.72 billion or $4.39%).

China’s 2021 global GDP grew to about $16.86 trillion or 17.86% of total global GDP. Comparatively, 2021 North American GDP declined to 27.9% of total global GDP, while Asia – led by China, Japan, India, and South Korea– produced 33.7% of global GDP and extended its faster growth pace lead to more than two decades.

2. An objective and realistic view of China is needed more than ever in Washington D.C.

On December 29, 2021 the Chinese Communist Party ordered Hong Kong police to raid the headquarters of Stand News, a pro-democracy Hong Kong-based news service critical of government policy coming out of Beijing. Seven Stand employees were arrested, and all remaining employees were dismissed. China’s action is another violation of the Sino-British agreement signed in 1997 giving Hong Kong economic and political freedom until 2047. The West, and especially the United States, must not continue to turn a blind eye toward China’s treatment of Hong Kong.

We also must reverse the current trend which has allowed China to gain superior numbers of military assets to ours in the South China Sea and off the coasts of our numerous Asian allies. As tensions grow with China over Taiwan, we must acknowledge Chinese Foreign Minister Wang Yi's comment: “the U.S. will pay an unbearable price” if we continue to support Taiwan. Our response must speak with conviction and specificity of the consequences China will suffer economically and potentially militarily if it moves against Taiwan, an important U. S. economic partner and champion of freedom and free enterprise.

With shortages of face masks to battle COVID-19 and computer chip delays that have challenged American automobile manufacturers, it should be apparent to both U.S. producers and consumers that U.S. businesses must rethink their previous supply chain strategy and be encouraged to produce more necessities at home.

Further, we must rally the world and hold China responsible for the COVID-19 outbreak and its consequences. It’s the right thing to do and the only way to prevent a future outbreak.

We applaud Congress for passing a bill targeting China over Uyghur-forced labor practices. The measure prohibits imports from the Xinjiang region of China unless companies can prove the products were made without forced labor. We hope resident Biden signs it immediately and more is done by the U.S. government and U. S. corporations to protect the rights and freedoms of Muslim Uyghurs living in China.

Broadening our view of China further, The Hill recently posited: Should a weakening and unstable Chinese economic model be as great a concern as a rising China? The answer is yes. China’s concern over energy shortages, slowing economic growth and productivity, and debt now at 290% of GDP, demonstrates that confidence in the Chinese economic and political structure is teetering from within. In addition, recent crackdowns on the property and technology sectors will result in less flexibility and greater economic authoritarianism control over two sectors that account for 29 percent of Chinese GDP.

Our concerns regarding Chinese economic stability and their ability to execute their 5-year planning model hopefully will be a cause for concern within the greater Communist Party of China. Exposing the growing fragility and incompetence of the Chinese economic model could provide a boost for pro-market reform party members as they vote at the 2022 Communist Party Congress this fall. Open, honest and regular communication of China’s current economic structural weaknesses could help market-friendly party members use data to thwart Xi Jinping’s ambition to be only the third leader in the party’s 100-year history elected to a third term. Perhaps a modern Chinese version of ‘Radio-free Europe’ would be useful in the months ahead?

3. U.S. Energy Policy continues to make no sense to us.

Oil prices continue to fluctuate, declining to the mid-$60’s range weeks ago only to rebound to more than $77 a barrel currently. Many energy experts believe oil could trade at more than $100 a barrel in 2022 if the Biden Administration continues its illogical energy policy. Remember that U.S. oil and natural gas are among the cleanest carbon-based fuels by category available in the world today. In fact, U.S. production of clean fossil fuels has dramatically reduced the U.S. carbon footprint, making it the global leader in carbon reduction in the industrialized world over the last 30 years. However, if cleaner U.S. oil and natural gas continue to be removed from the U.S. and world markets due to the Biden Administration’s policies, five nonsensical results will occur: 1) The policy will enhance the political and public policy initiatives of countries unfriendly to democracy like Russia and Iran; 2) European allies will become more dependent on unfriendly nations for their oil and natural gas needs, thereby weakening the security and economic prowess of Europe and the United States; 3) More “dirtier” Russian and Iranian oil and natural gas on global markets coupled with less from the U.S. means a sustained increase of lower quality and higher polluting fossil fuel products on global energy markets (in effect, the Biden Administration’s policy will increase the global carbon footprint rather than reduce it, making the policy anti-green rather than the pro-green policy it’s currently being promoted to represent); 4) The policy will employ thousands of Russians and Iranians in high-paying oil industry-related jobs when those good jobs could be here in the United States with workers paying taxes to the United States; and, 5) Billions of dollars of local, state and federal tax revenue from U.S. oil companies will be lost to the U.S. government at all levels in the months and years ahead.

Conclusion

The U.S. National Debt currently stands at $29.62 trillion (over $89,000 per U.S. man, woman, and child and just under $237,000 per U.S. taxpayer). Much of the current state of our national debt is due to excessive government spending on programs that are not needed while taking capital from private sector investments and U.S. national defense. It is crucial that U.S. fiscal, monetary and foreign policy focus on strategies that will grow U.S. capital investment, private sector job and economic growth, while defending the United States and our key allies. This is the only way to ensure that the United States will remain the world’s only economic and military superpower.

[Sirius Lee]

The only way for china to continue growing is to colonize more territory and replace the native populations.

The CCP doesn't want to implode, so Xi will choose to Maotastasize.

[Gay State Conservative]

There are a billion (plus) people in China who are willing to work 14 hours a day,6 days a week for $1.25 an hour because otherwise they'd starve to death.

OTOH,more and more Americans are satisfied with getting that SSDI check every month.

That's our future.

[GaltAdonis]

"Maotastasize"

Ha!
Good one!

[AndyJackson]

So what is happening to "productive" GDP in the US, you know goods and services that actually provide something for people. You know, cut out the regulatory bonanza and the WOT bonanza and the law enforcement bonanza and the COVID nonsense bonanza. You know folks that make something, or build something, or fix something, or feed someone or provide for health and happiness - you know the parts where people willingly part with their own money in a free market [and not government coerced] exchange. I have a problem here. The McKinsey crowd advised how much more profitable US businesses would be if they offshored all of their productive work to, just to pick a random example, China, while we kept the intellectual work here. Well we have seen the quality of intellectual workers we have kept when you look at the Mandate oral argument in the USSC, or when you look at the stupidity that comes out of our most elite universities. It seems when you decouple intellectual work from real work you get mush.

So again, when China starts calling in its chits what GDP of the US is going to chip in to pay off our legal debts?

[Renfrew]

The question we need to ask is why the USA stopped growing. We have more land than China. If we had kept the growth rates of 1920 there would be a billion Americans now.

What happened to five children families being the norm? Feminism and atheism are the causes.

[bert]

Speculative speculation founded on rumors

[MattMusson]

China is crashing. They have just locked down their largest manufacturing region. Realize that the region in question imports 60% of their calories by ship. So, locking down the Port means people will go hungry.

[Renfrew]

“The only way for china to continue growing is to colonize more territory and replace the native populations.”

The vast and empty lands of Siberia and Central Asia are on China’s doorstep. The Russian strategy is to sell China whatever it wants from these regions, to avoid a conflict Russia would lose.

The big question for this century is if this strategy will work.

[nathanbedford]

Let's consider the author's conclusions in reverse order.

The United States must "grow capital investment, private-sector job and economic growth" with "fiscal, monetary and foreign policy." To do that we must stop "excessive government spending on programs that are not needed." That is important because "our national debt at about $30 trillion is due to excessive government spending."

I would add, If we do not control our national debt there will be nothing left in the private sector i.e. no capital, needed for production. The reverse is also true, if we want to stop increasing inflation the least painful way is to increase production, i.e. supply, to match demand. We need to be more productive and that takes capital as well as infrastructure and culture. The author cites government policies that are choking capital, investment and growth that, when compounded by profligate fiscal spending and unending monetary stimulus, are the root cause of our dilemma. In other words, government is depriving the private sector of capital through "economic cost" and at the same time stoking inflation with government policies.

Why don't we simply reverse those policies?

Because politicians always find it better to offer constituents dessert rather than telling them to eat their vegetables. Because giveaway programs cause harm that is diffuse, obscure and generally unrecognized while giving away benefits are focused and identifiable so politicians prosper as politicians. But new elements have entered the American scene beyond the traditional cupidity of politicians.

First, crony capitalism has virtually taken control of our administrative state through regulatory capture, a classic example of which we are presently experiencing in the Covid vaccination mandates.

Second, inflation has not bitten until now because America's unique status as the world's reserve currency and only superpower gave us, for a season, unlimited power to borrow and spend without visible consequences. That is without obvious inflation. So politicians and Federal Reserve bankers felt free to keep the music playing.

Finally, all of these problems that we have relate to China. If we want to increase production to match supply and curb inflation, we find that our manufacturing base has been sent to China. If we want to retain capital for investment in America, we find that our pension funds have sent our seed corn to China. If our supply chain is in a shambles, a major part of the problem lies in China.

Worse, if we want to arouse public opinion to support reversing these very policies, we find that every American institution that should grow that support from academia to big sports, to Wall Street, to big media and big tech have all been infiltrated and co-opted by China. Follow the money and we find that virtually every major institution in America has been corrupted by China.

So our politicians who are inclined anyway to keep the music playing, who were not until now discomforted by inflation, conveniently find that there is no institutional pressure to deal with the very root cause of our dilemma. No institution that is except Donald Trump and his unwashed, deplorable supporters stand at the gate against the barbarians.

[AndyJackson]

great post!

[AndyJackson]

Problem is our intellectual elite have been playing Chutes and Ladders while the Chinese have been playing Go. A Panama canal here, a port there, a road through South America, who cares? Except that when you start to see how the played pieces you didn’t care about connect together and cut you off, it is too late.

[NorseViking]

They still have half a population in poverty, making both the aspiring labor and room to expand the middle class. The idea that the US economy is currently ahead of the Chinese is laughable. It is only nominally based on the inflating USD.

[Gay State Conservative]

I've seen it written that as a particular region/country becomes more affluent the number of births per female drops. One can obviously look at India,Senegal and Guatemala and see that the median number is something like seven...whereas in Germany,Japan and Canada it's fewer than two.

[NorseViking]

That’s BS. Most of the Chinese are living in the warm Southeast, leaving most of the rest of the country empty, even though the empty lands are more hospital than Siberia and Central Asia.

[Gay State Conservative]

Have you ever been to China? I have...several times. My first visit was in 1980,my most recent was in 2016. I haven't seen the whole country...not even close...but I have seen a fair portion of the southeast. Guangzhou,the huge city once known as Canton,is about 2 hours from Hong Kong. My first visit there (1980) showed a city with streets filled with buses,military vehicle and bicycles...at least 500,000 bikes at rush hour.It also was a city with drab,Soviet style buildings.In 2016 there were glass and steel skyscrapers and traffic jams of Hyundais,Toyotas and Buicks (yes,Buicks).

*However*...if you traveled 10 minutes south of those skyscrpers you found people living just as they did in the 1400s.

Unless I'm mistaken about 5% of China's population have a standard of living that approaches that of the American middle class...the rest are still basically coolies.

[nathanbedford]

Except that when you start to see how the played pieces you didn't care about connect together…

Our elected and unelected elites have not just been blind, they have been purblind. For the most part they have chosen not to see.

Why has it taken nearly 2 years to even utter in public discourse the belief that the virus came from the Wuhan lab? Why has the seizure of Hong Kong effectively gone down the memory hole? Why has the plight of 2 million Uighurs been taboo to mention in the NBA? Why are we not undertaking truly effective measures to protect Taiwan and the vital chips manufactured there?

We can ask these same kind of questions about our domestic policy. For example, why is it that it has been nearly criminal to assert fraud in the 2020 election? Why is it that no substantive hearing on the merits on that issue could be obtained? Why is it the fate of January 6 protesters is ignored as they languish in solitary confinement? Why have we abandoned due process in this country?

These things cannot happen unless we accept that no one is so blind as those who will not see. I fear that some sort of black Swan event must be required-as no doubt one of some kind or other will occur- in order to awaken us from our coma.

[NorseViking]

I’ve been to China multiple times between the 1990s and just before Covid. The way China is organized, about half the population are living within 10 minutes of the skyscrapers indeed.
Based on PPP, a delivery guy in Harbin, which is far from the most opulent of all Chinese places, makes an equivalent of $36,000 in Chicago.
Just ten years ago there were hordes of Chinese wetbacks across the Russian border. Now they are mostly gone, meaning there are decent employment opportunities back home.

[Renfrew]

Not sure what your point is. Yes, most of China’s pop is in the southeast, but north and west China still have a few hundred million people.

Siberia across the border has 30 million and falling.

The Sakhalin oil fields are 1400 miles from Beijing and 4000 from Moscow. As China’s power rapidly passes that of Russia, who in the long run do you think will control that oil?

[Renfrew]

Good points, but the issue we have to understand is why wealth leads to atheism.

India, Senegal and Guatemala are deeply religious countries. Germany, Japan and Canada are not.

It seems that once people have enough material comforts they feel they no longer need God. Religion collapses as does the traditional family.