America’s Economy Is Growing Slow, And That’s Okay: Here’s Why
America’s economy is growing slow, and that’s okay.
Like China over the past 30 years, America enjoyed a booming economy over much of the previous two centuries with consistent growth at a seemingly limitless rate. Our epic economic dominance in the 20th century peaked after World War II when the devastation of global war left a largely untouched America as the overwhelmingly strongest economy with a spectacular 50% of the world’s GDP.
Naturally, while Europe and the Soviet Union rebuilt from the ruins of war and hard fought independence movements finally liberated Europe’s colonial empires, the rest of the world began to catch up.
Unsurprisingly, the creation of the European Union and institutional free trade policies championed by the United States were implemented throughout the non-communist world further helped much of the first world develop. Then in 1976, Mao Zedong’s death allowed China to emerge from some twenty years of epic economic mismanagement, ready to use its hundreds of millions of workers to rapidly industrialize.
Other economic success stories include the Asian tiger economies of Japan and South Korea, as well as the other emerging BRIC countries—Brazil, Russia, India. These countries’ natural economic advantages as geo-political giants obviously mean that America’s economic dominance will continue to slip as these countries industrialize themselves and inevitably take better advantage of their impressive populations.
But Americans need not worry. America’s economic might may be losing ground in proportional terms, but our country is not declining nor is it faltering. Our percentage of the world’s GDP is shrinking, but our economy is still growing, and more importantly it is growing faster than our industrialized competition. The past decades have seen repeated spurts of impressive american growth that correspond with the technological and scientific achievements Americans are creating. America saw a huge economic expansion in the 60s (we won the space race and are still the only country to have put people on the moon, mind you). We saw another economic boom in the 90s under Bill Clinton with the beginning of the Internet and tech age that America was instrumental in developing. More recently, we have seen an impressive recovery from the Great Recession under Barack Obama’s management.
It might seem like we are experiencing anemic growth, but it does not make sense to compare the industrialized countries to the under-developed. Of course China’s economy will grow faster than ours because 40 years ago their economy was as economically dead as North korea’s is now. Similarly, it is useless to compare America’s economic growth to its growth in the 1800s when machines were first invented. Of course economic growth was going to sky rocket when the industrial revolution began.
Talking about our competition, Donald Trump suggests that Americans should be angry that America has only about 1-2% growth annually, but the reality is that America’s growth rate is much higher than Europe and Japan’s stagnant 0% to 1% growth. A lower percentage of growth is not a sign of a failing economy because for America, a growth rate of 2% entails much more actual growth than smaller countries with higher percentages of growth. When America sees 1% growth in an 18 trillion dollar economy, it is equal to adding the entire economy of New Zealand (an industrialized country) to our economy every year.
China may be catching up to the USA, but it’s only because China is still largely a third-world country. Tens of millions of Chinese still live on farms doing little more than subsistence farming and—like America 200 years ago—building factories for the first time in the nation’s history grows an economy like magic. China still has a long way to go to catch up to America, particularly in GDP per capita where the average Chinese citizen lives on just $6,800 a year.
This does not mean that China’s leaders are smarter or better than our leaders. Economic growth is not an independently discovered secret that has to be re-invented in every country. China is simply using the technology, managerial expertise, and business experience that Americans helped invent, refine, and perfect during the past century.
We need to understand that Economic growth is not a zero-sum game. Free trade benefits everyone with the effects of capitalistic competition that lowers prices, increases variety, and rewards innovation. Countries like China can grow their economy and it does not limit some finite amount of economic growth that America can have. Economic growth throughout the world is good for everyone. It lifts hundreds of millions of formerly impoverished people into a thriving middle class that ultimately creates a bigger international market in which American businesses can thrive. To keep it in perspective, China has four times as many people as America does. That means that when China’s GDP is the same as America’s, the average American will still be four times as rich as an average Chinese citizen. Americans are not losing, especially since a bigger Chinese middle class can buy more American goods, which ultimately raises our national economy and GDP per capita.
To highlight another point, not only is America’s economy still growing, but in some ways our shrinking proportion of the whole world’s economy is sign of our success. The US has spent decades trying to help the rest of the world grow their economies for our own economic and political benefits, and we have greatly succeeded. After World War II, we implemented the Marshall plan to quickly help our new NATO allies rebuild, which served two purposes: to create a big market for our rapidly growing businesses to sell our goods, and to help them help us contain the Soviet Union’s spread of communism.
We were also instrumental in implementing the General Agreement on Tariffs in 1947, which successfully signed the world up to participate in and adopt economic institutions that we wanted. This brought us and our allies closer together through trade and shared commitments to an economic system that not only helped all members, but also hugely benefited us. We Continued this success with the adoption of the World Trade Organization (WTO) in 1994 that further ingrained our economic institutions with 164 countries. While the WTO is by no means perfect, America has still gotten almost the entire world to come together and cooperate with each other over international trade.
Other success stories include Japan and South Korea, which after World War II and the Korean War, respectively, we helped industrialize and grow faster than any other countries in history up to that point. This created a massive Asian market for American goods, and these countries became some of our strongest allies in Asia in containing the Communist dominoes (the domino theory has of been largely debunked and actually turned out to seriously and negatively hurt our foreign policy and decision-making process during the 60s and 70s) during the Cold War.
Today, Japan and South Korea are valuable allies helping box in China and standing up to its increasingly aggressive actions in the South China Sea. Strong allies have always made a stronger America.
We have to stop listening to ideological nonsense and economic fear mongering that ignorantly scares voters into thinking America is an economic hell-scape in a shameless attempt to score political points. When you actually compare apples to apples, we see that America’s economic growth is much better than countries at the same level of development and industrialization as us, which ultimately means that we are adding a dramatically larger amount of dollars to our economy because percentages mislead when dealing with our economy, which is so many times larger than that of our developed friends.
Furthermore, the world is finally chopping away at our proportional historical dominance, but this process has been strategically subsidized by us for decades to further advance our own economic and political interests. When we assist hundreds of millions of people around the world join the middle class and prosper, we also prosper and demonstrate like we have so many times in the past. This is why America is so great.
China will inevitably catch up to us because of their massive population and their energetic participation in the international market. Buying hundreds of billions of dollars worth of their goods the US is actually helping them industrialize, and someday their economic growth will slow down like ours did. As hundreds of millions of Chinese enter the middle class and begin to spend their collective trillions, they will drive our economy up along with theirs because in a open capitalist system what benefits one group of people will benefit everyone else.