Economic futures

Readers of the essays posted on this website will know that for many years we have included the economic collapse of the US (and hence the global neoliberal) economy as one of our four futures. This was mainly because of the way Americans use debt--personal, corporate, and national--to pretend to keep the economy growing.

In a recent paper about the futures of unions, posted on this site, I said the US economy is a gigantic Ponzi Game.

My economist friends always laugh at me saying I don't understand how the economy works. They may be right.

Nonetheless, there have seen some items in the news recently that suggest even mainline economists are edging towards my concerns--or at least stating facts that seem to me to make my concerns worth consideration.

For example, the most recent report of global competitiveness done by the World Economic Forum shows that the U.S. slipped from overall first to sixth place, behind Switzerland, Finland, Sweden, Denmark, and Singapore.

While the U.S. was said to excel in market efficiency and innovation, out of 125 countries, the U.S. was 40th in health care and primary education and 69th in macroeconomy because of its huge and growing budget and trade deficits. In macroeconomy, the U.S. scored lower than such nations as Vietnam, Venezuela, Uganda, the Philippines, Peru, and Nigeria.

Somehow, that doesn't sound good to me for the World's Largest Economy--the Engine of Global Prosperity.

Moreover, a recent article in the Wall Street Journal pointed out that "for the first time in at least 90 years, the US is paying noticeably more to its foreign creditors that it receives from its investments abroad." Thus "in the years to come, a growing share of whatever prosperity the nation achieves probably will be sent abroad in the form of debt-service payments. That means Americans will have to work harder to maintain the same living standards--or cut back sharply to pay down the debt."

The article does not point out that (if Americans can even get jobs) they already work longer and harder than do most people in other "advanced" economies, and that if Americans do cut back, as seems inevitable, it means they will "spend" (ie, borrow to spend) less on consumer goods, and thus that the US (and world) economy, which is so dependent on US consumerism, will fall.

As Jim O'Neill, chief economist at Goldman Sachs in London is quoted as saying in the same article, the US as been "exceptionally lucky" in recent years because "it's like the world's biggest hedge fund."

Or, Ponzi Game.