As I watch our economic crisis unfold, I've been wondering what the world will look like when we come out the other side. I believe that we will come out stronger, but also less rich. We will be less rich not just because we will have less easy credit, but also because we will have more competition. I see this through three trends:
1. I first starting working in West Africa in 1986. Back before the internet when letters would take weeks to go in either direction and phone calls cost to the US several dollars a minute. The gap betweeen Westerns and the locals wasn't just financial. Very few Africans had skills to compete with every lower level foreigners. Many organizations had foreign finanical managers, project managers, and even administrative assistants. Twenty years later, there are far fewer expat jobs and foreign organizations find themselves competing directly with local ones. Despite the declining skills gap, the US and Europe have maintained a much higher standard of living than Africa, Asia, and the rest of the Americas.
2. In Fareed Zakaria's book The Post-America World, he stressed that the "rise of the rest" rather than the decline of the United States will reduce the US's ecomonic and political power. As China, Russia, India, Brazil, and other countries strengthen their economies and grow in power; the US will be unable to take unilateral actions and will be competing not only for power but for resources.
3. Finally, the economic crisis in the United States will cause a significant shake-up in all sectors of our life. I believe that the reduced spending and production that we are seeing today will continue. After all, so much of that spending was done on credit--money that we didn't have in the first place. The Federal Government is doing its bit to try to borrow and spend its way out of this crisis, but eventually we will have to pay back the trillion dollars that we are spending on the crisis today (plus the trillions that we borrowed for the Iraq war and will need borrow for Social Security and Medicare).
I think we will look back at the 90's and the first half of this decade (what do we call it? the OO's?) as the high point for the American lifestyle. We will grumble that we are still paying off the excesses of those twenty years. Hopefully, we will find that our happiness is not tied to the size of our big screen tv and might actually end up poorer but more content.
