End of the American Dream – May 31, 2011
It is time to face the truth. The Chinese economy is simply beating the living daylights out of the U.S. economy. Whether you want to call it a rout, a slaughter or a thrashing, the reality is that the Chinese are absolutely embarrassing America on the global economic stage. At this point, the Chinese are playing economic chess while the Americans are playing economic checkers. China is poised to blow past the United States and become the largest economy in the world. Not only that, some economists are projecting that the Chinese economy could be three times larger than the U.S. economy by mid-century. The age of U.S. economic dominance is ending, and most Americans still don’t even understand what is happening.
Several decades ago, big corporations started figuring out that they could make a lot more money if they sold goods that were made overseas. At the time the United States was so dominant economically that it didn’t even matter who was in second place. We started shipping in lots of products that were made somewhere else and the American people loved it because the prices were lower and they could buy more stuff. U.S. corporations loved it because profit margins were higher. Foreign nations loved it because we were helping to develop their economies and they were getting richer. Everyone seemed to be winning and it was a lot of fun while it lasted.
But then the trickle of jobs and factories leaving the country started to become a flood. Then it became an overwhelming torrent. The number of “middle class jobs” in the United States began to shrink continually. Suddenly it seemed like most of the jobs that were available were low paying “service jobs”. The prices of the goods in the stores were still low, but average American families were feeling increasingly squeezed so they started to borrow massive amounts of money in order to maintain the same standard of living.
Most Americans were willing to go into constantly increasing amounts of debt in order to buy cheap products that were made overseas. This seemed to work well for everyone involved and so the consumer debt bubble just kept growing and growing and growing.
As businesses and jobs fled the country, the U.S. tax base just wasn’t as robust as it was before either. The federal government, state governments and local governments all started borrowing gigantic amounts of cash from the countries we were sending all of our money to.
In particular, China really started to emerge as an economic powerhouse over the last couple of decades. Once China joined the WTO they aggressively started to flood our shores with really cheap products. When you have hundreds of millions of workers willing to work for about a dollar an hour that is not that hard to do.
Most Americans didn’t care where all of the cheap products were being made. They just kept running out to the retail giants and filling up their carts. Of course this was largely done with borrowed money, but at the time nobody really seemed to really care.
It is a lot of fun to run up huge amounts of debt, but eventually bills have to be paid. All of this borrowing has enabled the U.S. to enjoy the greatest standard of living in the history of the world, but it has been a false prosperity. The American Dream was purchased with borrowed money.
Now the United States is drowning in consumer debt and government debt from sea to shining sea. We sent gigantic amounts of wealth over to China and other foreign nations and they sent us gigantic amounts of cheaply made products.
It was supposed to be a good deal for both sides.
In the end, it turns out it was a great deal for them and a crappy deal for us.
The following are 40 signs that the Chinese economy is beating the living daylights out of the U.S. economy….
#1 The Chinese economy has grown 7 times faster than the U.S. economy has over the past decade.
#2 According to the IMF, China will pass the United States and will become the largest economy in the world in 2016.
#3 According to one prominent economist, the Chinese economy already has roughly the same amount of purchasing power as the U.S. economy does.
#4 At the turn of this century the United States accounted for well over 20 percent of global GDP and China accounted for significantly less than 10 percent of global GDP. But since that time America’s share of global GDP has been steadily declining and China’s share has been steadily rising.
#5 Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.
#6 According to Stanford University economics professor Ed Lazear, if the U.S. economy and the Chinese economy continue to grow at current rates, the average Chinese citizen will be wealthier than the average American citizen in just 30 years.
#7 During 2010, we spent $365 billion on goods and services from China while they only spent $92 billion on goods and services from us.
#8 Since 2005, Americans have gobbled up Chinese products and services totaling $1.1 trillion, but the Chinese have only spent $272 billion on American goods and services.
#9 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001, and the U.S. trade deficit with China is now 27 times larger than it was back in 1990.
#11 Since China entered the WTO in 2001, the U.S. trade deficit with China has grown by an average of 18% per year.
#12 According to a recent report from the Economic Policy Institute, between 2001 and 2008 the U.S. lost approximately 2.4 million jobs due to the growing trade deficit with China. Every single state in America experienced a net job loss due to our trade deficit with China during this time period.
#13 The United States had been the leading consumer of energy on the globe for about 100 years, but last summer China took over the number one spot.
#14 China produced 19.8 percent of all the goods consumed in the world last year. The United States only produced 19.4 percent.
#15 China now consumes 53 percent of the world’s cement.
#16 Last year, China produced 11 times as much steel as the United States did.
#17 Since China joined the WTO, approximately 46,000 factories have been transferred from the United States to Asia.
#18 China now has the world’s fastest train and the world’s largest high-speed rail network.
#19 Is alternative energy the future? If so, the Chinese economy is positioned well. China is now the number one producer in the world of wind and solar power.
#20 Chinese solar panel production was about 50 times larger in 2010 than it was in 2005.
#21 Today, China controls over 90 percent of the total global supply of rare earth elements.
#22 85 percent of all artificial Christmas trees are made in China.
#23 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.
#24 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.
#25 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.
#26 There are more pigs in China than in the next 43 pork producing nations combined.
#27 China now possesses the fastest supercomputer on the entire globe.
#28 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.
#29 Manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975.
#30 In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world. In 2010, that number skyrocketed to $82 billion.
#31 Over the past 15 years, China has moved up from 14th place to 2nd place in the world in published scientific research articles.
#32 According to one recent study, China could become the global leader in patent filings by next year.
#33 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe? Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.
#34 According to author Clyde Prestowitz, China’s number one export to the U.S. is computer equipment.
#35 In 2010, the number one U.S. export to China was “scrap and trash”.
#36 In 2009, the United States ranked dead last of the 40 nations examined by the Information Technology & Innovation Foundation when it came to “change” in “global innovation-based competitiveness” over the previous ten years.
#37 Russia and China have announced that they have decided to quit using the U.S. dollar and instead start using their own national currencies when trading with each other.
#38 A Washington Post/ABC News poll conducted a while back found that 61 percent of Americans consider China to be a threat to our jobs and economic security.
#39 The average household debt load in the United States is 136% of average household income. In China, the average household debt load is 17% of average household income.
#40 China has accumulated the largest stockpile of foreign currency reserves on the entire globe - $3.04 trillion as of the end of March. That figure was an astounding 24.4 percent higher than it was exactly one year earlier.
So where in the world did China get all that money?
That is an easy question to answer.
They got it from us.
We are the wealthy rube sitting at the poker table getting bled dry by all of the sharks.
We gave trillions to the Chinese instead of giving it to U.S. businesses and U.S. workers.
Now our economic infrastructure is in shambles and tens of millions of Americans can’t find decent jobs.
Our government officials are wondering where all of the tax revenue went, but the reality is that you can’t tax workers that don’t have jobs.
Sacrificing jobs and economic infrastructure for “cheap stuff” is kind of like using pieces of your house to keep your fire going. In the end, you won’t have any house left at all and your fire will go out.
The greatest economy on earth is being ripped to shreds right in front of our eyes and most of our politicians do not seem to care.
This has been a slow-motion disaster that has taken decades to play out. This is not something that happened overnight.
Sadly, the vast majority of the American people are still clueless about all of this. That is one reason why I write so fervently about economic news. My hope is that the American people will wake up before it is too late.
Unless fundamental changes are made, the current trends we are witnessing are only going to continue to accelerate. The Chinese economy is going to continue to beat the living daylights out of the U.S. economy.