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Is The Sun Setting For America?...

U.S. at present, is surrounded by double crisis - inflation as well as recession. Because of the huge demand of oil, minerals, Beverages and food by India, China and other developing countries, global prices of these goods are on the rise which is affecting US economy also. Due to the large scale sinking of the housing loan, American banks are under heavy loss, which is dragging the American economy into the quagmire. The question is that, the crisis is short term or emblematic of the long-term U.S. sunset?

In the past, U.S. has passed through a similar situation twice. In 1981, U.S. economy did not sink despite the large increase in oil prices. In 1997, the situation remained well even after the Asian crisis. I believe that the current crisis more likely to be deep and long-term. The argument in favour of U.S. short-term crisis is that the general slowdown in the business cycle comes fast and often. The key lies in maintaining a harmony between investment and consumption for the process of economic growth. To invest in factories and industries, a country has to cut down consumption. This investment increases the production soon but due to low consumption, sells go down and recession grows. Them reduction in investment and growth in consumption increases demand. This cycle goes on and on. But the current crisis of investment and consumption is not due to a cyclical imbalances. Consumption and investment both are going down simultaneously. In production sector, US companies are investing in China and for services, they are investing in India. Due to globalization, the income of US citizens is under pressure.

It is clear that the crisis is not because of cyclical imbalances of investment and consumption. It is because of the competition with the cheap labour available in India and China, which is not a short-term matter. Obviously this cheap labour will remain available because India is still a poor country. The second argument is the discovery of new technologies. It is true that the last 100 years, US has been a leader in research and technology such as car assembly line production, nuclear energy, personal computers and the Internet. USA sold these technologies to the East at heavy prices and earned hugely. Microsoft Windows earned huge profits for USA. It is argued that inventions will continue in US because even today World’s most intelligent scientists continue to flee to US. This argument is the result of the experience in 1997. At that time East Asia was in deep crisis as well as US. But with the Internet revolution, there came a boom for IT companies and recession never remained there. This Experience is definitely correct but it is not certain that this will repeat.

Come to England. The steam engine and powerloom was invented here. At that time, England was named as the factory of the world. But England could not keep its technology ahead and got behind in the race. Similarly, US will continue to lead in future, it is not necessary. Main fact is that in USA, all the research has been mainly outsourced. Scientists in USA receive maximum salaries while in India, they receive the lowest. US companies have built up there research centres in India. People working in these research centres will be Indians. While it is true that the technologies invented through these researches would be owned by US companies. But Indians who have worked to invent the technology would also know it. So, they can definitely act independently in future. Moreover, Indian companies have also begun to invest in research. Several new drugs have been patented by Indian companies. Space shuttle, Nuclear Technology etc. we have achieved by ourselves. Therefore it can be said with facts that the present period of globalization may not only paralyse the US economy, but may also produce new world leaders.

Samim said...

Of course, it'll be, How long will they lead when its deserved by others.

Jailbird said...

They might fall. But USA has bagged a lot in the pastand my confidence goes with them. You are from India. So, obviously you would love to see India ahead. But the situations still r in favour of Americans

BillyWarhol said...

very interesting Post*

i was reading Forbes Billionaires + I was surprized to see India right up there in the Top 10*

There's enuf Hunger Starvation Poverty + Lack of Clean Water + Medicine + Clothes + Housing for All the Wealthy Countries + People to Help*

Actually Solving those very Problems could Create a Ton of Jobs + Wealth!

Certainly better than the $Billions Wasted on Bombs + War*

Bush's Illegal War in Iraq comes to mind*

;)) Peace*


Thanx Billy for ur interest.

Of course, India provides a lot of variety. From the richest like Ambani to the poorest who are commiting suicide because of hunger.

Thanx for all this to our intelligent politicians who hv got brains only to fight for their vote-bank. What happens to the country, they hv concerns for it. I just hope that India gets what it deserves.

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