there's a fork in the road
ain't seem to make up my mind
don't know which way to go
i am sure running out of time
i am all alone with my suitcase in my hand
can't find my ticket to the promise land
there's a fork in the road
can't seem to make up my mind
Infamous Stringdusters: Fork In The Road
The United States and most developed countries are at a fork in the economic road. And they are running out of time to make the right decision. Turn one way and these countries face more of the same. Turn the other way and with enough effort, hard work and sacrifice these countries will find the "promise land."
Slower Economic Growth
Consumers around the world are not buying enough things to help employ all the people who need work. Falling demand especially affects the developed countries resulting in structurally higher unemployment.
Many people in the developed countries have over consumed for too many years, maxing out their credit cards. Now they are trying to pay down their debt. As their spending slows, economic growth falters.
People in developing countries want to buy things as well. While their economies are growing rapidly, their spending is not sufficient to overcome the drop in spending in the developed countries of Europe and North America. It will take a number of years for them to develop a consumer lead economy. With global demand expanding slowly it is now wonder the world is facing one economic crisis after another.
Global Competition
In the meantime, each country is contending for their share of the economic pie that is growing more slowly. While the emerging markets are growing at a much faster pace, they are starting from a very small consumer base. As a result, for the next number of years the emerging markets will be unable to overcome the slowdown in growth of the developing nations.
For years the United States was the dominate economic power. The United States achieved its great wealth through hard work, a willingness to sacrifice today for a better tomorrow and an education system that led the world. Things "Made in the USA" were world class. Innovation was rampant leading to new products and services valued by everyone.
As with any competitive market place, new entrants arrive on the scene bring with them new products at a more competitive price. Japan produced better cars. Detroit responded with cars that were shoddy and of poor design. After many years, the automotive industry came close to collapsing before it was able to become competitive.
Fueled by global outsourcing, consumerism in the United States continued as families spent all they made buying goods and larger houses. Debt financing evolved to facilitate buying with new "innovative' products and services. As long as the value of ones assets kept rising you could spend more than you made, extracting cash from their assets.
Free trade and global competition allowed the developed countries to enjoy a life style beyond their means for years. Now it has come back to haunt them as they must pay for their over indulgence.
Labor costs in China and other emerging countries are and will remain well below those in Europe and the United States. To become competitive the developed countries must raise their level of education, learn to spend less than you make (this includes governments), encourage innovation and learn to make things again. Becoming competitive in the global marketplace cannot come from devaluing the currency, opposing immigration and looking to erect trade barriers. It is a difficult road ahead.
At The Fork in the Road
Unfortunately, politicians are afraid to make the hard decision to ask people to take responsibility for their problems. They rather find the easy way out so they can be elected repeatedly.
Today many people want and expect the easy path to success. Our education system is at best the 18th in the world and falling further behind. People look to the government to solve our problems with quick fixes.
The problem is the easy path for politicians is the one that maintains the current economic malaise. The path to success comes from hard work and learning to live within your means.
In Philadelphia, the Amish are under bidding local contractors for roofing contracts. In one example, the Amish bid 38% lower than a non-Amish contractor. Since they work harder and for less money, not needing to pay for all the niceties like high definition cable TV, the Amish roofing companies are making life difficult for "main line" roofers who pay higher salaries to sustain the life styles of local contractors. Customers praise the high quality of the work by the Amish.
I am not saying we have to live like the Amish. However, we need to find ways to become more competitive in the world markets. Once the developed economies learn to compete by making better goods and making more of them, investors will return. Until then we will continue to see much of the capital pumped out by the government move to opportunities where the returns are higher. Our unemployment problem will remain at unacceptable levels.
We are at a fork in the road and our ticket to the promise land is in front of us if we want to take it. It won't be easy but we can do it if we commit to what needs to be done. All we have to do is make up our mind.
