Amrerica could be Super-Power again in 2030 February 9, 2009Posted by Bipin Agarwal in Global Economy, IT offshoring and Real Estate development, Politics and economy, Quality of Living, Recession.
Vision 2030 – America Super Power again
I am sure lot of us in America may be thinking this is the dumbest statement they have ever heard. Are not we are already a Super Power ?
Answer is – no we are not. We were a Super Power few years ago until we got into Iraq, we did not have bankrupt financial services institutions, debt laden US government, and country in recession.
First I will talk about why we do not have the Super Power status in the world irrespective to what Washington may want to think, then I will explain how we could regain the Super Power status by 2030.
Why are we not a Super Power?
Defense Power has lost its relevance. Stock pile of nuclear war heads we have in our control? That is not good enough, several countries have enough nuclear ware head to destroy the entire world several time. We can not use these weapons any way. If we use it once, we are finished for a long time to come. If we are really so confident of our defense capability, then why would we worry about Iran blowing up a fire cracker in the sky and scaring the world that it is nuclear weapon. Obviously Iran is not worried about our nuclear power, by the way so in no other country in world.
Economic Power – Welcome to real world . I do not have to put all the information that has been well described by press, economic experts, and our brain trust at Wall Street (in-spite of the spin government keep giving to American public and world). In a real world economic superiority is described based on your asset, and not liability. Would we call Warren Buffet as the Oracle of Omaha or richest person if he did not have 30 billions of asset but liability. You may have read about two of the richest family in Germanu go bust because theie liability were more then asset and they could not re-finance thir debt. That is where lot of household in America and the country is at. America long term liability (including current debt, future deficit, social security, and medicare liability and now broken balance sheet of the fed with all the toxic asset from failed banks and more to come) is about 50 plus trillion, our GDP around 13 trillion, but that does not matter. US government collection of tax is only 5 trillion and they have to service the debt and liability from their income. (GDP is almost irrelevant, that is not the income of the government). Even a C-grade student of accounting will tell you that we are close to bankruptcy if not already there. If you do not beleive me, look at Davos reporting, most popular person at Davos, Prof Nouriel Roubini will tell you that we have a failed financial system.
Our Coalition of willing
How many country do you think they are real friend of America now given our bone headed foreign policy of last eight years, our strong desire to play politics in every country, etc. Our Coalition of willing contributed max 10000 troops to Iraq while we sent about 130,000. You can figure out the leverage we have.
The argument such as Intellectual property, brain trust, our free market, human right, freedom of expression are some of the very strong reason to believe that we are still a Super Power. There is saying that King always like to believe that he is a king after loosing the war and evenif he is in prison. I do not think anybody will pay attention. Good news is that there is no Super Power right now. If China thinks they are Super Power, that is just another bone headed thinking meant for consumption by local people in China.
We have lost the moral authority by engaging in the war on the people who have noting to do with us, protecting and promoting a financial system and regulations that has destroyed the savings of the entire world and made us the biggest debt holder to world. Our value system is broken, we do not take our responsibility at family, community, business and government level seriously. We are always worried about our rights and not responsibility.
How we will become a super power by 2030.
After all the glowing description of America above what makes me think that America will be a Super Power again in 2030. first of all let me make it clear that 2030 is not a magic number. Point is that it will take at least 20 plus years for us to get there if we do the right things. It is going to be hard but doable if politician, interest group, and lobbies (actually they all are one and the same) start doing the right thing.
Following is the list of major areas of reform. Great news is that all of these are in our control, we do not have to depend on any country to help us make it happen. Those who partner with us will benefit anyway.
- Energy Independence
- Business Model Changes (Social Entrepreneurship)
- Health Care Reform
- Infrastructure Spending
- Social Security and Medicare
- Promoting Medical Tourism in emerging and under-developed countries
- Education and Education institutions (innovation machine)
- Family structure and responsibility
- Immigration Policy
- Defense Policy
- Dedication to Humanity by American
I will try to elaborate each one of the focus area and potential impact on US financial and our standing in the world.
Energy independence is the mother of all initiative to make America energy self sufficient. It is interesting that Google also has laid out a vision 2030 for clean energy. My forecast is that energy independence will include energy conservation, alternate energy. This area is likely to have the biggest impact the US economy.
Potential to reduce the import of oil (our largest import item), ability to create jobs, reducing our future environment cleaning spending. Our energy policy will directly impact our manufacturing activity of automobile (electric, hybrid), our investment in smart grid. Investment in smart grid will make our energy distribution efficient, have the potential to decentralize the energy generation. Our energy policy will free up our defense dollars that we have to spend to protect our energy supply.
If Obama administration has to pick one priority for future growth of America, then this is it.
Business Model Changes (Social Entrepreneurship)
Our free market business model that demands constantly increasing revenue and profitability leads to short term focus. Executive are focused on nex three monts. and not long term. When they can not grow profit they do mergers and cut cost to shore profitability at enormous cost to society.
Business model (social entrepreneurship) that balances the value of all stakeholders including shareholders, employees, community, government, environment that creates sustainable business is more important then the constant focus on increasing revenue and profitability. A partnership of business, philosophy, politics, and community can create a sustainable business model. Good news is that it is a big focus of lot of business and educational institutes.
Prof Thomas Neal is leading effort in this direction at Oxford Business School. There are lot of other initiatives at several universities including Yale, Stanford, DU, etc.
Health Care Reform
We do not have to debate that our health care system is highly inefficient. Only 30 to 40 cents on the dollar is spent on actual care. No different then government and Red Cross. Private sector was supposed to more efficient?
There are four legs to this table, Patient, providers, insurance company, drug and supply companies. Currently the interest of these stake holders are not aligned. 1) Patient want free health care, 2) providers are worried about the legal liability and this is one of those specialty where doctor want to be paid a lot irrespective of his or her capability, and labs want to do maximum test, 3) insurance company make most money when they deny you the care. ideally they would like to collect insurance premium form those people who do not use the health care system, 4) drug and supply company want to sell the most expensive equipment and drugs, irrespective to your needs.
Each stakeholder wants to get the best part of the deal without paying for it. Goal should be to spend the health dollars on needed health care and reduce the overall spending and improve the care.
Good starting point will be make health insurance available to everybody using the giant self funded (not for profit) insurance pool with life time cap. After the cap is reached, the premium goes up. Insurance company are paid the administration fee for managing the distribution of health dollars based on the number of patients they are managing and also managing the care and drug supply like they do today except their admin dollar will be capped. Providers should be rated and should be paid based on the rating they receive from patients. Patients should be encourage to have a lifestyle (exercise, food quality). Provider should have access to all the electronic record of a patient.
Social Security and Medicare
This is one of most underfunded liability that US government has. Raising taxes to continue this benefit does not make any economic sense. Government need to lower the benefit and increase the age when people are eligible. Also government should save the current surplus into a fund that is available for the beneficiary irrespective to the financial status of the country. Government has not been upfront and almost dis-honest in telling the state of affair to the people who need it most.
Promoting Medical Tourism in emerging and under-developed countries
This is a very emotional issue for lot of people. We all know that our medical cost is high and large share of that is spent on the people who are above fifity and have retired. Even if they deserve the best care, it does not have to be located in America. What is wrong in building serveral micro cities in good location in the countries that are not developed. South America, Africa, other coastal areas. Our people will get good care, our health care cost will come down, it will also have positive impact on the economy of these countries. Our dollar will go long way. Rather then importing nurses and doctors, why do not we send our patient to those countries. Everybody wins.
Education and Education institutions (innovation machine)
Everybody will agree that education is a key component for progress of any society. However most of the government around the world do not demonstrate it through actions. They spend lot of money on defense, infrastructure and a very small percentage on Education. America has some of the most advanced educational institute both at national and state level. There is lot of brain power sitting in these institutes. It needs to be harvested by making the resources available and making the education as top priority and teaching as a most respected profession. American can lead the world by making our institutes as the most accessible and wanted place.
Family structure and responsibility
Immigration has made America as a melting point for different culture, faith and back grounds. However, western culture has become synonymous with wealth, pleasure and luxury. Our Family system is broken. We have become a society that is focused on “I” , we need to focus on “US”. It is not funny that US also means UNITED STATES. We need to become a family centric society. As we become such a society our dependence on government will reduce. We need to save as opposed to spend the earning of our future generations.
American has a population of about only 300 plus million, that is less then 5% of the world population. We have lot of land and less people. We should allow selective immigration of 100 million people (educated and non educated) from all over the world to give us the critical mass. If we do not know how to do, just ask Wall street firms, they do M&A all thye time. We have to change our social program before we can do this.
America has to change the focus from defense spending to peaceful living. We spend too much money on weapons and military and war hero. We can cut down our spending by 50% and we will be as safe in world as we are today or we ever have been. We have fought lot of wars to protect our energy supply, However if we become energy independence, we do not need so much defense spending.
Dedication to Humanity by American
Common American has a good heart and is very accommodating. We need to promote our softer side to world and create more Peace hero then War hero.
America has the potential. We have the brain power. We have good people. What is needed is a close integration of values across stakeholders from people, business, politics, and environment. If we leave out any of these stakeholders, ii would not happen. Do we have the will power? Can we do it? YES WE CAN.
Your input will help
I am sure I have not covered everything, you can participate in refining this vision 2030. Put your thinking cap and let me know why these are not right priority or what other priority could be included.
If you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask