With the U.S. drawn further into an increasingly competitive global economy, Joe in Florida is wondering if the U.S. has what it takes to continue to thrive and prosper. And if not, should he start teaching his kids Chinese?
All right, this is a big one. With the increased productivity of China and India, the stabilization of the E.U. and euro, the decline of the value of the dollar and tension building over the oil stranglehold on the U.S., what is the prospective outlook of the U.S. economy over the next 20 years? I mean, should I be thinking about teaching my kids Chinese so they can compete in the world market, or will the economy be strong enough to endure the hardships of the maturing global economy?
-- Joe, Florida
After multiple, costly visits to the repair shop (it’s out of warranty) we’ve finally retired our crystal ball. There are plenty of folks out there who make a very good living forecasting where the economy is headed and we wish them well. But you might as well try to forecast the wind speed and direction in Central Park on July 12, 2021.
A lot, of course, depends on whether we face up to the problems and challenges that are out there — or continue to just worry and complain about them, forcing our Congress to pass more boneheaded laws that only make matters worse.
It seems clear, for example, that our immigration policies are not working. The same is true about our energy policy. You can add education and health care to the list. But the debate over these policies has devolved into sound-bite wars that do little to advance the cause of finding solutions.
And the media — from the mainstream to the blogosphere — bear a big part of the blame for this. Too often we all gravitate toward information sources that simply arrange facts (and pseudo-facts) in a way that reinforces our existing points of view. It’s hard to get a productive, creative dialog going under those circumstances.
Despite these very serious problems — relentlessly rising energy prices, soaring health care costs, swollen personal and government debt loads, cutbacks in financial support for education — our economy continues to create jobs, overall wages are rising and inflation and interest rates remain low by historical standards. When times are good, people tend to put off tackling the hard problems.
And before you start shopping for a house in the woods and stockpiling canned goods, it's worth remembering that the $12 trillion U.S. economy is still the biggest in the world, thanks in large part to the freedoms that foster innovation and the rule of law that attracts investment from around the world. Despite the decline in the role of manufacturing industries, our overall economy continues to grow as whole new industries — from biotechnology to communications — expand to take up the slack. That's not such a bad thing.
Still, all economies have their ups and downs. We haven’t had a serious recession in the U.S. in 25 years, and there’s no reason to think we won’t have one again in our lifetime. Unfortunately, it often takes such a downturn to get people to act on solutions that were available long before good times turned to bad.
What’s different this time around is that the prospects for the U.S. economy are clearly tied more closely than ever to the economies of the rest of the world. There’s no question the world is getting smaller (though we’re not sure it’s getting flat — it seems to be getting a lot bumpier every day).
Many of those now entering the global professional workforce haven't known the kind of wealth and opportunity that Americans have been chasing after for generations. And many of those young adults around the world — some of whom are coming to this country just as our parents and grandparents did - — highly motivated to get a piece of the same wealth and opportunity that many young Americans seem to take for granted. At some point, America’s young adults will feel the impact of that competition.
So, sure, learning Chinese would be great. But first they’ll have to be able to find China. According to a recent survey of their knowledge of world geography, half of all young Americans can’t even find New York on a map.
Why can't the IRS bank your return for people that cannot save money. ... My problem is saving money. I have money (but) I have to spend it right away.
John B., Bolivar, Mo.
You can always fill out a new W-4 form with your employer to withhold more than you need to. The money will be set aside before you get your check. But if you do this, you’ll just be lending money to the government — for free.
Here’s a better idea: Open an account with a bank, brokerage or mutual fund company and have a small amount deducted every week from your paycheck. (Don’t link this account to your ATM card. Better yet, make it a completely different company that makes it hard to transfer or withdraw the money.)
At first, you’ll have to take a “personal pay cut.” But you won’t even see the money in your paycheck — which takes away a lot of the temptation to spend it. At the beginning, your budget will feel tighter: you’ll have to figure out how to pay your bills with what’s left over. But over time, when you get a raise, increase the amount you’re diverting to your savings account. Week by week, you’ll see your savings grow.
When you get started, you’ll probably want to keep those savings in a safe place like a money market account. As your savings grow, you can begin to think about investing. Take your time, understand fully what you’re investing in, and before you know it you will have built a sizable stash.
Why not get Wal-Mart involved in gas and oil production? Hell, they do everything cheaper. They could build their own refineries in China ... and sell the gas here for a buck fifty and still make money.
Terry C., Sebring, Fla.
This is one of the more creative proposals we’ve seen to stem the recent rise in pump prices. Rest assured, China is working hard to develop and produce more oil and refine more gasoline.
Wal-Mart has a lot of very smart people in Bentonville, Ark. But they’re not known for hiring experienced petroleum geologists. So — unless Wal-Mart can cut a deal with Mother Nature to show us where new supplies of cheap oil are hidden — we’d still have the problem of not having enough oil production capacity to keep up with global demand.