1990: There is no such thing as a US economy anymore

“For the first time the world is functioning as a single economy…there is no such thing as a US economy.”

Those are the words written by John Naisbitt and Patricia Aburdene in their 1990 book entitled ‘Megatrends 2000 – The next ten years…major changes in your life and world.” [ 1]

The authors were attempting to explain why the then current hysteria being beat up by Wall Streeters about the US trade and budget deficit was a sham.

“It was said that these twin monsters would surely bring the most powerful economy to its knees, perhaps even lower, if something were not done.” [ 2]

However, the way in which the official national statistics were calculated ensured that the US twin deficits were largely a mirage.

Looking at the trade deficit Naisbitt and Aburdene write “the only things that are counted are what customs officals check off on their clipboards at ports of entry, the goods and tangibles of the industrial period. Non-tangibles such as book rights, royalties and fees were simply not counted. Further, the products of US companies who operated in foreign nations also didn’t count.

“In 1986 foreign branches of American companies sold $720 billion worth of goods overseas, seven times the so-called trade deficit for that year. Almost 20 percent of the merchandise imported into the United States is manufactured by foreign branches of American companies. The United States’ biggest import item by far is money. Its largest exports by far are bonds, stocks, and other financial instruments.” [ 3]

The authors rightly question why “commentators in the media and elsewhere …assess the health of the overall US economy by examining a single incomplete statistic.”

“There is a need for new concepts and new data if we are to understand the new global economy. Because they are using old concepts (eg, a collection of nation-states trading concrete goods) and old data, alarmists shout about perceived trade deficits and yell for protectionist measures borrowed from the old era. Much is made of the United States now being ‘the world’s largest debtor nation’. To begin with, half that so-called debt is in stock in US companies. In a truly global economy, does it really matter that ten shares of AT&T stock are now owned by an Englishman in Manchester rather than a banker in Wichita?” [ 4]

As if anticipating US citizen concern about foreign ownership of US corporations, the authors point out that

only 5 percent of the assets of the US economy are owned by foreigners

. Readers are reassured that the truth is that America and Britain were buying up the world:

“So what if foreigners own 5 percent of American assets? Many of the purchasing corporations are owned by American and other people from all over the world. What’s foreign?” [ 5]

“The right course for a sophisticated country is to invest the money it earns in the most profitable way. That is what ‘deficit-ridden’ American and ‘deficit-ridden’ Britain have both done….The United States is buying more businesses overseas - $309 billion worth in 1987 – than all other countries together are buying in the United States. Furthermore, US assets abroad are grossly understated because Americans have been on the buying side for a long time, and the worth of those assets is carried at the original cost rather than current market value.” [ 6]

Megatrends 2000 quickly flips over the negative reports of rainforest depletion, increasing poverty, environmental pollution, corruption and exploitation. The book celebrates the passing of the year 1984, a year Naisbitt and Aburdene assert passed without the dehumanization of modern society prophesied by George Orwell.

Looking to the new millennium it is observed that:

“Wealth has not led to increased greed, as conventional cynicism would have us believe.” [ 7]

On the contrary

“Wealth is a great peacemaker” say the writers. [ 8]

This is a book that, on the one hand, takes great care to examine the fallibilities of the monetary accounting of a nation as well as the fast pace of change in the world’s economic system. But on the other hand the authors carelessly disregard the economic and social history of humanity in their declarations of simple truths.

The world has changed dramatically, indeed. The logic of the US and the UK funding their phantom ‘trade deficits’ by exploiting the wealth of other nations somehow eluded analysis. A mere ten years into our grand new Millennium the actions of the ‘leaders’ of the industrialized nations continue to be vastly destructive to the future of life on the planet. Despite the incredible financial wealth accumulated through stepped up global exploitation by these ‘successful’ corporations our ‘leaders’ are now implementing brutal austerity measures like gutting the already half-funded healthcare and aged pensions to bail them out. Yet again, and again.

REFERENCES:
[1] John Naisbitt and Patricia Aburdene. ‘Megatrends 2000 – The next ten years…major changes in your life and world.” Sidgwick and Jackson Limited London. 1990. ISBN 0 283 06016 6. Page 26.
[2] Ibid. Page 24.
[3] Ibid. Page 26.
[4] Ibid. Page 27.
[5] Ibid Page 29.
[6] Ibid. Page 28.
[7] Ibid. Page 288
[8] Ibid. Page 289