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Contributed by Mike Walker, Colonel USMC (retired)
All,
In Toronto this weekend, the United States stood alone in arguing for expanding national debt in order to continue governmental stimulus spending. The other seven world economic powers politely declined to continue down that dangerous road. One thing we need to credit our G-8 friends for is that they had the character and honesty to warn us that our national debt is a serious problem. It is the next global economic bubble waiting to burst.
Some see this is chance to humble the United States and knock it off its pedestal for when the bubble bursts, the United States will be in real economic trouble. Some say the other world powers are positioning themselves by minimizing their debt so as to exploit the situation when the US debt bubble bursts. In either case, the United States needs to get its debt house in order now, before it is too late.
One odd voice in G-20 did support the increasing of US debt to expand government influence in the economy: Argentina. We should certainly look to Argentina in trying to understand the balance between the government and the private sector in creating economic prosperity but we should most certainly not be listening to the current Argentine government under President Cristina Kirchner.
In 1910 Argentina was one of the ten richest countries in the world. The question then was, who would be most prosperous country in the Americas, Argentina or the United States?
One century later, the answer is in, the United States now has a nominal per capita GDP of $46,381 and is ranked 6th in the world. Argentina now has a nominal per capita GDP of $7,732 and has fallen to 62nd in the world.
Why? In a nutshell, while Argentina embraced a state-centered economy where the government was made the engine for growth and prosperity, the United States adopted a private-sector economic model where free enterprise became the engine for growth and prosperity. All that is threatened by our national debt.
Either we master our governmental debt or forces beyond anyone's control will have their way. We must not go the way of Argentina. The future is now.
Regards,
Mike
