USA Road Map To Year 2030

The United States is under threat of losing its dominant status in the world. We are losing our influence not because of a lack of military power, but rather the relative decline in our economic power. The remainder of the world is catching up and this is particularly true with China and other parts of Asia. The question is what, if anything, can we do about it.

The National Intelligence Agency (NIA) recently published their economic global forecasts for the year 2030.using four different scenarios.

Stalled Engines: A scenario in which the US and Europe turn inward and globalization stalls.

Fusion: A world in which the US and China cooperate, leading to worldwide cooperation on global challenges.

Gini-Out-of-the-Bottle: A world in which economic inequalities dominate.

Non-state World: A scenario in which non-state actors take the lead in solving global challenges.

As shown on the graph to the left, in 2000 the United States share of global Gross Domestic Product (GDP) was just under 25%. The expected share of global GDP for the United States in the year 2030 is in a range of 17% to 19%, depending on which of the above scenarios becomes reality. This is a drop between 24% and 32% in thirty years and the decrease is expected to continue for some time and most likely at an increasing pace.

Per the NIA,

“By 2030 Asia will be well on its way to returning to being the world’s powerhouse, just as it was before 1500.”

The expected countries to rise include China, India and Brazil. The NIC is not expecting much from Russia; however, countries in Sub-Saharan Africa, other parts of Asia and Latin America, especially Brazil, are expected to significantly increase their share of global GDP by the year 2030 as pictured in the graph below.

The Solution

We have no control over the population size of India and China, 1.24 and 1.34 billion respectively. Each country has four times as many people as the United States. For much of the 20th century both countries were in poverty, therefore their countries’ economy was not much of a factor. Now both countries are developing a middle class and thus their Gross National Product is rising rapidly.

Here is what we must do.
Nurture A Strong Economic Relationship With The Following Countries.

The total population of this trading consortium is almost equal to the separate populations of India and China. 

This will not be easy. China and India will not sit ideally by as we nourish these relations. They will be tough competitors. If we pursue these other nations with the attitude they must “follow our lead” and not have much flexibility, we will lose. They may need us; however remember we also need them.

Choosing Europe as a strategic partner was easy; they already are a major partner. Canada and Mexico are neighbors sharing borders with us and for that reason alone it makes sense to have them join the alliance. Canada may be the best friend we have in the world.

Russia is included because our historical cultures are similar and if they are not invited to our party they will be invited by China, They are wrestling with democracy; however they are making progress. It did not take long for Germany to become an ally after World War II

I included Haiti and Cuba for three reasons: 1) They are our neighbors,  2) If we don’t China will and 3) It is time we stop “punishing” the people of Cuba because of the countries leadership and it is the Judeo/Christian thing to do. Both countries are impoverished and yet so close to the United States. We have ignored them for too long.

Reduce Defense Budget

We have the largest defense budget in the world at $711 billion with China having the next largest at $130 billion. Our defense budget is equal to the next 13 largest budgets in the world combined. Our resources are limited and we are in danger of slipping in influence because of economic competition rather than military.

Education is A Key

In a paper published by American Progress titled The Competition That Really Matters they said the following,

“Today, public commitment to early childhood, educational, and technological development in China is accepted as an integral part of a national economic strategy, unlike in the United States. In 2007 China surpassed the United States in the numbers of college graduates focusing on science, math, engineering, and technology fields. Three years later, it became the world’s largest provider of higher education.

By 2030, China will have 200 million college graduates—more than the entire U.S. workforce….”

If we do not allocate more money to education, and learn to spend it wisely,  we will not be able to slow down the world dominance by Asia. This is where World War III is being fought. We cannot let the black girl in inner city Detroit who has the potential to be the next Einstein go to waste; not just for her sake but also ours.

Get Our Fiscal House In Order

Our expected future expenditures are growing faster than future expected revenues and this is not sustainable. In addition our present unemployment rate is above 10% if we include those people who have stopped looking. Both problems can and should be addressed simultaneously. They are not mutually exclusive. If we cannot get our citizens back to work, we will not solve our fiscal problem.
The plan to get our fiscal house in order must include an upfront investment in infrastructure, education and research and development. These three ingredients are a must if we intend to remain competitive. A portion of the reduction in defense spending should go towards these needed investments. At the same time, such investments will help reduce unemployment.
The remainder of the debt reduction plan should happen over a period of ten to fifteen years. It took us a long time to get into this mess and we will not get out overnight. We have the time, as long as we get a plan now!Any additions to future programs must be offset by cutting into existing programs. It should be no longer acceptable to borrow from future generations to increase current expenses of the present generation.

Protect Our Innovations

We are the most innovative country in the world. This did not happen by accident. We spent trillions of dollars on research and development that has advanced society and increased wealth. However, we have allowed other countries, especially China, to steal our inventions with no cost or repercussions. This must stop. Over the last three decades China has benefited by us opening trade with them and allowing them to export goods and services to our citizens. One reason for innovation is to overcome their advantage of having such cheap labor. By allowing them to steal our innovations we have allowed them to neutralize our advantage. This must stop.

The United States has time to do what is necessary to retain its economic strength relative to the rest of the world. In order to do it, we must plan now and implement before it is too late. The window of opportunity is closing.

2030 Expectations

On December 10, 2012 The New York Times reported on how The National Intelligence Council (NIC) expects the world to change over the next seventeen years.

By 2030 Asia will be well on its way to returning to being the world’s powerhouse, just as it was before 1500. By 2030, majorities in most countries will be middle-class, not poor, which was the condition of most people throughout human history.

Below is a chart depicting the percent of total world consumption of the middle class from the year 2000 to 2050. The countries in blue are India and China. The impact on consumption by Europe and the United States is on the decline.
Most countries will be increasingly urban by 2030 and most of urban growth will be in the Asia/Pacfic region

Regional shares of worldwide urban population growth in five world regions: Sub-Saharan Africa (SSA); North and South America (NSA); Middle East and North Africa (MNA); Asia-Pacific (APC); and Europe (EUR). The graph above compares shares during the past two decades (1990 to 2010) to
those projected during the next two decades (2010 to 2030).

If you desire to have your children to have a good life economically in 2030 and beyond, have them focus on meeting the needs of Asia.

2030 Possible Game Changers

The National Intelligence Council (NIC) did an extensive study on how they expect the world to change over the next seventeen years through 2030. Below are some questions that per The National Intelligence Council the answers could significantly alter their forecast.

1. “Will divergences and increased volatility result in more global breakdown? Or will the development of multiple growth centers lead to increased resiliency?”

2. “Will current forms of governance and international institutions be able to adapt fast enough to harness and channel change instead of being overwhelmed by it?”

3. “Will rapid changes and shifts in power lead to conflicts?”

4. “Will regional instability, especially in the Middle East and South Asia, spill over and create global insecurity?”

5. “Will technological breakthroughs occur in time to solve the problems caused by rapid urbanization, strain on natural resources, and climate change?”

6. “Will the US, as the leading actor on the world stage, be able to reinvent the international system, carving out potential new roles in an expanded world order?”

In essence the NIC is saying they put in allot of effort in developing their forecast, but world events are dynamic and the above factors demonstrate that forecasting is not a science so their prediction may not totally come to fruition. However, it is a great beginning and is an excellent tool, which should be used with caution.

The bottom line is it is better to plan than not. The exercise of planning will improve your chances of having a successful future. At the same time be ready to alter your plan as things change and become clearer. It is obvious that the United States will not continue to be the ultimate power. Other world inhabitants will be ready to claim their fair share based on their efforts and contributions. We will no longer be the “Oligopoly” of the world. We will have to compete with equals or near-equals.

Here are the NIC’s conclusions.

Almost Certain In 2030

Below are some events that per The National Intelligence Council are almost certain to happen by the year 2030.

Majority of world’s population won’t be impoverished. Middle classes will expand in most countries. As individuals move into the middle class, values will shift including possible strengthening of religious, ethnic and national identities. But middle classes won’t feel secure: one billion workers from developing countries will be added to global labor pool, putting additional pressure on low-skilled labor.

Rapid extensions of life expectancy likely: global deaths from communicable diseases projected to drop by more than 40 percent. Some countries, particularly in Sub-Saharan Africa and South Asia, will still have youthful populations, but demographic arc of instability will narrow on both east and west flanks. “Aging” countries face the possibility of decline in economic growth. Increased migration will spread to emerging powers. Urbanization set to grow to almost 60 percent.

 Asia is set to surpass North America and Europe in global economic power, but there will not be any hegemonic power. The power of other non-Western or middle-tier states will rise. This middle tier as a group will surpass Europe, Japan, and Russia. China’s economy will be 140-percent larger than Japan; India’s will be 16 times larger than Pakistan’s.Technology will be a great leveler, shifting the balance of power towards multifaceted networks.

Demand for resources will increase owing to an increase in global population from 7.1 billion today to about 8 billion by 2030. Demand for food set to rise 35 percent; energy 50 percent over the next 15-20 years. Nearly half of world population will live in areas with severe water stress. Fragile states most at risk, but China and India are vulnerable to volatility of key resources. Main questions will be whether there will be more effective management, wider technology use, and greater governance mechanisms.

The above summary is taken directly from the NIC’s report. Because they are also forecasting that the United States will be energy independent by 2030, don’t believe gas prices will remain stable. Over that same time period there will be a 50% increase in the demand for energy worldwide. Click here for a summary of the entire NIC report and here are there conclusions.

World In 2030

This is a bullet point summary of a well written article in the December 10, 2011 issue of the New York Times titled Study Predicts Future for U.S. as No. 2 Economy, but Energy Independent. The topic is a discussion of  the results of  four years of studying and analysis of the future by the National Intelligence Council that reports to the Director of National Intelligence of the United States.

We encourage everyone to read the above article. The synopsis below is taken almost verbatim from it and we claim no originality on this one. We felt the information was too important not to share. I encourage you to pass it on to your family members who are in their late teens and early twenties. They can benefit the most from it.

  1. China Becomes number One Economic Power: “China will outstrip the United States as the leading economic power before 2030, but that America will remain an indispensable world leader, bolstered in part by an era of energy independence.”
  2. Russia Falls Behind: “Russia’s clout will wane, as will the economic strength of other countries reliant on oil for revenues, the assessment says”
  3. Majority of World Becomes Middle Class: “For the first time, a majority of the world’s population will not be impoverished, and the middle classes will be the most important social and economic sector in the vast majority of countries around the world.”
  4. Half of World’s Population to Suffer Shortages: “At the same time, it warns, half of the world’s population will probably be living in areas that suffer from severe shortages of fresh water, meaning that management of natural resources will be a crucial component of global national security efforts.”
  5. 15 Countries May Fail: “At least 15 countries are “at high risk of state failure” by 2030, the report predicts, among them Afghanistan and Pakistan, but also Burundi, Rwanda, Somalia, Uganda and Yemen.”
  6. World Will be Safest if U.S. and China Work Together: “The best-case situation for global security until 2030, according to the study, would be a growing political partnership between the United States and China. But it could take a crisis to bring Washington and Beijing together — something like a nuclear standoff between India and Pakistan resolved only by bold cooperation between the United States and China.”
  7. Risk of Conflict Within Countries Will Decline: “The risk of conflict within a state — like a civil war or an insurgency — is expected to decline in Latin America, but will remain high in sub-Saharan Africa, in parts of the Middle East and South Asia, and in some Asia-Pacific island hot spots, the study warns.”
  8. World Fragmentation Increases Risk: “A more fragmented international system increases the risks” of conflict between states, the study says. “Additionally, increased resource competition, spread of lethal technologies and spillover from regional conflicts increase the potential for interstate conflicts.”
  9. Increased Risk of Nuclear Weapons Use:“Most worrisome — and already a part of the global security dynamic — is an assessment that future wars in Asia and the Middle East could include nuclear weapons.”
  10. Slow Growth Countries: “Other important demographic trends will be aging populations in Europe, Japan, South Korea and Taiwan, which could slow their economies further. The report warns that Russia’s economy will join those places in experiencing “slow relative declines.” “
  11. U.S. to be Energy Independent: “The United States will benefit from its domestic oil and natural gas supplies and new technologies to tap them, allowing the nation to become energy independent and even a net exporter of fuel.”
  12. Global Economic Growth Depends on Developing Countries: “In general, it found, “the health of the global economy increasingly will be linked to how well the developing world does — more so than the traditional West.””
  13. Major Developing Nations: “In addition to China, the developing nations that “will become especially important to the global economy” include Brazil, Colombia, India, Indonesia, Nigeria, South Africa and Turkey.
Not all items included in this forecast will come to fruition. While planning for the next seventeen years everyone should draw their own conclusions about the future and the report prepared by the National Intelligence Council can be a valuable tool in this process.

Click here for a summary of the entire NIC report and here are there conclusions.

Update: December 14, 2012  Being energy independent by 2030 does not mean energy prices will remain stable. Over the same time period it is expected that worldwide demand for energy will increase by 50%.