I remember back in the 1980s, as the Japanese were buying everything in the United States that was nailed down and a lot of other things that were (think Rockefeller Center). As a New Yorker, that day in 1989, was pretty solomon day, as it was suppose to be the end of American domination. Then the Japanese economy collapsed and in 1995 they were forced to sell and Old Glory was raised once again over The Rock.
“American was back, Baby!” was the rallying cry, as the Reagan legacy of pro-business deregulations really kicked-in and the US economy picked up massive speed with the birth and development of the Internet. The American Dream was viable for anyone with a garage and a dream. But as dad always use to say, “What goes up, must come down.” And on a dark day in March of 2000 the Internet went POP!
Less than two years later in the middle of New York’s Financial District two building came tumbling down and again the whispers started that the American Century were over. The stock markets were shut down and when they opened ten days laters so much red ink was flowing that accounting companies started buying red ink in bulk. Then the Bush II’s administration put tax cuts into place and a quick recovery took place. Once again, “America was back!” but 1995 was hiding in the economic good news.
In 1995, Bill Clinton’ signed the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act, a cornerstone of Depression-era regulation. He also signed the Commodity Futures Modernization Act, which exempted credit-default swaps from regulation. In 1995, Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods. Economist predicted that these legislative acts would negatively impact the markets in eight to ten years.
Fast-forward to 2007 and the markets again go “puff.” The American Dream was again … on life support and fading fast.
Then the United States elected President Obama promising that all this would change. His administration along with a Democratic Congress passed the largest stimulus bill in history. Which focused more on funding the sex lives of beetles and STD prevention than actual job creating projects. This was followed by other economic policies that heavily regulated business including how rainwater was to flow off one’s personal structure. The American Corporate Tax Rates became the highest in the industrial world. Which made me think of the Smooth-Hawley Tariff Act in 1930.
This all gave rise to US companies moving out of the United States and to southeast Asia and this brings us to the Chinese Economic Boom. The Communist State in October of this year, out did the Capitalists at their own game and restored the country’s former global economic preeminence.
So did you know?
- Back in 1820, China was by far the world’s largest economy.
- Two centuries ago, China’s GDP was twice that of India’s, the world’s second-largest economy at the time.
- In 1820, China’s economy was six times as large as Britain’s, the largest economy in Europe — and almost 20 times the GDP of the still-fledgling United States.
- On a per capita basis, China’s GDP in 1820 reached 84% of the global average.
- By 1870, China’s per capita GDP had fallen by one third — to just 60% of the world average.
- China’s economic decline in the second half of the 19th century was, in part, the result of the devastation of China’s agricultural lands following the Opium Wars and the Taiping Rebellion.
- China also lost ground economically in the 19th century as Western nations grew wealthier from the Industrial Revolution.
- As recently as 1980, China’s per capita GDP was equal to just 24% of the world average.
- In the late 1970s, Deng Xiaoping began to implement market-based reforms that would lead to China’s economic modernization.
- After two decades of rapid economic growth, China’s per capita GDP in 2000 was back up to 56% of the global average, almost where it stood in 1870.
- After three decades of economic reforms, by 2010 China’s per capita GDP was equal to 103% of the global average.
- In October 2014, China overtook the United States as the world’s largest economy.