America, like Brazil, China, India and Russia are all blessed with abundant natural resources, but America has used it’s capital to build the infrastructure (which we will explore in future Diary’s) required to develop those resources more efficiently, creating enormous wealth for our society. Capitalism fosters economic growth because it allocates capital to it’s most efficient use. Has any other system in the history of mankind developed an economy better than capitalism? Individuals making free and self interested choices in the marketplace seems to work everywhere and every time its tried. Using infrastructure to develop and use a nations natural resources takes capital and since governments have no capital of their own, only the capital they tax from their citizenry, isn’t it best left to the freedom of the marketplace to develop an economy? Look at the mis-allocation of capital when Governments are involved in allocating capital either directly or through regulation, for example, “Green Energy” like windmills, solar, electric cars, or ethanol. Have you ever wondered why the United States has the largest manufacturing and consuming economy in the world AND why it will probably stay that way, for many years to come? Have you wondered if, or when, WHEN China, India or Brazil will overtake the U.S as the worlds largest economy? If so, you’ll have a very long wait.
First lets look at the worlds 15 largest economies in 2016, with over 1 trillion US$ of GDP, and how they rank according to the IMF.
1.) USA, $18,569,100
2.) China, $11,218,281
3.) Japan, $4,938,644
4.) Germany, $3,466,639
5.) United Kingdom, $2,629,188
6.) France, $2,463,222
7.) India, $2,256,397
8.) Italy. $1,850,735
9.) Brazil, $1,798,622
10.) Canada, $1,529,224
11.) South Korea, $1,411,246
12.) Russia, $1,280,731
13.) Australia, $1,258978
14.) Spain, $1,232,597
15.) Mexico, $1,046,002
Note, Russia’s GDP is cut almost in half from it’s peak in 2013 of $2,230,600. (so who claims sanctions don’t work)
Note, China’s GDP is roughly 61% of the US GDP, maybe that fact gives some perspective on the gap China must make up to catch the US.
Now lets look at the world top 5 manufacturing economy’s according to the newest Deloitte 2016 Global Manufacturing Index, the CIA Handbook, IMF, and the World Bank; and their total 2016 GDP in millions of $’s, (and their world rank in total GDP). They are:
1.) USA, $18,569,100 (1st)
2.) China, $11,218,281 (2nd)
3.) Japan, $4,938,644 (3rd)
4.) Germany, $3,466,639 (4th)
5.) South Korea, $1,411,246 (11th)
Lets compare Manufacturing GDP in US$, and Manufacturing GDP as a % of total GDP. Though USA has the lowest % of Manufacturing GDP as a % of the total economy, we still have the highest Manufacturing GDP in the world. Though China may overtake the USA as the worlds largest manufacturing economy, it will probably stay the least productive economy of the top 5 manufacturing nations.
1.) USA, $1,820 Billion, 12.3%
2.) China, $1,756.8 Billion, 29.9%,
3.) Japan, $1,000.8 Billion, 18.8%
4.) Germany, $663 Billion, 22.2%
5.) South Korea, $353.7 Billion, 31.1%
Looking at Population and their rank in the world, and then Manufacturing Labor Productivity in GDP per capita, we see that the USA has the highest Labor Productivity per capita and China the lowest. China has a VERY long road to travel before the Chinese population is as productive as the US population, and that holds true for Services and Agriculture as well:
1.) USA, 325,539,000 (3rd), $110,049.50
2.) China, 1,384,690,000 (1st), $22,407.70
3.) Japan, 126,740,000 (10th), $71,433.80
4.) Germany , 81,295,000 (17th), $87,208.30
5.) South Korea, 51,446,201 (27th), $67, 433.80
The United States Manufacturing base is the largest in the world and American workers are the still the most PRODUCTIVE in the world by a large margin, and should remain so for a long time! Let’s keep these numbers in mind, and, in proper perspective, when we whine about losing all those jobs to offshore manufacturing, or look at anecdotes regarding products made in specific countries overseas that have little basis in facts, or private sector unions – which per the BLS were only 6.4% of the private workforce in 2016 – destroying our manufacturing base, or that ANY other country will overtake the US in manufacturing dollars per capita any time soon.