According to International Monetary Fund (IMF) prognosticators, China will officially surpass the U.S. as the economic superpower in 2016, a mere five years away. As MarketWatch starkly put it,“whoever is elected U.S. president next year […] will be the last to preside over the world’s largest economy.”
The IMF study does have some flaws. As the editors at Investor’s Business Daily point out, the IMF used overall GDP in their forecast instead of per capita GDP, a much more accurate predictor of comparative economic health: “Per-capita GDP in the U.S. is $42,517 in 2005 dollars. In China, it’s about $2,802. Even by 2030, China doesn’t get close to U.S. per-person output, not even at current growth rates.” Those growth rates (currently 10 percent for China and about 2 percent for the U.S.) are also unlikely to remain static, as the IMF blithely assumes.
So China might not overtake us as fast as the IMF would have us believe. But the fact remains — China, a communist country, is growing its GDP at nearly five times the rate of the United States. Is this not an astonishing, embarrassing, and frightening state of affairs? And it’s not as if the IMF is the only agency playing Cassandra to America’s economic future. Standard & Poor’s recently warned that unless policy makers quickly address our monstrous national debt — now in excess of $14 trillion — the U.S. could lose its AAA credit rating, a previously unthinkable possibility.
Most alarming of all, according to an analysis by USA Today, a “record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. Wages accounted for the lowest share of income — 51.0% — since the government began keeping track in 1929.” That’s right — wages now account for a lower share of income than during the Great Depression, when a full quarter of the workforce was unemployed.
This last is the key statistic, and surprisingly little commented upon. According to Steve Cone, executive vice president of AARP, 7,000 boomers will turn 65 *every day *in 2011. As they do, they put greater and greater strains on federal programs like Medicare and Social Security, while leaving a gaping hole in the workforce. The result — fewer taxpaying workers will be supporting an ever-expending federal government. I am no mathematics major, but this is a cruel calculus even I can understand — and fear.