For nearly a decade, my foundation has had a Wall Street Committee, typically consisting of a half-dozen members. There is a live portfolio of about $75,000 at this time, one-third in cash and two-thirds in common stocks. Some 14 well-known American companies are represented, virtually all of whom derive substantial percentages of their business from international operations, which is an attractive characteristic most of the time.
The committee meets two or three times a year to eat pizza, drink beer, and talk about the stocks in the portfolio and new ideas, the state of the economy, and life in a world which often seems to be spinning off its axis.
None of the committee members were born in the United States, and they ganged up on me to provide thoughts on the geopolitical topic in the heading above. The date of these observations was 2010; I have appended some 2015 thoughts in italics. All blushing aside, the points of five years ago mostly ring valid today; maybe it is because they were obvious, simplistic, no-brainers, nothing regarding expert insight.
*The American consumer has revised downward his prior pattern of excessive consumer expenditures, typically financed by unhealthy debt levels, but the overall domestic economy continues to be the largest market in the world. This means that, periodic financial/economic upheavals notwithstanding, the USA is still the magnet country for people seeking job opportunities not available in their home countries. This gives power to any American leader.
No change. (The growth of multinational companies works both ways, creating and eliminating jobs in different markets/countries.)
*The controversial aspects of President Obama’s tenure have not obscured his broader impact, that of bringing about a better relationship between the United States and other countries than was true with his predecessor. In fact, it would not be surprising to see a woman or a second minority male follow in Obama’s groundbreaking footsteps and become president at any time.
Still mostly valid, with the caveat that many of those military/political historians steeped in the Kissinger “realpolitik” mode of thinking now believe that Obama’s alleged “softness” internationally has cost him support from some erstwhile allies.
The political stability of the United States is well above-average; this fact, plus the credibility of its legal system, fosters sufficient international respect to overcome its occasional large mistakes.
No change, but note the somewhat conflicting preceding point in italics. In addition, the periodic idiocy of government shutdowns, real or threatened, does not exactly enhance the status of this country.
The openness of American society in terms of a person’s ability to speak their mind and pursue ideas–whether political, artistic, or in business–is unparalleled.
No change.
*China of course has become far more important as a growing, diversified economy but its average citizen is not yet in great financial shape, and the society is still closed to a large degree, i.e. its financial dealings and political process are not as transparent as desired. India has not yet put its whole economic/political act together and remains a country with major income inequality. Russia is still evolving, trying to get past its centuries of totalitarian rule, its corruption, and an addiction to alcohol and tobacco which puts the average life at only 57 years of age.
Some shifts required in these particular observations: China has entered into the international financial arena in a manner not true five years earlier, Russia has become more aggressive externally, and uh, I did forget about Japan–but that’s okay, its focus is mostly internal.
South America remains relatively provincial, needing to resolve national problems before attaining international leadership. Venezuela’s Hugo Chavez was a victim of his overreaching program, which resulted in inflation, an outflow of currency, and disgust at his moves to imprison his critics. In contrast to the above two comments, Brazil has achieved enhanced stature, a function of government stability, the benefits of the Olympics (2016) and the World Cup (2014), exploitation of its natural resources, and the benefits of sheer size.
*Whoops, Brazil has blown it: huge corruption scandals reaching to the top of the government structure, an economic downturn, and unsafe water for the upcoming Olympics. I believe it was Lord Acton who said that “power corrupts and absolute power corrupts absolutely.”
No European nation has become a viable candidate for leadership. The large and multifaceted African continent has not produced any candidates either; in some ways, its situation is similar to that of South America. The 2010 World Cup in South Africa provided insufficient leverage to that country’s economic outlook, and despite its many attributes, high unemployment and a heavy AIDS impact hold the country back.
No change.
When you think about other possible leader nations, those in the Mideast are not terribly relevant because the region’s economic base is focused on one product (oil) and treatment of its citizens on average is not appealing to the world community.
No change.
Hence, from a pragmatic standpoint, the United States keeps its leadership position in part because there is not a truly worthy competitor.
Probably there should be a comment here, for those fixated on the so-called Western world, that the putative competitors for world leadership—England and Germany, while functioning more effectively than their European counterparts, are not about to jostle the United States from its top spot. Moreover, China’s stock market and economic comeuppance has removed the cloak of invincibility from the country which has been driving half of the world’s growth. Commodity currency countries which had thrived selling stuff to China have seen the value of their currency brought down sharply, the flip side being a stronger USA dollar.