Sunday, August 28, 2005

2020 Foresight

Jacques-Henri David, President of the Deutsche Bank Group in France, assesses the world’s economy and power relations among leading nations in the year 2020 pursuant to DBG’s recent analysis of “the macroeconomic evolution of the major continents over the next fifteen years” (as transcribed by Watching America, courtesy of Power Line’s John Hinderaker).
David and DBG project that “in 2020, the United States will remain the world superpower, with a total GNP of approximately $17 trillion to $18 trillion. Thanks to its dynamic demographics (1% annual population growth), a productivity and a competitiveness amongst the best in the world (currently second in the world and far out in front of Germany (13th) or France (26th) according to statistics from the World Economic Forum), and thanks also to its constant drive to create and innovate, and with flexibility due to the mobility of its labor force, the United States will maintain a clear advantage over China and India and will widen the gap with Europe. With average per capita salaries of approximately $55,000, the income of the average American in 2020 will be 1.5 to 2 times greater than that of a European; five times higher than that of a Chinese and nine times more than that of an Indian (approximately $6,000 per capita).
“China will indisputably be the world’s second greatest economic power, with a GNP of some $14 trillion, or three times higher than today. . . . Even more than today, China in 2020 will be the industrial workshop of the world.” This assumes, of course, that “no major social crisis interrupts the long-term dynamics.” Even then, “paradoxically, one of its handicaps will be an aging population, due to the delayed impact of its ‘one child policy.’ By 2020, the median age in China will be approximately 40 years, which will be higher than in the United States.”
In third place, India. “The world’s third greatest economic power will be India, but far behind the first two, with a GNP of about $7 trillion.
“India should be the uncontested champion in terms of growth, due its demographics, its highly qualified labor force, the ease with which it can be integrated into the global economic system thanks to the wide use of English throughout its population, and thanks also to its mastery of communications technologies, especially the Internet. If China can be held out as the world’s future industrial workshop, India will undoubtedly be one of the great service societies.”
As for our European allies, the prognosis is less sanguine. “In Europe, Germany, France, along with Italy and the United Kingdom, should lose ground in the world competition with a GNP per country of about $2 to 2.5 trillion.
“While European countries will remain rich in terms of per capita income (about $32,500), their relative weight will decline with their demographics and weaker growth (on average, almost half as much as the United States). Countries like Spain or Ireland will experience a higher level of development than the European average, thanks to a wider opening of their economies to the outside, the dynamism of their investments, good population growth forecasts and effective immigration policies.
“Ireland, for example, in 2020 will have the second highest GNP per capita in the world, just behind the U.S. The increased weight of these new stars on the European landscape will not, however, be sufficient to compensate for the retreat of its historic champions [Britain, France, Germany] who will feel the full weight of their society’s declining demographics [aging populations].”
Though David doesn’t expound it, the message seems irrefragably clear: Europe must abandon its propensity toward quasi-socialist centralism and state capitalism and adopt the only viable alternative dynamic: truly free enterprise.


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