This morning I was watching Congressman Steny Hoyer being interviewed on CNBC's Squawk Box morning
show. Hoyer made the comment that the US is "the richest nation on earth" during a discussion on economic
issues. How many times have we heard politicians make that statement? I think we would all answer that we have
heard this many times over many years. My question is "Do you believe this statement is true?"
What makes a person, family, company, organization, government or nation rich? Many people look
at things that are visible from the outside. If someone lives in a big expensive house, drives exotic new cars
and buys the latest and greatest stuff all the time most people would judge that the person must be very rich to afford their
level of consumption. If one applies the same perspective more broadly and looks at many areas of the US, we could make
an assessment that the US looks like the richest nation on earth. Or should we have a different perspective?
If the person with the expensive house, new cars and great stuff paid cash for all the things they bought,
has a substantial amount money in the bank or invested and has a job or owns a business that generates a high income,
it is likely they are truly rich. But if the person borrowed the money to pay for all the stuff, doesn't have much money
in the bank and is barely paying their bills every month, is that person rich or merely creating an image of wealth when in
truth their net worth is very low or perhaps negative. I would make the case that creating an image of wealth doesn't
make anyone really rich.
When I look at the US I see a nation that used to be rich
and has an image of wealth but is no longer rich. Any nation that has a total debt (consumer, business, governments) to
gross domestic product ratio as high as ours is not really rich. We have succeeded in creating a façade of wealth.
Over the years the US has consumed much of its wealth through war expenditures, excess consumer consumption and non-productive
government expenditures. The US has lost much of its manufacturing industry that generated a great deal of its national
income. If one looks only at the visible aspects of our nation we still look pretty good, but the numbers don't lie,
there is a mountain of debt and government unfunded liabilities that is growing much faster than the national income
as measured by the growth in gross domestic product.
One of the reasons why
the US retains an image of being wealthy is that the US continues to provide opportunities for individuals and companies to
become very wealthy. The US has created numerous billionaires concurrently with tens of millions
of people living in poverty or dealing with a significantly reduced standard of living. In what other
country can an individual company like Apple be so successful that it has more cash in the bank than the US government?
The US is consuming its wealth on a net basis, not creating it. When tens of millions of its citizens
are on federal government issued food stamps that are being funded through deficit spending this is not the sign
of a country that is rich or building wealth.
Politicians like Hoyer need to
stop making statements like the US is the richest nation on earth and start talking honestly to the people about where we
stand as a nation. We need a massive restructuring of government policies and programs to reverse the current trends.
The US has capability to rebuild its wealth but it will take a lot of very hard work to make it happen.