CEO, Jack Welch, was on
Tuesday, saying, "This is still the best country in the world."
Those words make us all feel warm and fuzzy. We're the best. We have been and we always be. Politicians like to invoke these same feelings in their speeches.
But the words are hollow. We're not the best anymore. Our time at the top is coming to a close, unless we take drastic actions which we seem unwilling to consider. China is about to pass us. The Chinese work harder, for less money and benefits.
We need a wake-up call.
I had a long car ride last weekend and was listening to
satellite radio with an endless loop on
News Channel. If you only got your news from these two channels and the politicians and pundits speaking on them, you would assume our leadership atop the global is unassailable.
The biggest question facing our country, according to the talking heads, is whether we should have more or less government and more or less taxes.
These debates miss the big picture: China is eating our lunch economically. Are we, as Americans, going to come together as a cohesive team and think about how we can better compete with the Chinese or are we going to keep fighting ourselves?
Americans have had it good for a long time. Our standard of living is the best in the world. We borrowed money over the last 20 years because our expectations of continued prosperity were assured. But the party is over. We've collectively maxed out our credit cards. It's time for us to look at ourselves critically in the mirror.
We don't need politicians who act like polite
sales clerks telling us that our butt doesn't look fat in a new pair of jeans we're trying on when it does. We need politicians who talk to us like a personal trainer at the gym: We're fat and out of shape --- and we need to get on a program.
Here are some startling facts for Americans to consider:
- The average urban worker in China gets paid $3,500 a year.The average worker in America gets paid $45,562 a year. And the Chinese government often doesn't provide benefits or extensive Social Security. Think of those economics. If you were the CEO of IBM (IBM) - Get Report or Hewlett Packard (HPQ) - Get Report, how could you not decide to offshore a lot of jobs, if you can easily find Chinese or other workers who are willing to do the same job as an American at 92% off? Our 9% unemployment rate isn't because our companies are "uncertain" about how Obamacare will affect them. It's because it's already way too expensive to hire people here versus overseas.
- China is going to spend $230 billion on 45 new airports in the next five years. Have you flown through Atlanta or LaGuardia lately and taken a look at our "world-class" infrastructure?China will spend $1.3 trillion on new road and rail infrastructure in the next five years. President Obama recently proposed to spend $53 billion on high-speed rail (or 4% of what the Chinese are going to spend) and it will likely be rejected by the Republicans. Earlier last fall, he proposed a $50 billion infrastructure plan for rebuilding 150,000 miles of roads, building 4000 miles of rail and restoring 150 miles of runways at old airports. That proposal was rejected.
- America's debt-to-GDP ratio is expected to hit 90% by 2020. China's was 17.5% last year . And we had a debate in Washington DC this week about cutting the deficit (not the debt). Obama wants to reduce the deficit - which will be $1.6 trillion this year - by $1.1 trillion over 10 years. The bipartisan commission recently proposed a $4 trillion reduction over 10 years. As hedge fund manager, Dan Arbess, has said: "We're not even in the right zip code for this debate."
- America's spending on Social Security and Medicare will equal all of the federal government's tax revenues by 2025. That's 14 years from now.
- In 2009, China invested $34.6 billion into renewable energy projects. By comparison, the US Office of Energy Efficiency and Renewable Energy saw its 2010 fiscal year budget increased from $140 million to $2.3 billion. That office will manage total federal funding of $16.8 billion - less than half of what the Chinese are spending. While we have an internal debate about whether our government should "pick winners" and support any renewable energy projects, the Chinese government is putting its pedal to the metal. This governmental support is happening across many other industries as well.
Try to take the emotion out of it. How is America going to compete with China for the next 25 years at this rate?
It's time for America to get paranoid. That's the only way we can proactively take on these challenges facing us.
We have to make tough choices about where we want to support jobs and growth and where we need to cut back due to our over-spending habits of the last 25 years.
It's obvious that the Chinese have done the competitive analysis about how they're going to beat us. Now it's time for us to do the same. Put in those terms, it's obvious we must:
Cut entitlement and defense spending we can't afford
Cut our debt and deficits dramatically
Support creative jobs versus labor-based jobs
Support education and education reform to ensure we have the right skills in our labor force
Support necessary infrastructure. We don't have to build it from scratch but it can't be crumbling around us.
Support alternative energy. Do we want to win or do we want the Chinese to? It's a simple question.
Get off foreign oil reliance as quickly as possible.
Government should play favorites with industries if the Chinese government is playing favorites now. It's not about right-versus-left or taxes. It's about finding our edge in the global economy and exploiting that.
We have to dispel a few home truths. We are not worth what we get paid. We are not the best in the world at the moment. We are under-worked.
Unfortunately, most fat and happy societies have a hard time taking self-corrective actions. They stay fat and happy until they are over-taken in global leadership. We need to look at these issues squarely now though -- and through the lens of having the Chinese eat our lunch, not the typical Democrat-Republican rhetoric.
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Eric Jackson is founder and president of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson