We won’t take this lying down!

The International Monetary Fund (IMF) has been in the news over the last couple of days. Unfortunately, for reasons that have nothing to do with the IMF. This post has nothing to do with that but more importantly for a forecast they released back in April. On April 25^th the IMF released the first meaningful forecast or prediction of when the United States would fall from being the leading economic power in the world.  The prediction which came from this was a bit of surprise in how soon they believed this might happen.

It does not take any sophisticated prognostication to reveal that China would be the country most likely to take this number one position from the United States.  First off, they are the most populous country in the world.  They have 1.4 billion people.  India is second with 1.2 billion and the United States is number three with 310 million.  The population of China is 4.5 greater than that of the United States.  If the consumption and productivity per capital in China were to be 25% of their American counterparts, China would be ahead of the US in these categories.  

Secondly, we have been hearing the “giant sucking sound” that H. Ross Perot talked about when he was speaking out against NAFTA in his 1992 run for President.  Perot was wrong in stating all industry jobs would be going to Mexico.  Instead they all went to China in a relatively short order.  This “giant sucking sound” was not just heard in the US, it was heard in Europe and Japan as well.  

The figure to the right, from the IMF, shows the ranking of GDPs of the top ten countries in the world in millions of USDs in 2010.  China is number two, having edged out Japan for that position recently.  China is only poised to grow.  The US having lost so much of our manufacturing base will wane in our opinion. We see it already in the shrinking middle class and changes in the distribution of wealth here.  

The surprising part of the IMF prediction is how soon they see China taking over the number one position.  They are predicting that this could happen as early as 2016!  When we read this story, we expected a much bigger reaction from the government and citizens.  There did not seem to be much furor over this at all.  The lack of reaction concerns us even more than the IMF prediction.  

Sure, the US economy will continue to be strong and there have been some movement of manufacturing coming back to the United States (on-shoring). But, as we have commented in other blog pieces, change happens faster and faster in our times.  Change occurs faster than we can react to.  If the 2016 prognosis is correct, it is practically an inevitability given we are mid-year 2011.

This does not mean, we should take this lying down.  Not at all.  Not one little bit.  Cadent Resources, Inc. is a small company but we believe in and are committed to US manufacturing and distribution.  We want to see a strong and vibrant industrial base in the US not simply because it would be good for our business.  We believe it would be good for the entire country.   

We call on all segments of our society to take advantage of our excellent universities to encourage our young people to major in and become the best in world in:  

• Engineering & Sciences


• Mathematics & Computer Sciences

We encourage our government, universities, and corporations to not only encourage such educational initiatives but to develop real workable programs geared to grow manufacturing and manufacturing jobs in this country.

It will not be easy, but we believe strongly that we need to do this.  This forecast from the IMF should be the rallying cry for our nation.