The major story in the financial world in the past year has been the eurozone debt crisis.
However, it isn’t so much the debt crisis itself that is the big problem but rather the structure of Western governments.
After World War II when Europe was rebuilt, the West and Japan were about all there were in the economic world.
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India turned inward after independence, China was communist, as was much of Asia. South America went from dictator to dictator, hyperinflation and civil wars.
Therefore, there wasn’t much competition for the Western world and they grew economically. The West could then tax this growth and create welfare states (in the case of America, a global empire).
However, now we have competition from the emerging world. Emerging nations are opening up and want the same standard of living as in the West.
You can hire a web technician or engineer from India at one-tenth the price. You can import a chair from China at one-fifth the price. There is competition.
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This means a lower standard of living and weaker economic activity in the West, while the East will continue to grow.
Even with markets in China and Indian weak in 2011 due to worries over inflation, both economies are still growing in the 6 percent to 8 percent a year range. This will continue for the foreseeable future.
They used to say “go west” for opportunity but in the future it will continue to be “Go East, young man!”
About the Author: David Skarica
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