There is a tide in the affairs of men, Which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures.
Wall Street, Main Street and U.S. Global Competitiveness
Economic growth is closely related to the global competitiveness of any nation.
China, Japan, England, Germany, Norway, Peru, Poland and Saudi Arabia have learned that global competitiveness is achieved when money saved in sovereign wealth funds, in the foreign currency reserves of countries, by foundations, by culturally-connected investors, all seeking higher returns, is invested. These funds can be invested so as to monetize the pursuit of happiness by those on Main Street. In a period of record low interest rates, ROI is a predominant concern.
Lee Kuan Yew was asked which nation will lead the world in the future, the U.S. or China? He responded that the U.S. would. China will give the U.S. a run for its money, he said. While China can draw on the talents of 1.75 billion people, the U.S. can draw on the talents of the remaining 7 billion people in the world. These combined talents will amount to something that no one can compete with.
Financial Service Disruption
Lee Kwan Yew's optimistic view of U.S. competitiveness reflects on economic and financial disruption which will materially change the way in which international trade and investments are conducted.
The World Economic Forum has just completed a detailed analysis of how vulnerable the financial services industry is to disruption from new, technology-savvy players.
The 6 areas of vulnerability are:
1. Emerging payment rails and Cashless World
2. Connected insurance and dis-aggregation
3. Alternative Lending and Shifting Customer Preferences
5. Empowered investors and Process externalization
6. New Market Platforms and Smarter, Faster Machines
It is fascinating to consider the impact that these disruptions will have on international trade and investments.
A critical aspect of exporting intellectual property is the mitigation of foreign political and commercial risk. This risk mitigation applies to financial institutions as well as to exporters. Congress did not re-authorize the charter of one of the principal agents of this risk mitigation in the U.S., the U.S. Ex-Im Bank. The lobbying efforts of commercial banks and their lobbies failed.
The effect is the stunting of U.S. global competitiveness. The cause is a massive ignorance on the part of political, business, financial institution and academic interests whose leadership's lack of vision is conflated with this fiasco.
The issue of corporate welfare which is associated with Ex-Im Bank is not diffused alone by associating the welfare of small businesses with large exporters. Ex-Im Bank is accused of crony capitalism and of supporting mainly the large multinational. The problem is not exclusive to Ex-Im Bank. U.S. economic growth is best empowered when capital is applied to the bottom of the U.S. economic ladder so that the entrepreneur can realize the extraordinary opportunities in global trade. The opportunity to expand the profit margins which global trade provides the small businesses on Main Street and to enlarge return on investment of investors on Main Street is stymied as well by the short-sightedness of a Wall Street and financial community which persists on concentrating wealth as opposed to diffusing it.
Ex-Im Bank needs to become more democratic in the process of empowering the entrepreneur and diffusing wealth. In the process, the U.S. becomes more globally competitive.
The Nature of Global Competitiveness
Global competitiveness is driven by two great forces. The first is government which invests its foreign currency reserves in productive capacity that creates additional foreign currency reserves. National economies create foreign currency reserves by being globally competitive.
The second way of generating foreign currency reserves is just as potent but it is barely recognized because of myopia and "bureaucratic narcissism."
"The meek shall inherit the earth."
The second way of generating foreign currency reserves and and global competitiveness is by empowering investment in the productive capacity of immigrant communities. These communities are culturally-connected to the global trade opportunities explained in the MGI Report (see I. "Start me Up."). These communities have an extraordinary capacity for multilateral trade which is itself a natural hedge against currency fluctuation.
The Flaw in Our Economic Stars
The flaw in our economic stars is on flagrant display in the current U.S. presidential campaign. It is on display in Greece, in Rwanda. Rwanda? Yes. Rwanda, where nearly a million people were killed in one of most violent displays of internecine warfare, is one of the fastest growing economies. It is among the fastest growing countries in Africa, a continent whose growth is extraordinary. In the galaxy of brilliant economic stars in the world, Rwanda is a standout. It is an example to the United States where the Civil War for the liberation, the empowerment of the immigrant, women, blacks, the recovering warrior, the financially underserved, is still being fought.
They have seen the stars but have they seen the light in a •Sky Full of Stars."