America's Share of the World Economy
Take a look at this chart of the wealth of nations.
This chart indicates just how dominant the United States of America is economically. Whenever you hear about the decline of the United States in terms of productivity, especially manufacturing, please keep in mind this chart.
China is catching up in terms of gross productivity, but in terms of productivity per capita, it is still a backward nation. At least two-thirds of China's population lives on poverty-stricken small family farms. It is still a village economy. It is going to take decades for those people to drag themselves out of a level of poverty that Americans have not seen for two centuries.
Per capita output of the United States is high. Given the size of the country, which is either number three or number four in the world, per capita output of the United States is mind-boggling. China, India, and Indonesia are backward societies economically. If we count the European Union as one country, then the EU and the United States are close. The West, meaning the West above the equator, is still dominant, and shows few signs of falling behind.
In 1950, when I was in grade school, the United States accounted for about 28% of the world's economic production. Western Europe was barely recovering from the effects of World War II. Western Europe has caught up.
This chart is based on figures supplied by Angus Maddison. Among economic historians, no one argues with his figures after 1820.
The United States still accounts for about a quarter of world productivity. That is not much of a decline. Statistical noise or errors of measurement probably account for the bulk of the difference between the two charts.
The idea that the United States is falling behind the rest of the world's economy is simply nonsense. I realize that we are subjected to a lot of nonsense in every area of life, and this includes economics. I don't want you to be too vulnerable to this nonsense.
The United States of America has maintained this enormous share of the world's output for at least two generations. What more could anybody ask from an economy? The rest of the world has increased its output to a degree that would not have been conceivable in 1950. This is especially true of China. It is also true of Western Europe. Nevertheless, for all of this increase in output, the United States of America is still the biggest player of all. We are not falling behind.
You would think that we would have fallen behind, given the fact that the United States was physically untouched by the devastation of World War II. Recovery from World War II in Western Europe has been truly extraordinary, almost as if the war had never taken place. This tells us that the process of economic growth, which is now worldwide north of the equator, is close to unstoppable. If World War II in Western Europe was a setback that leaves no traces today, then the steady expansion of per capita income of 2% per year overcomes all known setbacks.
We are all richer than we were in 1950. When it comes to things digital, there is simply no comparison. I remember the world of 1950, and the world I live in today is economically much better than the world I lived in back in 1950. The moral world is much worse. There is legitimate cause for hand-wringing in this area of life. But there is no legitimate cause for hand-wringing in the field of economic development.
I don't care how bad the welfare state seems. I don't care how bad Keynesian deficits seem. The fact of the matter is this: we are getting richer, year by year, and if World War II did not set us back, then I don't think anything will set us back over the next two decades. There will be a redistribution of wealth in the United States over the next two decades with respect to which groups prosper comparatively and which groups don't. But the economic pie will be bigger in two decades than it is today.
This testifies to the enormous productivity of the free market economy. The world today no longer deals with communism or socialism, other than North Korea, Cuba, and Venezuela. The Keynesian economy is vastly more productive than Marxism ever was. The world had its fling with Marxism, and that ended on December 25, 1991. The relatively good guys won. The utterly bad guys lost. Nobody misses the China of 1977 or the Soviet Union of 1990. We should never forget the three-word description by Richard Grenier of the Soviet Union prior to 1991: "Bangladesh with missiles."
Conclusion: there are legitimate things to be concerned about, but economic growth is not one of them. Western civilization is not verging on collapse. Neither is the world economy.
Of course, if nuclear war breaks out, you can safely ignore my prediction. But if nuclear war breaks out, you probably won't be alive to dance on my grave.