America's Downfall

Before making an analysis of America’s downfall, I can sum up in this phrase: “free lunch for the poor, and taxes for the rich.” It resumes the idea of an interventionist and statist state, which under the premise of looking for welfare of its citizens distorts all the economic apparatus. 

America is being blood feed by Welfare State, where immigrants are no longer settlers, and these new incomers are looking for easy benefits granted by the State, and haven’t immigrated to come true the American dream. For this reason, it explains the fact of that seven out of ten Latin American voted for Obama in the 2012 election.

So, in part, the American dream of hard work and economic success have been replaced with Welfare State. Then, what America is cultivating for the future is people who repudiate work and are dissociated with the idea of work as generator of wealth.

Besides, America is sunk in higher taxes which affect profoundly income with distortion, the Government’s expenditure has no limits as the public debt, the Federal Reserve’s monetary police is based in huge expansion; and, on top of all this, there are numberless regulations for the free initiative, then companies and firms are strangled which prevents their expansion and curbs the new creation of employs.To evidence this, American government decides the number of the employer that companies or firms can have in their payrolls, and determines the kind of jobs that companies and firms can create according to the government’s regulations.

In conclusion, the government is the agent who set barriers to the companies and firms to produce, and it is the one element against work. So if an state doesn’t generate wealth through production, then this seeks it through high taxes and the issue of inorganic money through deficit. One consequence of this is that the high class, who are the owner of means of production, begins the search of stability and friendly financial conditions in other countries, because the stuck of the economy can lead to social disturbances.

To prevent America’s downfall is needed to unhook the American citizens from the magical thought that has impoverished the Latin American nations, and return to the former principles: hard work, economic success mirrored in the market, and no government’s intervention. 

In case that a Democratic candidate gains the presidential elections, then the American have a secure passage to the path of turning United States of America into United States of Latin American, so another hellhole country.

The Answer Lingers in Productivity

Nowadays some people argue on the reason for the critical situation of Europe in its economy, meanwhile others turn to study the factors that originated all this crisis in order to comprehend the chaotic economic condition.

An analyst having a reasonable level of intellect shouldn’t cast doubt over any other reason than the one linked to productivity, which turns to be uneven among the members of European Community. Before delving into the subject, it should be defined productivity as concept firstly.

Productivity by Alexander J. Field, The Concise Encyclopedia of Economics, gives this example if your bakery business buys flour and yeast, rents a shop and equipment, and pays for fuel, its contribution to GDP is not the sales price of the bread made, but the difference between gross revenues and purchased materials and services except hired labor. Your firm’s output is what you and your employees have added to the value of the materials and services purchased from other firms. He adds if you discover a way to rearrange your labor force and equipment so that production is more efficient, or discover a great new recipe for a loaf that is equally tasty but costs you less to bake, multifactor productivity in your firm may go up, increasing your output (value added) per hour even in the absence of any capital deepening.

Obviously this bakery would operate very different in any country member of the European Community. This is a revealing example the reason for the chaos that has been created.

According to Wikipedia, Productivity is a measure of the efficiency of production. Here it is possible to highlight that what determines the efficiency of production is human capital, and -some will argue that this is a key factor but not the only one- there could be others like technology.

However, this argument is refutable on terms of that it is not only the accessibility of the existent technology that a country whether might have or not; despite having a very high degree of technology but what determines its efficiency is the use of this and, there human capital comes along.

Wikipedia also says that Productivity is a ratio of what is produced to what is required to produce it. In Productivity by Alexander J. Field, The Concise Encyclopedia of Economics, the growth of productivity –output per unit of input- is the fundamental determinant of the growth of a country’s material standard of living.

This concept discloses the importance of labour productivity –which offers a dynamic measure of economic growth, competitiveness, and living standards. So if the labour productivity is rather variable from one country to another, no analyst or economist could expect to have the same indexes in both economies. One of the both will show clearly any increase or decrease in their numbers comparing with the other.

Here, two questions come along. If economies present enormous differences in their labour productivity how can these come together as one country in a community of members and even how could these countries associate them in a non-commercial barriers trade?

It is studied that human and social capitals together with competition have a significant impact on productivity growth. One paramount factor that exercises a determinant influence on human capital is culture –values and concepts with which a man is brought up, and which varies from one country to another. A relative example of disparate concepts from one country to another in Europe is the vision on work. For European southern countries this is appreciated as curse meanwhile for European northern ones work is the medium to create wealth and, therefore bring as result an increase in the growth of a country’s material standard of living.

In fact, we can find that EU’s GDP is shrinking as a proportion of world GDP. A deeper integration brings as consequence less competition among the member states, so the benefit is higher taxes and more regulation.

Therefore, it could be stated that for better job opportunities and higher quality education are need to improve labour productivity and boost growth, besides if the countries of a community don’t have the same vision about how wealth is created and their productivity index is uneven between them their union will have some countries bearing the burden of the less productive members and bringing chaos into their economies, plus don’t give any chance to those countries already in chaotic conditions take some rules on their own