New, compelling evidence that the United States of America is approaching the status of a third world nation has emerged in the last few years. It may seem ludicrous that one of the countries on the forefront of technology has citizens in a state of squalor but surveys and reports paint an alarming picture of the United States as falling so far down the economic scale of the world that the country will lose its status as a world power.
One economist, Francis Ferguson, PhD, goes so far as to say that the U.S. is already a third world country but adds that it hasn’t realized it yet. The signs that the U.S. is becoming a third world nation include: apparent decline in money spent for education, infrastructure falling into disrepair, and an imbalance between imports and exports.
While many people believe the U.S. decline in education is due to reduced spending this is entirely false as reported by the U.S. Department of Education. Education spending can be blamed for holding back other third world countries but it cannot be blamed for an apparent fall of the U.S. to third world status. The money spent on elementary and secondary education, both per student and as a whole, has increased every year since before 1990. This holds true on the local level, state level, and federal level. Even when adjusted for inflation, education spending has never fallen in the last twenty years.
Some criticism of education comes from the failing of President Bush’s No Child Left Behind Act. The act fell short by $27 billion of promised funds. Even so, education spending rose nearly 40 percent from 2001 to 2006, from $27.3 billion to $38 billion. Funding for disadvantaged children rose even more in the same period with a 45 percent increase.
The real problem with education spending is that, while spending increased, there is nothing to show for it. Test scores and student performance show no improvement with the spending increase, so the problem is not about money. The problem is, as yet, unknown but researchers speculate that there are several causes, such as teacher apathy.
Although education spending does not point toward third world status for the U.S., a decline in infrastructure and construction tells another story. In 2009, Arnold Schwarzenegger, Governor of California, Ed Rendell, Governor of Pennsylvania, and Michael Bloomberg, governor of New York City, all cried out about infrastructure spending. For so many years, the infrastructure has been denied funds that now extremely large sums are needed to bring roads, bridges, sewers, railways, and other infrastructure up to code.
Governor Rendell said that overall, $1.6 trillion is needed to stay competitive with the rest of the world. Even with the $80.5 billion earmarked for roads, bridges, and waterways by Obama’s stimulus package and another $72.5 billion for transportation in the 2010 budget, this falls far short of the mark. The American Society of Civil Engineers says that Rendell’s numbers are underreported and the true amount needed is closer to $2.2 trillion.
To put this amount in perspective, the total U.S. taxes collected by the federal government in 2008 was about $2.5 trillion. The money to repair the U.S. infrastructure simply doesn’t exist and it cannot be pulled from other sources without causing the collapse of some other social or government structure.
New construction is also shown to be decline. So, as the old construction falls into disrepair, there is nothing to replace it. From 2008 – 2009, construction spending fell by 13%. With private construction also in decline, no one is left to pick up the slack and decay is imminent. Another factor to consider is that the estimated $2.2 trillion is not a static number. As time marches on, the infrastructure continues to decline due to natural forces and the amount needed grows steadily each year.
3. Trade Deficit
Another factor leading to the belief that the U.S. is in decline and falling into third world status is the trade deficit. A trade deficit occurs when a country imports more raw resources and final products than it exports. For years now, manufacturing jobs in the U.S. have continued to decline. Jobs have steadily shifted from manufacturing to service- oriented positions.
Restaurants and retail store jobs are the fastest growing. Beginning 30 years ago, manufacturing jobs slowly moved outside the borders of the U.S. due to the cheaper labor. As free trade with China and other developing nations opened in the 1970s and 1980s, U.S. manufacturers were able to outsource production to developing nations in exchange for cheaper finished products.
This amounted to huge profits for American corporations but vastly reduced the capability of the U.S. on its own soil. As more and more companies laid off U.S. workers and shifted operations to developing nations, those companies that tried to stay for the good of the country were unable to compete because their products cost much more to produce.
In the 1950s and 1960s it was possible for a family of 4 to live off a single income. Now, as lower-paying service jobs replace the higher-paying manufacturing jobs, one income is barely enough to support 2. Even 2-person households now usually have two incomes in order to keep up with the Joneses.
The average wage before the decline of manufacturing jobs, adjusted for inflation, was $28 per hour. The average earning today is only $16 per hour. This problem is only getting worse and there is no fix on the horizon. New college graduates just entering the workforce find that they cannot make a living on a single job and they are deluged with an over-abundance of jobs at the poverty level.
As more manufacturing jobs moved out of the country, the trade deficit grew. In 1980, The U.S. actually exported more to China than it imported, to the tune of $2.7 billion. 25 years later, in 2005, that number shifted to a deficit of $201.6 billion. This is only China. There are several other countries the U.S. deals with that show similar numbers.
Another factor of the trade deficit is the proclivity of the developing nations such as China to accept payment for trade through government bonds. This protects the Chinese interest in the value of the dollar. This economic position is confusing to most but what it means is that now the U.S. not only pays for cheap merchandise from China but also must pay interest on the loans it accepts to keep the economy afloat.
While this position has remained sustainable for a few decades, it cannot last forever. As the U.S. dollar weakens, the rest of the world begins to move to a new standard. The Euro is quickly replacing the dollar in many markets. When the change is complete, this will leave the U.S. in a state of complete economic collapse.
The stability of the U.S. and apparent wealth is largely a myth. Most wealth is concentrated in the hands of a few and they are not sharing. An index to measure the wealth of societies, the Gini Index, already shows that the average U.S. resident is no better off than the average resident of Ecuador, Mexico, or even Nigeria.
This evidence of the failing infrastructure and imminent collapse of the economy along with the Gini wealth index shows that if the U.S. is not now one of the poorest societies in the world, it will soon become one.
It will look like this: Three Signs America is Becoming a Third World Country