There’s an enormous yet simple reason why America will remain an extremely powerful nation out to 2050. It’s demographics.
Thanks to a relatively high fertility rate, plus a rich culture of immigration, America is set to grow its population by another 100 million people through 2050. This is based on U.S. census projections and is supported by other projections as well via New Geography.
Over the next four decades, America will grow its labour force, ie. its productive population, by a whopping 42%, as shown below.
Meanwhile, China’s labour force will shrink by 10%, Europe’s will shrink 25%, and that of Korea and Japan’s will shrink by horrendous amounts.
See, China’s labour force has been growing very fast lately, which has helped it stun the world, but this growth is set to peak and then start falling by the middle of this decade. So be prepared for the hype to die down by about 2020, even though China will of course keep developing.
In contrast, from about 2015 onwards, the U.S. will start showing how its national model isn’t so bad after all.
China will have to increase worker productivity faster than the fall in its labour force each year just to tread water when it comes to GDP. Meanwhile the U.S. could have zero productivity gains over 40 years and yet achieve a 42% larger economy by 2050. Thanks to healthy demographics.
China might be able to overtake U.S. GDP since it’s easy to increase productivity quickly when coming from a low base, but at worst, the U.S. will still be a close #2 with few other contenders in the world. All the while having a far higher GDP per person than China. So net-net, the China Challenge won’t be so bad, and in fact the U.S. will likely come out looking very strong.
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