Is America still the undisputed “Numero Uno”? Not according to the Economist Intelligence Unit’s (EIU) “Where to be Born Index.” A quarter of a century ago, America topped the list. Today, it is #16.
This quirky EIU Index attempts to measure which country will provide the best opportunities for a healthy, safe and prosperous life in the years ahead. The index links the results of subjective life-satisfaction surveys — how happy people say they are — to objective determinants of the quality of life across countries. And the idea is to forecast which country would be best to inhabit 18 years out, when a baby born today becomes an adult.
Obviously, the EIU’s assessment is not the last word on a nation’s quality of life, but it does at least provide food for thought…and it does corroborate a growing body of empirical data that suggest the American quality of life has degraded somewhat.
While playing around with some numbers on the back of a Rancho Santana cocktail napkin, for example, we stumbled upon some shocking contrasts between Nicaragua and the US — shocking to us, at least.
Last year, the Supplemental Nutrition Assistance Program (SNAP) — i.e. food stamp program — in the United States spent $7.4 billion more than it did the year before. $7.4 billion happens to be almost identical to the entire GDP of Nicaragua, a nation of 5.9 million inhabitants. SNAP used its incremental $7.4 billion to feed 4.4 million of America’s poorest citizens. Meanwhile, all 5.9 million Nicaraguans — rich and poor alike — managed to “live on” $7.4 billion.
Here in Nicaragua, the government is too poor to operate a SNAP program. In fact, the Nicaraguan government is too poor to do much of anything. Not only is it too poor to feed its own poor, but it is also too poor to create a maze of government agencies to hassle its citizenry. The government’s entire annual budget is only about $1.6 billion, which is less than 1/50th the size of the SNAP budget.
These comparisons tell us little about how things ought to be, but they tell us a lot about how things are. Specifically, they tell us that the United States spends a spectacular amount of money trying to “manage poverty.” And yet, the more the US tries to manage poverty, the more poverty spreads. The ever-expanding budget of the FNS does not beget self-reliance; it begets ever-expanding government reliance.
During the last four years, the number of Americans receiving food stamps has doubled from 23 million to 46 million, while the direct cost of providing that support has skyrocketed from $30 billion annually to $71 billion. (The FNS’ total budget topped $100 billion this year).
To continue the comparisons between the rich Americans and the poor Nicaraguans, the US spends 4.7% of its GDP on its military, while Nicaragua spends only 0.7% of its GDP. The US employs 13 times more police per 100,000 citizens than Nicaragua — 233 vs. 18. And yet, very few US cities are 13 times safer than Managua — El Paso, Texas being one of the rare exceptions.
These sharp contrasts are exactly what one would expect when comparing the world’s wealthiest nation to the Western Hemisphere’s second poorest nation (top prize in that category falls to Haiti). Similarly, it should come as no surprise that the median income in Nicaragua is only 1/10th of what we Americans call the “poverty line.”
Net-net, the US is still a very, very rich country and Nicaragua is still a very, very poor country. That said; several gauges of America’s economic condition have been deteriorating over recent years, at least relative to similar gauges of Nicaragua’s economic trajectory.
As the chart below illustrates, Nicaraguan GDP growth has staged a remarkable rebound from the war-torn decade of the 1980s. Meanwhile, US GDP growth has been downshifting from its robust pace of the ’80s and ’90s.
More recently, the Nicaraguan economy has been producing rapid employment growth, while the US has been producing rapid unemployment growth.
Regrettably, as the US private sector struggles to grow, the US government’s debt burden is soaring. During the last six years, America’s federal indebtedness has increased from less than 70% of GDP to more than 100%. During that identical timeframe, Nicaragua’s government debt burden has decreased from more than 110% of GDP to nearly 70%.
Why look at these trends?
Because the next 25 years will not be like the last 25 years, guaranteed. The world always changes…but not always for the better. What if that portion of the world called “America” is changing for the worse?
for The Daily Reckoning
Eric J. Fry, Agora Financial's Editorial Director, has been a specialist in international equities for nearly two decades. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short-selling. Following his successes in professional money management, Mr. Fry joined the Wall Street-based publishing operations of James Grant, editor of the prestigious Grant's Interest Rate Observer. Working alongside Grant, Mr. Fry produced Grant's International and Apogee Research, institutional research products dedicated to international investment opportunities and short selling.
Mr. Fry subsequently joined Agora Inc., as Editorial Director. In this role, Mr. Fry supervises the editorial and research processes of numerous investment letters and services. Mr. Fry also publishes investment insights and commentary under his own byline as Editor of The Daily Reckoning. Mr. Fry authored the first comprehensive guide to investing internationally with American Depository Receipts. His views and investment insights have appeared in numerous publications including Time, Barron's, Wall Street Journal, International Herald Tribune, Business Week, USA Today, Los Angeles Times and Money.
It already has.
Nicaragua is a young man’s game, I think.
During the first half of the 20th century, America was a pretty decent country. There was huge immigration to the ‘promised land’, there were amazing innovations, but there was a huge but honest mistake of mismanaging the economy to result in the Great Depression. But overall, America house a bunch of honest working and creative people. A people who understand reality, that anything can go wrong.
After winning WW2, America began to transform – fueled by a largely destroyed world. It dominated just about everything, and for about 3 decades, helped to manage for a peaceful world including struggle with communism. It paid a great price in that struggle but also gained a great deal from the open markets. On balance, the free world admire the land of the free.
From about the 80’s on, however, a generation of people who contributed nil to WW2 began to take charge. They grew up infused in several cultural ideologies centered in ‘America Is Great’. This is when the world famous American Arrogance was born. Soon, the generations of the 90’s and millennial believe their country can do no wrong, always exceptional, greatest in the world. They began to enjoy life, spend way beyond their means, entertain to no end, reduce their education, abandon critical thinking, support all wars because they’re so much fun and America is sure to win. By the turn of the 21st century, national recklessness, gross stupidity, out of control finances, political madness, have reached a new height. American Hubris replaced Arrogance. Also, highly imperial foreign policy of the past few decades have built up enemies, resulted in a 9/11 blowback.
Today, America finds itself locked into a black hole entirely of its own creation. When it looks around the world, it find few, very few friends. But a nation of 320 million still do not understand why it happened, and why nobody in the world care, except to protect themselves from the inevitable implosion. This is how low the once-great country has reached. Maybe it will climb out of the hole. But that will be the job those now less then 10 years of age, or yet unborn. In the meantime, 95% of the world’s population moves on – because they can without the need of an America no longer able to manage itself. And because anything America can make, including the highest tech products, some country in the world can also make.
Hmm, and yet you leave out that the countries ahead of the US on the “Where-to-be-born index” are all socialist governments with a much higher taxes and government spending.
The Worst Generation got in power in the 60’s and started placing soc security payments
in a general fund leaving government debt in its place. This generation also
allowed the Immigration and Nationality Act of1965 to be passed causing the ethnic makeup of the US to change which has caused numerous problems (neighborhoods changed for the worse and people were forced to leave for safety reasons and simply because people are
hard wired to prefer people that look like themselves). The worst generation
had the jobs, the manufacturing and cheap education. The generations that followed
were left with the bill and today keeps a roof over their heads and lottery tickets in
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