Sunday on GPS, I interviewed Ruchir Sharma, author of the terrific new book Breakout Nations: In Pursuit of the Next Economic Miracles. The following is a web-extra portion of our interview where Sharma lays out three reasons he's still confident in America's growth. Here's the transcript:
Fareed Zakaria: You don't deal with America, but you're also saying that in this new landscape, you're pretty comfortable with the United States?
Ruchir Sharma: Yes. I think that the U.S., as I talk about here, has three things going for it.
One, I think, is the exchange rate, that a dollar today, when adjusted for all inflation against its trade-weighted partners, is the most competitive that it's ever been in history.
Fareed Zakaria: Which means American manufacturers and exporters have a huge advantage, because their goods will be cheaper?
Ruchir Sharma: Yes. It's very cheap. We are seeing some signs of a manufacturing renaissance where jobs are coming back to America. It's a slow process. It's slow healing. It takes a while. But that's happening. So that's one very positive factor.
Two is that the wage growth differential is closing, if it hasn't closed. Americans' wages are much higher, but it's closing.
Fareed Zakaria: Because the Chinese wages are going up. Indian wages are going up. Brazilian wages are going up?
Ruchir Sharma: Yes. So if Chinese wages are compounding at 15 percent a year and American wages are - are total cost of compounding at a measly, you know, 2, 3, 4 percent, you know, that obviously leads to a lot of sort of tension at home.
But eventually, there's an equilibrium process which works. The jobs start coming back and that sort of pushes it up.
And the third factor, I think, is technology. And this is where I find that emerging markets and why many emerging markets remain only emerging, which is that the lead that America has in technology is just getting bigger and even more significant, because the world of technology has moved much more toward software and that's where America's competitive advantage lies. And even today, America spends more than one third of global R&D. It is in America.
So America makes like all the big innovative products. And the factories are in Asia, which obviously sort of leads to this distortion as far as the jobs picture is concerned. But it's something which is really a competitive point about America.
I think these three factors and technology is also helping the oil industry, as well, the whole energy complex, in terms of what's happening there in shale gas and other sort of oil resources.
So this is a big change which I think is going on.
Should we be expected any of these miracles to actually occur in our life time ?
want to see the change in your lifetime, then change yourself for the change u want to see.
lets be energy savvy, productively hardworking, engage minimal wage, plant your own food, save a dime for every dime u spend, then u will see the chage in your lifetime.
Sullivan as most gays do, make themselves victims. The american Indian has been the victims of discriminatory practices since 1492 (seperating man and women, spouses is just one of those). We accept gays as people but with the preference of them having rights over everyone else, real minorities seeing thier prefential treatment are frustrated with the double standards..
Indeed the U.S. is still leading in technology and possesses a big portion of innovative dynamics – the trump card to economic growth.
Yep, and (1) it's dollar is still the standard for world currencies, (2) it's still has the worlds largest economy, (3) it's the world's biggest gas guzzler, (4) it's military spending is second to none, and (5) it's federal debt is about $16 trillion.
Let's see where things are at in next 4 to 5 years.
USA Economy –
 Unfunded liabilities are $120 Trillion
 All Federal revenue from both Income ans SS taxes is less than $2.4 Trillion a year
[$120 T / $2.4 T = 50x. That means that to get back to even every US tax payer would have to pay 50 YEARS taxes
 USA has 100% bebt to GDP ratio – and going up 10% per year with $1.2 T deficits [immediate problem]
 60% of Public debt matures in less than 3 years
 That means astronomical money supply growth [printing money]
 THAT means the coming loss of of the $US status as the world's reserve currency
Funny how none of these "experts" understands this, eh?
ON MEXICO. STOP BLAMEING MEXICOS PROBLEMS ON THE USA. THE USA IS 300 MILLION PEOPLE. CANADA IS ONLY 40 MILLION OF COURSE THEIR IS A HIGHER DEMAND FOR DRUGS IN THE USA THEN OTHER COUNTRIES. THE USA GIVES MORE MONY TO MEXICO THEN ANY OTHER COUNTY. LET MEXICO TAKE RESPONSABILY FOR ITS OWN PROBLEMS INSTEAD OF USING THE USA AS A SCAPEGOAT.
Students "should study American History in particular, so they can plan the future," according to Woodrow Wilson, the young President of Princeton University in his 1902 inaugural address.
Contemplate the opportunity to plan America's future at Life among the Ordinary, a site dedicated to the trials, tribulations and progress of ordinary people:
Here goes another right-wing fanatic belly-hooing "our great future". The reality is, is that America has already past it's heyday and unless our policies change and we somehow,break the stranglehold that the M.I.C. has on this government, our decline will only continue!
Yep. I guess you just have to admire this guy's optimism, but that's about the size of it.
May the odds be ever in your favor...
My mentality is pretty simple these days. It makes the most sense to me to conduct myself, as if I am in a prison yard: Head down, little engagement, and don’t expect help. Opposite of any of these things could land me in the hospital or a morgue.
Almost true Jal, the world is certainly not at the level we'd all like to see it, and there is too much fear, stress, and difficulty for many trying to just make ends meet (and we're just talking about places where human atrocities are not prevalent). But a little respect, courtesy and kindness will still usually go a long way.
A little respect, courtesy and kindness will still usually go a long way – well that is a nice comment to see. Let's see if nations can deal with each other in this way. What is happening in Syria in terms of the ceasefire is a silver lining in a clouded world.
Economic power is a goal that the world can pursue, but not military power. The two are linked, however, and I can't help feeling best friends would not deal with each other countries do. Maybe friendship between countries is the best thing.
I agree. However, I am still weary. Assertion is therapy for anxiety. Assertion can be enabled by kindness and respect.
Its relationship to Israel.
The only ally in the middle east.
What stupid Americans seem not to understand, is that Jews are chosen people.
We will reap the rewards of our faithful service to Yahweh.
The goyim of this world should be happy to fight over the scraps that we Jews throw from table.
Israel will reign supreme over earth, and anybody challenging that assertion will be conquered, with the help of US military.
You people may not like us Jews, but you WILL learn to fear us.
If a few of you must die to save a few of us....that's a bargain I can live with. Your own nations agree with me on this.
Your sacrafices are necessary to ensure the survival of the only democracy in the middle east.
Oh Lord, please forgive me and keep all Thy good people of this Earth which I always endeavor to be part of....but I cannot help thinking that this "Rabbi" is a DISGRACE TO HIS RACE. And if I be mistaken of this in any manner whatsoever that can be spoken, by Thine Own Hand may you strike me down at this very moment.
You are no more a Jew than I am Angelina Jolie! Muppet.
Zakaria is a European Socialist. He's full of crap.
You know more about America than this guy. Former president clinton said that both democrats and republicans decided on their path after his fight with Gingrich. Republicans chose tax cut, deregulation and democrats chose investing in people and other stuff. In reality, democrats enabled republicans to deregulate banks and helped cut taxes to increase ineuality. What's frustrating is that there is still no substantial change of policy to reverse the damage done by last decade of policy. They would send ryan or find some other flavor of the month to push for same messed up policy.
I guess I'm being censored because I disagree with Zakaria most of the time. Here are three things that aren't accidents of the current global economy: A federalist system with real limits on the national government, the right to bear arms, and separation of religion and state.
Huge trade advantage means that the dollar has lost its value, which may or not be a good thing. This is a bit of a positive spin on the beginnings of inflation.
You repeated to dogma that EVERYONE says when you said govts need austerity program and retirement age needs to be increased. To your credit you did say investments are needed. How are people in their 70s supposed to get jobs when there is age discrimination against people in their 50s? What is someone in their 70s able to do? With the huge increases in productivty the retirement age should be decreasing. That would improve the unmeployment problem. If workers received the fruits of these productivty increases instead of it being siphoned off at the top retirement was possible at earlier ages. Instead of making workers work until they drop how about we take some of the wealth from the top 1% and redistribute it to those who earned it? It is good for the workers it will boost the economy so it will benefit the wealthy. It is good for everyone.
1%? I think about 35% would be just fine
Coming soon... "The Palin Manifesto". Painstakingly hand written by Sarah Palin herself in the same authoritative literary style that we've seen on the palm of her hand. Outlines in great detail her vision for America. Order your copy now.
America has another thing going for it...me. But that goes without saying...obviously.
AMERICA'S THREE THINGS IT HAS GOING FOR THEM:
Good to finally see some good news from a news source, i'll get on here more often, Sharma
Don't forget those 5 million Jews.
Why are foreign people speaking of America. Can we interview some Americans regarding America please.
Yes Jim, someone like Paul Craig Roberts would do just fine by me. But the mainstream media won't touch it.
Yes, 3 things, going, going, going, gone! Sure hope there are less than 3 things against it !
I will always agree with Bill Clinton that "There is nothing wrong with America, that cannot be cured by what is right with America". Except that the government cannot/will not agree to support what's right, and nor is there a leader anywhere who has enough guts to stand up and fight for what's right.
"Except that the government cannot/will not agree to support what's right."
What do you mean?
Wooohoooo! Team Amerika Hell Yeah!
Europe will fall and the BRICs will catch the proverbial flu of long standing effect. Who do we export to?
It's about time the Indians opened up their markets to American products. For starters, send them the american beef. US Commercial Grade. They could use some proteins.
Fantastic book – Breakout Nation. WHat a game changer with excellent analysis of what makes a breakout nation
agree fully – bought 10 copies and distributed to my team! must buy!
brilliant idea Sachin – will do the same for my team as well. game changer.
agree with the author of Breakout Nations on:
So if Chinese wages are compounding at 15 percent a year and American wages are – are total cost of compounding at a measly, you know, 2, 3, 4 percent, you know, that obviously leads to a lot of sort of tension at home.
I.m mid way on the book – beleive me havent read anything like this in a long time. this should be part of management schools curriculum.
this guy is one hell of the sharp fellow. have been reading his articles in ET for last 3 years – he has got it all right. in fact Hi,
The billonaires index as mentioned in the book – has been explained so well. just totally out of words for such a great book.
I agree with Jacky Sarna – this book should be made part of curriculum not just in the expected break out nations but in Ivy league universities – this is the future!
As Prannoy put it – Montek and other Indian Policy makers need to read this book and work on changing the Indian Scenario.
We are a bunch of volunteers and starting a brand new scheme in our community. Your site provided us with helpful information to work on. You have done a formidable job and our whole community shall be grateful to you.
The Global Public Square is where you can make sense of the world every day with insights and explanations from CNN's Fareed Zakaria, leading journalists at CNN, and other international thinkers. Join GPS editor Jason Miks and get informed about global issues, exposed to unique stories, and engaged with diverse and original perspectives.
Every week we bring you in-depth interviews with world leaders, newsmakers and analysts who break down the world's toughest problems.
CNN U.S.: Sundays 10 a.m. & 1 p.m ET | CNN International: Find local times
Buy the GPS mug | Books| Transcripts | Audio
Connect on Facebook | Twitter | GPS@cnn.com
Buy past episodes on iTunes! | Download the audio podcast
Check out all of Fareed's Washington Post columns here:
Obama as a foreign policy president?
Why Snowden should stand trial in U.S.
Hillary Clinton's truly hard choice
China's trapped transition
Obama should rethink Syria strategy
Enter your email address to follow this blog and receive notifications of new posts by email.
RSS - Posts
Get every new post delivered to your Inbox.
Join 4,852 other followers