Martin Hutchinson is sanguine about the future of Western civilisation, but every silver lining has a cloud:
Provided Western government spending is kept under control so private sectors have room to flourish, and interest rates are fairly quickly restored to levels that encourage saving, the Western advantages of capital, education, technology and favourable business climate will ensure that growth resumes, so that economic dominance does not pass wholly to the East. Moreover, China and India are not without problems of their own: in China’s case, a banking system with potentially massive bad-loan problems; in India’s case a chronically overspending, corrupt and inefficient government. The chances are that the United States will still be among the most prosperous countries in the world in 2050, as will most of Europe.
It’s the government spending and interest rates problem that’s the key. I don’t see either party restoring government spending to the levels of federal or state income (NJ’s Chris Christie is an exception) and the Fed is obsessed with quantitative easing, which will keep interest rates artificially low and encourage deflation (unless they totally lose control of the situation and we have hyperinflation.) And one should add to this litany our government’s propensity to regulate/outlaw large portions of economic activity is, in its own way, as damaging as our lack of fiscal discipline.
Our élites have basically made the decision that they don’t want an economic regime that they can’t control no matter how well it works. And that’s at the source of many of our political conflicts.