We’re four years past the 2008 financial crisis when Lehman Brothers failed, millions of home owners went under and economic recovery was but a doe-eyed dream. Meanwhile all three of the world’s main engines of growth, the U.S., Europe and Japan are still mired in tepid recovery, if not reversing course altogether.
Remember when the much vaunted BRIC economies (Brazil, Russia, India and China) were going to pick up where the mighty U.S. left off? And still there’s been no flight of capital half a world away to Sao Paulo, Mumbai, Moscow or Shanghai. Their consumers aren’t driving demand and powering a global recovery. To the contrary they’re also experiencing slowing growth. China and India have revised downward to sub-8% targets.
For the first time in a century the modern age of opportunity that raised standards of living around the world risks returning to a decidedly low-tech feudalistic past.
Why has there been no dramatic re-balancing? Because much of the fast-growth economies of the last decade have relied on unsustainable models to fuel expansion – heavy on investment, light on consumers. To truly build a consumer-driven economy there needs to be access to capital, social safety nets, better healthcare and rising education.
Time to re-think global growth, focus on the middle class and get back to the more important metric, increased opportunity and rising standards of living. The most likely place for that to occur is right back here in the U.S. where the consumer of first resort was born. Mass market appeal drove adoption of every major invention of the twentieth century from electricity and the automobile to the Internet and medical technology. Without the all important middle innovation slows to a crawl.
The U.S. will only regain its critical role in driving growth if the middle class in general, and entrepreneurs in particular, returns to its place at the focal point of economic policy and business development. The role of banks is to facilitate business, not become the main business itself. Better to learn quick that the race has never been to the top, but to the middle, and that’s where the future lies.Photo credit: Brian P. Klein, 2011, view of Pudong, China