BRIC … Really?

By Brad Thomason, CPA

If you are a reader of the financial press you have most likely come across the acronym BRIC before.  Brazil, Russia, India and China are the four countries whose economies would seem to have the most potential for growth in the coming century.  Just as the 19th century was the European century, and the 20th century the American one, so is the current century supposed to be the Emerging Nations’ century, with these four at the vanguard.

The oft-cited implication of this potential development is that the United States will be overtaken by one (or all four) of these countries as the preeminent economy, and in fact the most dominant new country on planet earth.  The rise of the risers, the theory goes, spells the downfall of the incumbent.  That is, us.

Well, not so fast.

I couldn’t help but notice the coincidental (I presume) appearance of three successive articles in the latest issue of Bloomberg’s Businessweek.  The first talked about how women in India were very much under the thumbs of their fathers and husbands, and that the notion that a woman would actually make up her own mind about how to cast her vote was a novel idea which was just starting to catch on in Indian culture.  Then came a piece about the Chinese government aggressively disrupting the activities of groups who are critical of the government.  Finally, from the crime blotter of about-to-be-host of the World Cup, Brazil, a love letter about the rise in muggings; with a featured quote that said, “I’ve told everyone who’s asked me about Brazil: Don’t bring anything too precious because there’s a good chance you won’t be taking it home.”

And I’ll assume you are already aware of what Russia has been up to recently (and the devastating effect that their entire economy has suffered just because of sanctions against a couple hundred of its wealthiest citizens).

Do any of those really strike you as the kind of problems you would expect in the country that is about to succeed in knocking the US out of the top spot?

I have personally been on panel discussions at conferences with well-meaning persons who are very worried about the demise of American supremacy.  Now, I’m not saying we don’t have our problems.  But I will point out here what I have pointed out in those forums: in order for the US to stop being first at anything, it necessarily means someone else has to be better.  And frankly I don’t see a whole lot of ready candidates, at least not today.  I offer the above references as substantiation of my opinion.

The US dollar is not the world’s reserve currency because everyone on the planet likes us: it’s because there is no suitable alternative.

The US is not the world’s largest economy simply because of the size of our land mass or the natural resources present here.  The BRIC countries actually can match or beat us on those stats, yet there is no parity.

The thing which makes the US the world leader is…not just one thing.  Our military might sure doesn’t hurt, and you could argue that it sets the stage for all the rest.  But that combination of all the rest is what seems to be the driver.

We have clearly defined civil rights.  Laws mean something here.  The political process, though exhausting, frustrating and often abused, is nonetheless ultimately respected and followed.  The press is nosy and loud and if you are a public official you better not step a toe out of line or there will be someone right there ready to hand you your walking papers.  The financial markets work the way they are supposed to far more often than not.  Innovation is revered and supported here.  People get up in the morning, go to work, and do what they do to drive our economic engine.  And perhaps more than all of this we simply want, as a nation, to try to be as good a place as we can be.

We may not do any of those things with perfection.  But we do them far and away better than anyone else has ever managed to pull off.  The American melting pot has produced a stew that has proven essentially impossible to replicate elsewhere.

And if you look at what is going on right now with the supposed heirs, I don’t think we have a lot to worry about at the moment.  Too many individual variables would have to change too much for the situations in those countries to come even close to the combination of factors we have here.

Even if somehow, someday they did, I’m unconvinced that we should regard that as a cause for worry.  Folks in western Europe still live a pretty good life, even after a century in the runner-up spots.  There is no reason to think that a post-supremacy America necessarily has to be a disaster.  But even if it does prove to be, such a day still seems a mighty long way off in the future.

My response to all of this is simple:  keep doing what I’ve been doing.  I’m going to keep trying to grow in my career, keep serving my clients, and keep investing capital into US assets.  The case for doing so seems pretty strong.  The case for worrying about a distant possibility with odds which are dubious at best, not so much.

Those who spend too much time fearing the “end of America” may find themselves unnecessarily missing out on all the good things our country has to offer in the here and now.  That’s not something I have an interest in doing.

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