Today I read that over 40% of all Americans are now receiving some sort of government aid. If we assume that’s roughly accurate, and add to that all of the Americans who are employed by government (about 7.5% excluding schools & post office staff), or who are being supporting by them (assume 2x, based on the fact that now less than 50% of all Americans are officially employed), we already get 55%.
This comes close to the figure of 58% estimated by Gary Shilling in 2009.
But are they? Is this humanly possible?
The answer is probably not. And in fact, that’s not at all what’s going on. What’s going on is that foreigners are taking up the slack: mostly Chinese, Japanese, Germans, Dutch plus the oil-exporting Saudis, Norwegians, Russians and Iranians.
Here are the current account balance stats from Wikipedia, in billions of USD:
China + 296b
Saudi Arabia +96b
Netherlands +53b […]
Even more revealing is the following chart showing current account surpluses and deficits as a percentage of world GDP. [Even if we admit that GDP numbers always contain a fair portion of fantasy, still they can serve as an effective “deflator” to keep multi-year comparisons in perspective.]
It is hard to believe that this massive long-term transfer of resources can continue indefinitely. Even if one were to argue that these transfers essentially amount to a type of regular tribute paid to the world’s leading military power, the ever-mounting influx of “unpaid” goods to the United States has resulted in a hollowing out of US industry – and an increasingly widespread poverty throughout the country. The scenario is reminiscent of that of post-1492 Spain, which brought in so much tribute from the Americas that first all industry, then finally the entire country essentially went out of business. Put simply, history shows that such a tribute-centric model is not sustainable.