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Why America's the Only One to Blame for Its Decline

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The United States is currently not the top country in the world for business—wait, hold on; how can that be true? Isn’t America the most powerful nation in the world?

Well, according to Donald Trump, America is losing its business advantage amid a declining U.S. economy. In an interview with CNBC’s Piers Morgan last Thursday, Trump went on and blamed China, India, and Mexico for the country’s demise, saying American jobs have been stolen by these countries, thereby negatively impacting the U.S. economy.

While I agree with Trump that the loss of jobs in this country is a major issue, I wouldn’t go as far as to lay the blame 100% on these countries. Hey, the global economy is forever interconnected. All countries do what they can to move ahead. It’s no different with China, India, and Mexico. They have a major cost advantage in cheap labor and manufacturing space, so they take advantage of it. That’s just the basis of competitive advantage between countries.

Countries focus on their advantages, whether it’s labor, technology, or an easy business climate. For Trump to squarely lay the blame for the decline of the U.S. economy on just three countries is the easy way out.

Yes, it’s not relatively cheap to manufacture in the U.S. economy, as far as the labor costs and business incentives go, compared to the emerging markets, where you have people willing to work for $10.00 a day and in some of the worst working environments found. It’s not good, but that’s the reality.

With the massive and overdone quantitative easing by the Federal Reserve and the massive spending and mounting of the national debt, things must change; otherwise, investors could end up investing in an aging America and a soft U.S. economy that is seeing minimal growth.

In the annual report Economic Freedom of the World by Canadian-based Fraser Institute, good old America was ranked 17th in the world in economic freedom. (Source: “Canada Continues to Lead the United States in Economic Freedom While Hong Kong Again Tops Global Rankings,” The Fraser Institute, September 18, 2013.)

The report stated, “Unfortunately for the United States, we’ve seen overspending, weakening rule of law, and regulatory overkill on the part of the U.S. government, causing its economic freedom score to plummet in recent years. This is a stark contrast from 2000, when the U.S. was considered a bastion of economic freedom and ranked second globally.”

The current impasse and bickering in Washington is proof of what the report found. The ability of the U.S. economy to deliver requires far less political intervention in favor of a more proactive approach to developing businesses and providing a business climate that encourages growth and innovation in the U.S. economy.

You cannot simply blame other countries for your misfortune. Sometimes, we just have to take what we are given and focus on building the U.S. economy into a more viable structure. If the U.S. economy’s decline continues, you may want to look at shorting U.S. stocks or exchange-traded funds (ETFs) that derive the majority of their revenues domestically; you could also consider buying ETFs that play a downturn in the U.S., such as ProShares Short S&P 500 Fund (NYSE: SH), ProShares UltraShort S&P 500 Fund (NYSE: SDS), or ProShares UltraShort Dow 30 Fund (NYSE: DXD).

This article Why America’s the Only One to Blame for Its Decline was originally published at Investment Contrarians

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Economics Markets

 

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