Economic future of West and potential of East
Decide your migration destination
ANUSH, an Indian-born British software engineer, was declared redundant by his company in early 2009. He was given two months time to search for another job but before the two months ended, his company declared itself bankrupt and stopped its operations. Anush didn't find a job after that. Eventually, he failed to pay his mortgage and his house was repossessed. He, along with his wife, are now working in a superstore as sales assistants and struggling hard to pay their rent and utility bills and maintain their usual standard of living.
Anush is just one of millions who lost jobs in the aftermath of the most horrendous financial collapse in history. Anush and similar other may blame the government and crooked high-profile corporate heads and bankers for this mishap. But truly this is natural. When good times reach their peak, bad times emerge. And a long century of good times in the United States of America and the United Kingdom is, thus, just over.
The streets of London today are full of job seekers -- people who lost their jobs last year and thousands of newly imported students and migrants deliberately brought by the British government as part of its economic policy. The British budget deficit is widening, government loans are skyrocketing, and funds for national security and benefits are diminishing. The Financial services industry, the biggest contributor to the UK GDP, is showing no sign of recovery. The value of pound sterling is depreciating almost every month and unfortunately no economic policy of Alistair Darling is working. USA, the creator of this financial fallout, is another misfortunate heading toward poverty, if everything in the world remains honestly uninfluenced. With more than twelve trillion in national debt, growing at compounding rates every second, with no real hope of generating ability to pay back in forty years, the USA is not far from becoming bankrupt. It's only China who's saving voracious American consumers to consume more Chinese products until it finds a way to ditch the US economy and dollar.
Obviously, the haunted governments of USA and United Kingdom are not sitting idle. They are using their maximum talent to find solutions. However, all new heads of policy-making are using pretty old techniques to come out of this bad time -- slashing interest rates, printing more and more money and taxing incomes at tremendously high rates. However, cutting interest rates is failing to encourage investments, printing more money is endangering the economy with inflation and taxing incomes at higher rate is depleting living standards.
The level of income and living standards in these countries are set to go down by this way or that. If Britain and the USA want to rebuild their economies, they must convert themselves to low-cost economy like China or India. To win this fierce economic war, there are no ways left other than calling back all the industries that were shifted to low-cost developing countries over the last three decades. This eventually means that the struggling governments should abolish the national minimum wage rate or make it almost half of its current level. A lower minimum wage definitely will attract more investments than can cutting interest rates. Continuous pumping of money should be stopped right now unless it's extremely necessary to devalue the dollar or pound sterling quickly. However, whatever steps are being taken, the dollar cannot be saved from falling in the near future. Like the British pound, the dollar will cease to be the reigning currency all over the world.
Over the last few decades, USA, United Kingdom, Canada and Australia have been the most attractive destinations for skilled manpower from Asian and other developing countries. The main sources of attraction were high levels of income, excellent living standards and social security provided by the governments of these countries, which no longer exist under today's economic circumstances. According to Jim Rogers, one of most influential investors in today's world, the choice in the 18th century was to migrate to Britain, the 19th century to USA and in the 20th century to China!
The next twenty years are going to be a very crucial period for the world economy. As the global economic power is expected to shift from West to East, while choosing one's migration destination, one must be very careful inside this time-frame. One should decide where one should be and what currency one should earn. Any wrong decision will cost one plenty. This is being experienced by recently migrated Asians and Africans in the United Kingdom, America and Canada.
M. Arifur Rahman is an investment manager and independent financial consultant working for a global investment firm in London. Email: arif.rehman@yahoo.com
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