Dalio reads the tea leaves well. The five factors of production are land, labor, capital, technology and entrepreneurship. Growth will depend on how a country’s political leadership can develop these factors and maximize their value.
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1. Land: India, the US and China have have 180M, 168 and 165M hectares of arable land each. They will always support the largest populations in the world. The US is abundant in fossil fuels which effectively makes it mostly energy independent. China generally extracts more…
2. Labor: The median age in India, China and the US is 28, 39 and 39. India’s population pyramid follows a “normal” trajectory and so does the US’. China’s is far more uneven given its one-child policy that is leading to an inversion of its population pyramid. Rapid aging has…
3. Capital: So long as the US dollar is the world’s reserve currency, the Federal Reserve can print money and the government can continue to borrow from international lenders. This finances its growth and supports the US-led economic system where in large part, American consumers…
4. Technology: The US remains the undoubted global leader while China is a reasonable second. Their technological prowess has been driven in large part by quality education. In China’s case, IP theft helped it leapfrog but this was possible because it could absorb the…
5. Entrepreneurship: The US is best placed to incentivize entrepreneurship with its near limitless access to capital and immigration policies designed to support an innovation ecosystem. While China attempts state capitalism as a means to incentivize new business creation, its…
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