Too Big to Fail?

   Economists have long said that when the U.S. sneezes, the rest of the world catches cold. But there may come a time when that will no longer be true. Similar things have happened before, so there's no reason it can't happen again.
   Worldwide, the U.S. is the largest and most productive of any nation, with GDP of $16 trillion. That's a quarter of the world's total output of goods and services, and double the value of the world's second largest economy, China, which has a GDP of $8.2 trillion.
   America is also a major market for merchants in other countries, with total imports of $2 trillion yearly. That's roughly the same as the total GDP in Canada ($1.8 trillion), Mexico ($1.2 trillion), Russia ($2.6 trillion), Spain ($1.8 trillion), France ($1.3 trillion), France ($2.6 trillion), Germany ($3.4 trillion), or the UK ($2.4 trillion).
   So when Americans stop buying stuff from overseas, it's easy to see why a slump in the U.S. economy strongly affects economies in other nations. However, it's important to remember a basic principle of accounting: Worldwide, the values of exports vs imports -- one on each side of an accounting ledger -- always balance. A foreign trade deficit may be a useful number for business and government in a single nation to consider, but in the case of the U.S., that deficit -- $34.2 billion in June -- amounted to about 2 percent of the total GDP of $16 trillion.
   In economic terms, then, the U.S. is the world's dominant power. Was it always so? No. Will it always be so? Maybe, maybe not.

   There was a time when the Roman Empire was the world's dominant power. Later, Spain was the richest and most powerful. Then came France, and after that, Britain.
   Some nations achieved dominance through economics and world trade, others by military means, or a combination of the two. Spain focused on acquiring the most gold, but in the process impoverished many peoples of North and South America.
   Britain used a colonial approach, where colonies supplied raw materials to UK manufacturers, and had to buy the finished products from them.
   Colonialism was rife in the 17th, 18th and 19th Centuries, and many view the wars between Britain, France and Spain as military matters for control of territory. Seen another way, they were economic matters for control of resources and markets, using the military as weapons in an economic battle.
   
   Consider this: Most wars use territorial control, politics, the egoism of political leaders, or even religion as excuses. The real reason, more often than not, is economic.

   Meanwhile, nations in so-called developed economies struggle to resume and increase their growth rates, while those in Asia and less-developed nations in the so-called Third World are prospering or have plenty of room to grow.
   Only by acknowledging this reality and working together for the common good, rather than struggling for dominance, can the world avoid pushing that economic struggle to a military one.