SWOT of the USA
Summary This paper is based on my analysis of the work “A Report on Life in the United States: Social Classes in Modern America; Conditions and Quality of Life in the USA and the Future Prospects for the American Society and Economy, A Strategic Think Piece by Robert J Hessian, PhD. The intent of this paper is to explore future prospects for American society and the US economy. To frame the analysis, I will investigate the concept of SOOT, Strength, Weakness, Opportunities and Threats, in the American context as presented by the underpinning paper.
Introduction United States of America is a federal republic that was founded in 1776. It is revered for its economic, technological and military prowess. It has the largest market in the world with an estimated 2009 GAP of $14. 3 trillion (a quarter of nominal global GAP and a fifth of global GAP at purchasing power parity). At 3. 79 million square miles (9. 83 million km) and with over 311 million people, the United States is the third largest country by total area, and the third largest by population.
It is one of the world’s most ethnically diverse and multicultural nations, the product of large-scale immigration from
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It involves specifying the present position the America (already done in the background paper) and identifying the internal and external factors that are favorable and unfavorable to that positioning with a view to create policy plans that will strengthen strengths, eliminate weakness, maximize opportunities and minimize threats. The strengths and weaknesses usually arise from within, and the opportunities and threats from external sources. The SOOT Analysis identified the following: Strengths: The size of the U. S. Market. With nearly 3. 2 million consumers, the United States is one of the largest markets in the world.
When a company has access to the U. S. Market and these 3. 11 million people, it can take advantage of economies of cleanings achieved because an initial investment is spread out over increasing numbers of produced units. It has a GAP approximately $16 trillion, almost 3 times ND the size of Japan’s economy. The economy is driven major by its consumption, described mostly as a ‘consumer economy. 2 The wealth of the U. S. Economy. Although the United States contains only 4% of the world’s population, it accounts for nearly 25% of global economic output.
The combined effects of being one of the richest countries in the world and one of the largest in terms of population put the SOOT of the USA By Lampoon market in size and wealth. 3 High value investment on R and Education. In the United States more than $800 billion is spent annually on education, more than the 68 counties combine. There a significant number of world class universities attracting a large number of foreign students almost double its nearest rival the UK with 475,169 to 225,722 students respectively. 4 US degrees are still highly valued.
The US remains dominant in absolute terms, and annual increases in US R is greater than the budget of most countries. The US R spending was estimated at 436 billion, 36% of global spending on R in 2012. 5 Large land mass. At 3. 79 million square miles the United States is the third or fourth largest country by total area, and the third largest both by land area. This large land mass provides a vast amount of trial resources, with the United States being the largest food producer in the world. Market oriented economy. The economy is dominated by privately owned businesses and is marked by resilience, flexibility, and innovation.
Businesses are free to hire or fire employees and open or close operations. Unlike the situation in many other countries, new products and innovative practices can be introduced with minimal bureaucratic delays. A large population. The United States is the third most populous country in the world (31 1 With a per capita GAP of $49,965 (2012), the economy is driven by internal consumption ‘a consumer economy. 6 This large population allows the United States to be a major driver in the global economy. It uses this fact as a strong influence over international relations. Weaknesses: Low household saving rate.
Pressures on the middle and working class to spend and constantly consume means that saving is not a wide spread habit or priority in America. More than half the US household have less than $10,000 in savings. The result is a heavily indebted middle class on the verge of losing their greatest investment, their homes. 7 This trend is declining, causing a major the driver of American economy, domestic consumption to decline as well. It has a large fiscal efficient. The US budget deficits 7. 6% of GAP has created a massive public debt and created the need to increase taxes on the population. It has a large external debt. The United States debt is increasing at an alarming rate, which concludes and equates to approximately $14. 71 trillion (93. 2% of GAP) (2013) and makes it $45,000 for each American taxpayer; Making it the biggest debtor country in the world. 9 Disparities in wealth exist. The relatively poor Gin index of 45 is indicative of wealth/ income gap in the United States. It has the largest disparity gap between rich and poor, compared to other industrialized nations. This ever widening disparity gap threatens stability and growth. 10 High cost of education.
The high cost of education has created a two tier market for labor, that is many at the working class lack the education and professional skills that are regarded for top management position, hence they fail to get comparable pay rises, health insurance and other benefits. This retards the middle class, with little or no upward mobility for the working class. High cost of health care. While the US have many of the best healthcare facility in the world, the cost of healthcare is prohibitive. The working and lower classes of the population are often times without funds to meet their healthcare needs.
The US spends more than any other industrialized nation on healthcare cost, without having a greater supply of healthcare services, higher utilization or significantly better dependence. Although the US is one of the largest producers of energy, it is also one of the largest consumers. This has created a heavy dependence on foreign oil, underpinning high energy prices. High rate of poverty. Vulnerable groups are being threatened by the global competition, especially in the some traditional manufacturing industries, which has resulted in reducing their wages.
There are still a significant number of people who live in poverty in the US, especially unmarried mothers along with their children and minorities. In 2012, the official poverty rate was 15. 0 percent. There were 46. 5 million people in poverty. 12 Opportunities: Reduce dependency on foreign energy. The US should invest in new technologies, clean sustainable energy, and reduce energy consumption to reduce to attain energy independence. Reform immigration. Immigrants have always been a rich source of entrepreneurship in the United States; more immigrants should be welcome, particularly newcomers who are well-educated and highly skilled. Reduce poverty and the wealth/income gap. There is an opportunity for policy makers to provide guidance on the poverty reduction, enact policies that lift the poor out of poverty. Reduce unemployment and increase growth. The United States need to kick-start growth and target Job-creation specifically. There is an opportunity to push more people into middle-skill Jobs and to find ways to create more of those Jobs. This means a return to emphasizing vocational education. There are still need lots of new plumbers, electricians, and heating-system re-pair workers. Policymakers must re- skill and re-tool the population.
Reduce the Federal deficit. The current Federal government budget deficits of 7. 6% of GAP are worrisome as is the 73. 6% of GAP public debt and these will have to be aggressively addressed during this decade Reduce healthcare cost. The cost of healthcare has hurt the global competitiveness of American businesses. In most other Western countries, the government?not employers?shoulders the cost of health insurance. In the United States, health care has consumed an ever-larger share of employers’ compensation to employees, driving up costs and making labor more costly than many businesses want to pay.
To increase college graduation outcomes. 37 million Americans have some college experience but no degree. Although record numbers of high school graduates have enrolled in college, their odds of finishing remain low. Getting diplomas in the hands of more people would be a huge boost for the U. S. Economy. During the past three decades, the United States has slipped from first among nations to 10th in the percentage of people holding a college degree, even as the Job market has eroded for Americans without one.
Increasingly, this failure has constrained household incomes and harmed the nation’s economic growth and competitiveness. 4 To synchronism education needs and Job requirements. A highly skilled workforce is essential to innovation; to keep its place at the forefront of science, technology, and innovation, the US must improve student outcomes in science and technology. College-bound students must be encouraged to major in math, computer science, and hard sciences ?fields that are essential to innovation and carry important spill over benefits to the economy as a whole. 15 Threats: The growth rate.
The growth is forecasted to grow at slower by the International crunch, which will also have negative effects on the US export markets and the economy as whole. 16 The mounting Federal deficit. The US budget deficit has been coined as unsustainable according to MIFF (International Monetary Fund). It is expected, if it continues, that it would have undesirable effect on the interest rates and capital markets globally. Emerging economies. The growing economies in Europe and recent developments in Asia and India, which are expanding economies globally, especially China, are forecasted to overtake the US market in size.
Job lost. Traditional manufacturing industries are lost due to the trade deficit, the many setbacks the hole economy has faced and anything that relies on a routine task that a machine or a low-wage foreign worker could do instead have contributed to high employment rates. Flat wage rates. Despite enormous growth in productivity (125% increase in the last 30 years) wages have only increased by 25% during the same period so 90% of all the benefits in US economic growth since 1980 have gone to the top 5% of Americans.
Flat or declining real wages and stagnant incomes for the past 40 years have eroded their purchasing power and their lack of access to free healthcare and tertiary education have stymied their social-economic mobility. 7 Significant amount of people without pension or health insurance. Half of all American have less than $10,000 in retirement savings and half of the oldest Baby Boomers are at risk of not having enough resources to pay basic retirement expenses and healthcare. Only one out of five persons working in the private sector has pension and health insurance. 18 House and mortgage crisis.
One widely shared value, especially by the middle classes, has been the dream of home ownership-it is seen as a sign of wealth, a mainstay of economic stability and a symbol of the buy-in by the lower classes for ere market capitalism & private property rights. Cost of living. Consumers are paying more for basic necessities such as food, fuel, medical care, college tuition. As baby boomers begin to retire, medical costs are rising much faster than inflation. As a result, spending on health care programs such as Medicare and Medicaid and on Social Security will increase at unsustainable rates. 9 Political stagnation. The present partisan politics in the US political system has required most legislation passing through the US Senate now requires sixty votes to pass-so a small minority can more easily frustrate the desires of the majority. This has increasingly resulted in Congressional gridlock where major legislation goes into the US House of Representatives only to die. 20 Policy Recommendations for next five years: The SOOT analysis suggests four major policy recommendations over the next five years to improve the position of the USA. 1 .
Despite the troublesome trends Just discussed in the SOOT analysis it is clear that the U. S. Economy’s recession is underpinned by a collapse in households’ and businesses’ demand for goods and services, not a collapse in the ability to supply these goods and services. The consumer driven economy has stopped consuming. The burst of the housing bubble erased wealth from homeowners. A pullback in consumer spending (households spent less because they were much less wealthy) and construction (companies stopped building, as even their existing inventory could not be sold) this cascaded throughout the rest of the economy.
Businesses stopped existing capacity, they did not need to invest in increased capacity. Credit became a thing of the past as businesses and households to hoard liquid assets at the expense of consumption. Policymakers need put more money back into the hands of the consumers and create policies that restore confidence in the economy so consumers to only have the money to spend but the will to spend. 2. There is a need to get the people back to work; policymakers have to created policies that encourage the re-shilling of the unemployed to better capture the Jobs being demanded by the market (science and technology).
Policies that increase aggregate demand should be brought to the fore over next five years. This means targeting the small business with all possible assistance to finance Job-creating investments and safety net spending. 3. Policymakers need to reduce deficits spending to manageable level and find ways ease the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt.
This can be done by reducing the US trade deficit with its trading partners, especially China. 4. While I am not sure there will ever be a policy recommendation that can solve the political stagnation problem within the next five years. There is a need for bi-partisan politics in the US and a concerted effort by the political masters to get something done in Congress that will propel the US forward.