Economies with foresight

Some countries, living within their means, have avoided the worst of the West’s recession.

by Hadley Gustin

Abandoned houses, unemployed street wanderers, businesses failing and closing their doors: Ordinarily, these would be the high signs of an impoverished and peripheral nation. However, in todayâÄôs world, this description is no longer exclusive to third world countries; instead, it characterizes states such as Germany, France, the United Kingdom and the worldâÄôs most powerful nation, the United States. This is not to say that the appearance of socio-economic desperation is static and uniform. Many witnessed the aftermath of the excruciating destruction in Haiti last week and as a result, saw the great divide between standards of life in an underprivileged country and those in a prosperous one. Now that the high and mighty financial institutions of the West have largely collapsed, the problem of poverty is growing and becoming more pronounced in the wealthiest of societies. In 2009, the rate of unemployment in the United States soared, beginning at 7.7 percent and closing at 10 percent. Nearly 3 million American homes went into foreclosure last year, more than three times as many as in 2005. Consumer bankruptcies rose 32 percent, but business fared even worse, filing 39 percent more bankruptcies than in 2008. In Minneapolis, unemployment was at 7 percent in November. Last year, the number of anticipated foreclosures reported by the city of Minneapolis remained fairly steady at 3,000, and the number of recorded consumer bankruptcies in Minnesota was 21,304. Despite the incessant fanfare from mainstream media, touting that the worst of this catastrophic recession is over, the data show that more citizens are losing their homes, their jobs, their establishments and their status as middle class Americans. What, then, should be this countryâÄôs greatest priority? Is it winning both wars in Iraq and Afghanistan, or bailing out banks that have betrayed the global population with their duplicity and greed? No. Currently, at the height of all of this pecuniary stress and tension, America must look outside itself to smaller, less tarnished nations as examples of how to effectively manage credit. The old clichés âÄúDonâÄôt count your chickens before they hatch,âÄù âÄúA penny saved is a penny earnedâÄù and âÄúDonâÄôt bite off more than you can chewâÄù could not be more contemporarily relevant. For decades, Americans have lived their lives in excess, and this simple fact is the root cause of this nationâÄôs economic crisis. By adopting the various socio-economic strategies of countries that have avoided the financial fray to a large extent, constituents in the U.S. will truly begin to rebuild their economy and the mores that led them to overindulge. One of the best examples of an under-the-radar success story is Slovenia, a small state of 2 million people in central Europe. A young sovereign republic, Slovenia, formerly part of Yugoslavia, has been a leader in forging economic success mainly by living under a sustainable debt-to-income ratio. As written by the CIA, âÄúIn March 2004, Slovenia became the first transition economy to graduate from borrower status to donor partner at the World Bank.âÄù This is perhaps the largest difference between the U.S. and the Republic of Slovenia. While the American public continues to consume exorbitantly, falling ever deeper into debt, Slovenes are far more frugal and tend to make decisions based on real value, not speculation. A recent development in Slovenia is the Agency for Co-operation of Energy Regulators. According to President Danilo Turk, âÄúSlovenia will become a transit country for gas,âÄù paving the way for a lucrative future in the energy market. Couple that with the fact that this nation has an economy âÄúdoing too well to take on drastic and painful reformsâÄù in the words of a top Slovene economist, and it is apparent how this fledgling state has the wherewithal to avoid the chaos created by the globeâÄôs biggest economies. Qatar is also a nation-state with the means to sustain itself during these difficult financial times. Reuters stated that âÄúQatarâÄôs economy grew 11 percent in 2009, mainly due to its natural gas sector.âÄù Not surprisingly, it is in the process of solidifying ties with Slovenia to transport gas through the Balkans. However, the basic principle of QatarâÄôs economic resilience resembles that of Slovenia. In the end, it is all about having a GDP that can support the national debt. Australia also demonstrates this lesson very well. In December 2009, âÄúthe Australian economy created 35,200 jobs,âÄù according to the Wall Street Journal, and unemployment fell to a miraculous 5.5 percent as affirmed by the Canadian Press. On the whole, as Australians witnessed the extreme effects of the global recession on the U.S. and the U.K., they immediately began to cut spending. If we as Americans can own up to anything in this politically and fiscally tumultuous period, it is the fact that we have been living beyond our means for quite some time. The federal government obviously has no intention of reducing costs as they continue to fund multiple wars and overseas endeavors. Therefore, it is up to us, the youth of America, who are so heavily vested in this countryâÄôs future advancement, to restrain ourselves from gluttony and finally learn to live with less. Hadley Gustin welcomes comments at [email protected]