People who make long-term economic forecasts have a tendency to focus on strengths: China can mobilize a lot of money so it will become a superpower, the U.S. has a good climate for business so it will continue to dominate the world economy, and Europe is more egalitarian so it’ll get more bang for the buck. But perhaps we should look instead at the willingness of economies to remedy their shortcomings. China has to find ways to encourage entrepreneurship and address the massive disparities in education and wealth. Europe has to mobilize large amounts of money and make it easier for investors anywhere to bring inventions to the Single Market. The United States just has to quickly figure out ways to restore competition in tech, finance, health, and public education, so its redistribution systems are not strained.
So, who’s most likely to succeed during the next decade? My money is on the United States. Productivity growth will pick up again as businesses take advantage of new technologies, consumers will take home big price and quality gains, and policy types will stop fretting about fears of secular stagnation. If enough of the tax burden is shifted from labor to capital, the incomes of middle-income households will keep pace. Expect the United States to call the shots for the rest of the century.