India and China will catch the US in GDP, but GDP per capita they are not even close

Just goes to show that the US still counts where it matters most, in improving the lives of its people. Right now, the US seems to be afraid of the India/China bogeyman who will overtake us economically.

It is true that India and China will necessarily catch up with the United States in terms of GDP. They have three or four times the people, they better. However, in terms of GDP per capita, there is no telling when they will catch up. I would venture to guess it wouldn't be for another 40 years if they were to flower into a completely lassiez faire capitalist society. Currently, they enjoy, by many accounts, much less economic freedom than the US. Via Reason:

A 2005 World Bank study found that the bulk of a people’s wealth comes not from tangible capital like raw resources and infrastructure. It comes from intangible wealth: effective government, secure property rights, a functioning judiciary. Such intangible factors put the equivalent of $418,000 at the disposal of every American resident. India and China? $3,738 and $4,208 respectively.

America’s vast intangible wealth makes everyone more productive and successful. Personal attributes—talent, looks, smarts—matter only on the margins. Having witnessed the life trajectory of many Indian immigrants, what’s striking to me is that, with some exceptions, it doesn’t matter whether they are the best in their profession in India or just mediocre. Within 10 to 15 years of arriving, they land in a very similar space. They get good jobs, buy homes, have children, send them to decent schools and colleges and save for their retirement. The differences in their standard of living would have been far greater had they stayed home.


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