.
Chances are that if you currently
reside in the US, Canada, Australia, South Africa, Brazil, Argentina
and host of other countries, someone somewhere in your family tree came
from someplace else. Which is to explain that unless you are a
native Indian or hail from a local aboriginal tribe, there was a
parent, grand-parent or great grand-parent in your family tree that
decided to relocate for better opportunities, or a better life,
whatever that may entail.
.
The point of all
this is to suggest that today, we will make the argument that perhaps
some of the same forces that prevailed perhaps 100 or 200 years ago are
at work once again, in 2011, changing the economic and political
dynamics of the world we currently live in. Those forces of change
already have, and will continue to, create both new economic winners
and losers, new emerging countries poised to become the next economic
powerhouses, and of course countries that were considered to be on top
to now see their pecking order knocked down a few notches as well..
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Although
some
people
may
feel
uncomfortable
about
all this, the truth is that
change is going to come, regardless if we like to see it happen or
not. As such, the trick is to embrace such changes, know what
those change are, and profit from them. And in addition,
these changes
will force new immigration trends, whereby citizens from one set or
group of countries will start to migrate to another. In fact,
this has already started.
.
First,
let
us
start
off
with
the
countries that will be knocked out of first
place, or the top ten, if you prefer. Just as with baseball or
soccer, no one stays on top each and every year forever. Some new
team is going to rise up and take their place in the victory circle,
and this applies to nations and economies as well. And this is
exactly one of the profound changes we are witnessing at the moment,
which will play itself out over the coming decades.
.
The
most
drastic
and
notable
changes
will
occur (and are occurring) in the
group of nations formally considered to be the wealthy, industrialized
and advanced collection of countries in North America and Western
Europe (and of course Japan can be added to this list as well).
All of these nations have already had a brewing storm of demographics
and deteriorating economics working against them, and now of course the
current economic crisis just adds even another layer on top of that.
.
In
terms
of
the
first
two
items,
all of these nations have a problem of an
extremely large number of aging citizens who are now ready to retire
and tap into the various social welfare programs that exist (government
pension programs, such as social security, and government health care
insurance for the elderly as well). The problem of course is that all
of these programs exist as so-called pay-as-you -go financed plans,
whereby current tax-payers putting money into the system were (are)
supporting those currently taking benefits out. Just like a Ponzi
Scheme, this only works if you have more and more new people paying in,
as compared to those taking money out. The clear problem then is,
the generation coming up behind the Baby-Boomers (that demographic
group currently aging and retiring) who will now support the old folks
drawing a check, is much, much smaller. And as a result of that,
the financial burden per worker paying in, much greater, per person as
well. In other words, the social welfare Ponzi Scheme is
collapsing.
.
However,
you
might
think
that
a
larger
number of workers retiring with a much
smaller number of workers to replace them would mean that the younger
generation should experience full employment, with possibly higher
wages due to demand – and under normal circumstances, you would be
correct. But, that is not the case for today's younger generation
in these wealthy, modern countries because of the global outsourcing
and off-shoring phenomenon. Which is to explain, domestic
companies in the US and Western Europe as well have been moving the
factories and the jobs abroad to lower wage (and highly populated)
emerging market countries. This is not new news to you, but the
result is, a young person in the United States graduating with a
university degree in computer programing is not competing with one of
his peers in another part of the US for his first job, but rather he is
competing with a person from Bangalore, India with a Doctorate degree
willing to work for half or less. This is the reality of the
current state of affairs and one reason why the unemployment rate in
the US and Europe is so high (there are other factors as well).
Of course, just to backtrack a bit, all of this started with the
manufacturing jobs being moved abroad and now that same thing is
happening with white collar jobs or professions also.
.
This
leads
to
the
economic
problems
or
better said, revenue imbalances, that
is occurring in such countries in terms of payroll tax and welfare
benefit contribution taxes. Which is to explain that a lower
number of people in the working age population means higher tax burdens
to support the same and ever increasing government social welfare
expenditures, AND when we couple that with the fact that the jobs have
gone abroad, this all results in higher unemployment as well. In
brief, what should be a boom time, employment wise, for today's younger
generation (even though their taxes may be higher than their parents)
is now a bust. And with less government revenue coming in to pay
for all the promises made, we are seeing governments foolishly
borrowing money (usually from foreigners, with the exception of the
Japanese) to cover the government revenue short-fall, which is already
creating another set of problems.
.
Now,
to
contrast
all
this,
who
are
the up and coming nations and why?
Plainly stated, the so-called emerging or developing market nations
(that were also previously called Third World in the past) that do not
have such aging population imbalances, nor expensive and expansive
government social welfare programs, nor any mortgage – housing industry
problems either. Of course this is not to say it is all sunshine
and champagne in many of these developing countries either. Surely they
have a number of problems of their own, and one of the major challenges
going forward will be managing the GDP growth and also the employment
situation for a very large and fairly young population. However,
with
that said, we are generically speaking about nations that: have
superior economic growth trends (5 to 12 percent annually), that are
experiencing an exponential growth in their middle class (and this is
why foreign companies are beating down the door to get in and open new
stores), that are the recipients of many of the manufacturing and other
kinds of jobs being outsourced from the so-called First World
countries, and are countries that do not have real estate and or
related
consumer mortgage problems, In addition, such developing nations
are now also attracting well healed
middle class migrants coming from North America and Europe (who are
trying to escape the higher taxes, bankrupt social welfare nations they
are leaving behind). What this means is, aside from everything we
just mentioned, these same countries are getting the best and brightest
from the so-called First World countries, adding new talented people
and entrepeuners to the local market.
.
All
of
this
leads
us
to
answer
the question: Who are the new immigrants or
expatriates specifically and why are heading for the developing or
emerging market
countries? Well, there are two groups in fact that make up this cohort
of new migrants leaving the supposedly wealthy nations (countries that
are really not wealthy any more) and heading to the developing or
emerging market countries. One group is in fact the retired or
near retired. In other words, the Baby-Boomers who are trying to
find someplace where their retirement income goes further, whereby cost
of living is less expensive (not to mention private medical care as
just one area), and otherwise to get away from the looming social
problems back home. But for the most part, this group is somewhat
solvent and are not seeking employment or work (these are people that
have some savings to invest, can probably purchase a home for cash in
the new country, etcetera).
.
The
other
group
are
the
25
to
45 year olds, looking for work or business
opportunities, and otherwise, simply attempting to escape from the
higher taxes and bankrupt welfare states they know they will witness
before they reach retirement age. In addition, such persons
naturally are looking for lower cost of living, lower education costs
for their children and better standard of living as well. Of
course, this group can be subdivided with the most at risk being the
younger people who do not have any savings or assets to start off with
that are merely looking for work or employment. The other older
segment in contrast would tend to be people that perhaps own their own
small business, do have some savings and assets, and in fact might even
be someone with an on-line or other kind of business that could be
conducted anywhere. Think on-line retailers, travel agents, other
kinds of agents (talent agents for example), consultants, computer
programmers, authors, etcetera. In fact, simply by moving to
another country, in terms of operating your business, could mean a
substantial tax savings by that action alone (not to mention perhaps
lower labor costs, etc.).
.
In any event, the final point is that regardless of the age group or
reason, it certainly is true that many people have found both economic
and other kinds of freedom abroad, and particularly in many of the
emerging or developing markets that have been speaking about (and
the
Dominican Republic as well). While making such a move is often a
difficult decision, it really is no different from the grand-parents or
great-grand parents of some people, that had made the choice to seek
out a better life elsewhere perhaps 100 or so years ago. The only
differences today are the destinations.
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