Book Review – The 10 Rules of Successful Nations

Ruchir Sharma is the author of The 10 Rules of Successful Nations (2020). He is Chief Global Strategist and head of Emerging Markets Equity Team at Morgan Stanley Investment Management.

Sharma is a young man who manages $20 billion of assets, and already has two other books out: Breakout Nations: In Pursuit of the next Economics Miracles (2012) and The Rise and Fall of Nations: Forces of Change in a Post-Crisis World (2016)

Interviewed by Fareed Zakaria this past week, Sharma announced that when the COVID Crisis is contained, we, the United States, will not be among the top ten successful nations on his list—or even anywhere near it.

Given that Sharma’s first rule for a successful nation is “They fight population decline,” it isn’t surprising that we won’t be great again when this pandemic cools down.

It’s obvious that we are not fighting our population decline in the face of COVID-19. We are at the very top of the losers, with many of us gone and the health of millions of others diminishing every day more rapidly.

The Successful Nations

That said, let’s turn to what Ruchir Sharma emphasized to Fareed Zakaria when they talked on Fareed’s CNN’s weekend TV show Sunday.

Shama’s book’s table of contents opens with an Introduction about Impermanence, something that as a Taoist, I’m very interested in reading when I can get a copy of his new book.

His 10 categories for judging success follow: Population; Politics; Inequality; State Power; Geography; investment; Inflation; Currency; Debt; and Hype.

Yes Hype! Not the typical categories of an economics book are they?

Sharma feels that much written about the BRIC (Brazil, Russia, India, and China) nations is hype. And that emerging nations should not be lumped together. Each country should be viewed on its own.

This explains why in his new book Sharma has ranked nations’ GDP growth rates against each other over the past seven decades.

According to Wikipedia, in his first book, Breakout Nations, Sharma applied his framework to analyze the United States. Back in 2012 he felt the U.S. was going to be a “Comeback Nation.”

Sharma praised our paying down of debts faster than peer countries; the strength of our dollar; our technological innovation, the lowering of our energy costs with shale oil and gas, and our expected renaissance in manufacturing.

Sharma said that we had an Achilles heel, however. That was our rising government debt.

So, now in 2020, on Fareed’s CNN show, it’s easy to see why Ruchir chose to emphasize his Chapter 9, Debt.

The promise of each of those five good things we were planning on doing in 2012 has fizzled out like a dying firecracker on sand.

So Who Wins?

Ruchir noted that Germany is near the top of his top ten-growth countries-of the-decade lists that he began to create starting with the 1950s and ending with the 2010s.

At the very top of that fiear list are Iraq and Libya. In the following lists, we see are various countries around the glob making it into the top ten until 2020.

Unfortunately, nowhere over those past seven decades is the United States of America on ANY of Sharma’s lists.

Instead, we see names of nations like Italy, Japan, Austria and Greece, as well as Ethiopia, Namibia, Mongolia, Myanmar, Iran, Lithuania, and Kazakhstan, and many other countries we Americans know little about.

Why We Are No Longer a “Comeback Nation”

Sharma tossed out the reason for the ten national successful countries connected with DEBT over each decade with a very pithy phrase. “In good times these countries save, and in bad times they spend.”

Frankly, debt, in my opinion is what the United States government has flunked at over the entire past seventy years.

After wasting billions of dollars on stoking unwinable wars in Asia and the Middle East by leaders of both parties, Democrats have been consistently left to clean up our economy left in shambles by Republicans as our national elections see-saw back and forth between the two parties.

Only Bill Clinton balanced the budget in all those years. Most recently Barack Obama was left to fix the Great Recession created by his predecessor.

While creating stimulus back in the first decade of this century was a helpful thing, many of the wrong people got the money. And there were no consequences for those who made that recession happen. Now, this year that is still happening again.

Our oil wars with other countires ended with fracking for cheaper oil and gas, but the aging fossils in our Congress would not agree to finance free renewable energy sources.

Donald Trump, in this last decade, increased the damage by leaps and bounds by giving billionaires and millionaires huge tax cuts while the country and the Fed were still trying to recover from the gigantic recession of 2007-2008.

Throughout my entire lifetime there have been economic recessions almost ten to twelve years apart. Even if COVID-19 did not exist to launch this 2020 economic crisis, it probably would have been caused by something else.

Our Inactions are Catching Up With Us

Our pattern of not saving during good times, and using credit cards for non-necessities in good and bad times is coming to a head.

This pattern is fostered by a government that will not put caps on the interest rates that the so-called “credit” card corporations and banks can charge customers, while it stuffs money into the pockets of giant corporations with low-interest loans via low Fed rates.

This pattern is fostered by the increasing income inequality which our government creates through its spending sprees in good times and now in the bad times, with “pork” going via politicians to big corporations that do not take care of their employees with adequate protections against economics downturns.

It is fostered also by the attitude that if you are not rich you are worthless and if you are poor you deserved it.

It is fostered by the myth that the supply side of the economy are the makers of wealth even though that has been throughly debunked ever since Ronald Reagan’s death. Corporations are big HUGE TAKERS from our government coffers.

Moreover, at the beginning of this century, under a Republican controlled Congress, there was nothing of significance done by the Obama years to stop the bleeding that those of us worker/consumers experienced on both the supply and demand side after that economic crash.

While jobs became more plentiful under Donald Trump, wages and salaries did not increase. But prices of consumer goods did rise, and they skyrocketed higher when Trump declared his tariff wars on other countries.

It’s an outrage that our Government has been fueling income inequality by robbing the poor via taxation to pay the rich over this past seven decades. We’re now at the point where hundreds of millions of Americans’s wages and salaries have stagnated for so long that they are in danger of extinction by this virus.

We Americans are so caught up in our own dramas we cannot see that the rest of the world is pulling ahead of us, and that we will again lead the next Great Recession. Recently a Financial Times columnist forecast that the global tourism industry would set off that recession. We’ll see if that is case soon for us. We are one of the biggest tourist destinations in the world.

As to those who look back and turn into pillars of salt, they are kidding themselves. There never ever was a “normal” in America’s past.

Everything is changing now, and we can’t go back. There will be no “greatness” in our future if we stop demanding that things change for the better, and that they change faster, whatever that might cost. It’s time to fight back!


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