The Next Generation and Standards of Living - Essay Example

Will the next generation have a higher or lower standard of living? How and why? Introduction The United s (U.S is one of the biggest countries in the world. Its standard of living is higher over most of the countries. It is in this reason that the U.S. standard of living has become the global standard for so many years and even until now. As a developed country, the U.S. always aims to promote quality and standard of living for its people. It is in this reason that there is a need to try to take a look at the objective of the state to know if there is consistency of it based on the past. It is in this reason that the proponent of this paper tries to create a conceptual prediction of the country’s future especially on its next generation’s standard of living. Predicting the U.S.’s standard of living in the future is therefore based on the past and its current standard of living. However, prior to anticipating what to come in the future, it is also important to know how exactly to evaluate the standard of living of a nation in general. This is also emphasized in the paper. Yardsticks of the standard of living In Western Nations particularly in the United States, the standard of living is moving to an upward spiral trend. It is quite simple to believe on this. However, there must be enough bases prior to believing on this. It is good to consider how exactly to measure standard of living. Household income and expenditures per capita plus own production can be essential yardsticks for measuring standard of living; however such should be included with health, life expectancy, literacy, and access to public goods or common property resources (World Bank, par. 5). Mostly, all of these yardsticks for the standard of living are commonly used in measuring the country’s standard of living. A country with high household income and expenditure but receiving poor health system, can be considered having poor quality of living. In the same way, a higher literacy rate does not necessarily imply that the country has high quality of living. In fact, even if there is higher literacy rate, but the life expectancy rate is shorter, then there must be an implication that there is an existing poor quality of living. Even though it is not a perfect measure of the cost of living, price index can also try to gauge the cost of living (Mankiw, 298). There are many noted disadvantages about price index and this only implies that it cannot be the best tool to gauge the existing standard of living of the country. However, because of some of its important economic implications, at some point there is remarkably significant connection between price index and the standard of living. In 2006, average Americans have an income of $44,260, $11,410 for Mexicans and &1,050 for Nigerian. According to Mankiw (100), this is due to the fact that the standard of living is due to country’s ability to produce goods and services. Thus, in the United States alone, the country’s income is growing up to two percent per year and it takes 35 years to double this income. From an economic perspective, it makes sense to measure country’s standard of living based on its ability to produce goods and services. This is evident not only in the U.S. but in other highly developed countries such as Japan, UK and other European countries. Most of these countries have the ability to produce goods and services and in the long run have gained considerable amount of investment return. It is clear that there are different ways on how to measure the country’s standard of living. With this, it is important to consider that it is not substantially enough to use only one tool for the measurement of standard of living. There are gauges that can be combined together that eventually will show the right information on the country’s prevailing standard of living condition. These gauges can be based on the basic needs of human being prior to his comfort and survival. After all, people mostly see the basic needs in life and these include access to material goods and services, health, socioeconomic considerations, fluidity, education, inequality, political and religious freedom and climate (Steckel, par. 3). Standard of living in the U.S. The most common and if not the most obvious gauge of the standard of living are the material aspects. Gross Domestic Product (GDP) per person is commonly used measure of the material aspects of standard of living which is usually adjusted based on the level of inflation and deflation (Steckel, par. 5). The GDP per capita in the U.S. from 1820 to 1998 and its annual growth rate from previous period are shown in Table 1 below. Table 1. GDP per capita in the United States (Steckel, 2002). It is clear that there is an upward spiral trend on the GDP per capita in the United States from year 1820 to year 1998. However, this does not automatically mean a positive progress knowing that the GDP per capita is based on the adjustment of changes of price level. Comparing the GDP per capita in 1820 with the GDP in 1998, the increase of figure is twenty one times. However, this does not mean that the year 1820 was less productive compared to the year 1998 or vice versa. As can be observed, the annual growth rate from previous period varies. The lesser annual growth rates from previous period were from between 1820 and 1870, and between 1913 and 1950. Historically, the year 1820 was the start of industrialization in the United States. During the 1930s, US suffered the Great Depression which was manifested by the decline of GDP per capita and loss of at least one fourth of employment. This is a clear manifestation that the US economic progress was uneven overtime (Steckel, par. 5). Another important measure of the standard of living is health. According to Steckel (par. 6) health is usually measured based on the average length of life and the average height that could indicate or measure the nutritional conditions in the years spent for growing. Table 2. Life Expectancy at Birth in the United States (Steckel, 2002). From the year 1850 the average life expectancy was 38.3 years and in the year 1998, the average life expectancy reached up to 76.7 years. The life expectancy trend of the U.S. was increasing. This was due to the fact that increased in medical researches and developments during this period of history in the U.S. were remarkable and even highly affordable. Many approaches were made that consulted scientific bases and evidences. The public was highly aware of scientific knowledge thus employing more advancement in western medicine. Shown in Table 3 are the average heights of native-born American men and women by year of birth from 1710 to 1970 (Steckel, par. 7). The heights of native-born Americans were increasing and this only implies that there level of nutritional conditions over the years have significantly increased. Table 3. Average heights of native-born American men and women. Future standard of living in the U.S. As history tells it all, the United States remarkably showed increase in the level of its standard of living. The life expectancy can tell it and even the state of health condition of every American through the level of nutritional condition they had over the years. Most importantly, on the material aspect, there was a remarkable growth at the average of 2% per year for GDP implying that the country has constant growth every year. However, it can also be stated that the country’s economic condition is at stake considering that the economic progress was uneven overtime. This means that the country has not yet reached a stable growth for its economy. The U.S. economy remarkably was placed in the cycle of rapid slowdown and variation starting in the year 2002. This is shown in Table 4. Globalization significantly placed the U.S. to the test where there are more willing participants to play into the one global market. Recently, it is not only the U.S. which is trying to play the greatest role in global market economy but more existing countries are trying to be on top. In particular, China has become one of the greatest rivals of the U.S. in modern economy of the 21st century. In fact, China has been pressured to consider valuation for its Renminbi (RMB) and in particular a demand to appreciate it is strongly urged by the U.S. The U.S. viewed China’s RMB as one of the main reasons of loss of its manufacturing jobs and general deflation (Yang & Besnainou, 106). In fact, even if China already declared flexible rate for its RMB and constant appreciation of its currency, it is still not enough to create direct and on-time effect for the U.S. economy to stabilize. As of August of this year, $28 billion was remarkably noted as US trade deficit with China (Bloomberg.com, par. 1). Table 4. United States – Real GDP growth rate (%) (Index Mundi, 2010). There was a direct association of trend between health and material aspects based on the past history of the U.S. This can be seen on how its economy performed while the health of the people continuously improved. The improvement was based on the improvement of medical conditions which was very affordable. However, today health policy in the U.S. suffered and in fact, continues debate was focused on its access, cost and quality (McLaughlin & McLaughlin, 5). The continuing slow down of the U.S. economy therefore can significantly create direct impact to the standard of living of the people in the country. If this trend of the country’s economy continues over the course of time, it is therefore expected that the standard of living in the U.S. will eventually decline within the rate at which the country survives right now. Bibliography Bloomberg.com. 15 Oct. 2010. China Says Japan in No Position to Criticize Yuan Policy After Surpluses. 20 Oct. 2010 . Index Mundi 2010. United States – Real GDP growth rate (%). 26 Oct. 2010 . Mankiw, Gregory N. Principles of Economics. 5th ed. USA: Cengage Learning, 2008. Mankiw, Gregory N. Principles of Macroeconomics. 5th ed. USA: Cengage Learning, 2008 McLaughlin, Curtis, P., and Craig D. McLaughlin. Health Policy Analysis: An Interdisciplinary Approach. USA: Jones and Bartlett, 2008. Slesnick, Denial. T. Living Standards in the United States: A Consumption-Based Approach. Washington, D. C., USA: American Enterprise Institute, 2008. Steckel, Richard H. 2002. A History of the Standard of Living in the United States. 26 Oct. 2010 . World Bank. World Bank Development Report: A World Bank Publication, Vol. 13. USA: World Bank Publications, 1990. Yang, Jiawen, and Isabelle B. Besnainou. “Is the Chinese Currency Undervalued?”. International Research Journal of Finance and Economics (2006): 106-30. Read More