VOL. 127 | NO. 209 | Thursday, October 25, 2012
Rays of Wisdom
Dana and Ray Brandon
You Better Care About Global Economy
By Ray and Dana Brandon
Ray’s Take Most people tend to think provincially. We see and weigh what is closer to us more heavily than things and events that are further away. Americans in particular have long believed that what happens to the economies outside our borders doesn’t really affect us. The euro may be threatened and certain countries facing default, but we tend to believe that our economy is so massive and insulated that it won’t really bother us.
However, that’s not the case anymore. Our economy is tightly tied into the world’s. In fact, international transactions account for more than 30 percent of our total output. Our Fortune 500 companies get half their revenues from international operations, and foreign capital stakes a significant investment in domestic entities.
Our global economic involvement is a two-edged sword: it has enriched the U.S. more than a trillion dollars each year, yet nearly a half million American workers lose their jobs at least temporarily annually. So, while international commerce has many benefits – we love low prices at Walmart – it has also brought individual pain.
Regardless, any crisis in the global economy directly threatens American companies – not just their profitability but also their employees. Our exports would decrease, which would create a negative ripple effect throughout our own economy. Foreign investment here would diminish simply because there wouldn’t be as much capital to invest. Less confidence in the global economy – and the European Union is of particular concern – means less spending and investing all around the globe.
We might like to think that we’re insulated from the rest of the world, but we’re all in this together. So be aware of what is happening to economies beyond our shores.
The United States is still the leader of the global economy, but the continuation of our economic strength and influence doesn’t just depend on what we do here. For better or worse, our economy is intertwined with that of the rest of the world. In this day and age, no one “goes it alone” and thrives.
Dana’s Take For two decades my sister has worked as an accountant for a company whose name begins with the word “American.” A few years ago her company was purchased by a business in Singapore. Now, her boss and the accounting team speak Chinese.
How do we prepare our children for this global marketplace? Start small by exposing kids to international foods and sports with global appeal, like soccer. Invite friends from other cultures to your home. Friendship is the shortest route to understanding.
Take it up a notch by hosting a foreign exchange student. When planning a family vacation consider far-flung spots like India or Thailand. A college student’s junior year abroad could be in a city outside of the EU, like Hong Kong or Sao Paulo.
Opening our kids’ eyes to the world will position them to adapt and succeed.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.