Wealth distribution critical to US economy

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Source:Global Times Published

The US economy is performing steadily. The country’s production remains solid – especially in the technology sector – fortunes are gathering and asset prices are expected to continue rising. However, the real challenge facing the US economy today is wealth distribution. As the debt levels of all classes continue to mount, more money needs to be given to the country’s people in order to maintain the economic growth of consumption power.

The debt levels of US families and the country’s younger generations have seen significant growth despite tighter reins from the government. Allowances have been given to families for housing and decorating, and pension allowances have been given to seniors. But these measures have not proved effective – social dissatisfaction is evident, and the influence of populism has risen sharply.

US President Donald Trump’s success in the 2016 election was only the beginning, and whether or not he can succeed in his re-election bid is now in question. The outcome of the 2020 presidential race, however, will barely influence the US’ economic situation going forward. No matter who takes office, they will need to resolve the existing problems in the country’s wealth-distribution system, and the best solution to these problems is the promotion of reforms to provide universal healthcare.

Universal healthcare is important to the future US economy as it is not only critical for society and politics, but it will also have a broad influence on the nation’s economy and finance.

A closer look at the wealth structure of US families reveals that housing, commuting, food, insurance, pension and medical care account for majority of total expenditure – and the last three all relate to healthcare. That’s why universal healthcare is the priority when it comes to optimizing the wealth structure of US families.

Furthermore, the insurance industry is a significant pillar of the US’ financial sector. The healthcare issue has a direct influence on the insurance industry’s revenues, and may lead to major reform in the current financial system. That’s why Wall Street is closely following the Democratic performance in the 2020 election, given that it is the Democrats who are waving the universal healthcare banner.

Younger generations in the US, most obviously represented by university students, tend to support the Democratic stance on the healthcare issue. The US is one of the few major economies in the world that doesn’t have a system of universal healthcare, thus the trend is expected to eventually become a reality.

How will such a revolution influence US society, particularly in the long run? This is a question that needs to be answered prudently. The 2020 election may attract more attention to the issue. A universal healthcare system may be established if the Democrats take office. Such a change would have an impact on Wall Street, which may lead to the depreciation of the US dollar and instigate a buying frenzy for bonds. An infrastructure-construction boom may follow, and economic and industrial restructuring could be at its heels.

A significant reform like the introduction of universal healthcare may bring uncertainty to the US’ society and industries. During the transformation, an economic crisis and financial crisis may take place, causing shocks to some extent. But the overall situation is not likely to be influenced because, for the US, it’s just a fortune-reallocation process – another boost to its consumption.

How would such a political process and reform take place in the US? Will the process cause a meltdown of the US economy, dragging down the US’ global status? Analysis shows that it is more likely to go to in the opposite direction; the US could consolidate its current global position.

First, the infrastructure boom could hedge the risks for Wall Street. This round of infrastructure construction will not be concerned with merely bridges and roads; it will be more technology-driven and include the construction of intelligent cities, healthcare benefits facilities, regional structure adjustments, and environmental investments and construction. Second, the introduction of universal healthcare will be a new round of wealth re-allocation, which will promote consumption, balance the investment-driven infrastructure boom and support the economy’s forward growth. Third, the US is a high-tech country; the realization of universal healthcare could be conducive to gathering more elite tech professionals so as to build up its edge in the global tech race.

The article was compiled based on a report by Beijing-based private strategic think tank Anbound. [email protected]

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