At the risk of sounding like an investment advisor rather than the estate planning attorney that I am, I would like to examine the gloom and doom statements that we all hear so often in the news and from other media outlets. We hear that we should invest in emerging markets rather than in American companies, and that our country has passed its zenith and is headed toward economic collapse at the expense of other more progressive powers.

 I take issue with these statements – and would suggest when meeting with your financial planners that you consider a little history that doesn’t seem to get as much attention. Allow me to explain.

 We’ve all heard that China is the up and coming power – ready to overtake America. While it’s true that our country is taking on too much debt currently funded by the Chinese, I’m not so quick to believe this means an imminent shift in world economic power.

 Take the Google versus China drama playing out in the news today. The Chinese Communist regime wants Google to self-censor any politically threatening content that comes into China. Google’s reaction was to move its China operations off-shore from the mainland, vowing to continue to send uncensored content into China.

 I think this demonstrates a variety of “big picture” points that merit attention. First, China is going to have increasing difficulty in controlling the information that its citizens access – which will over time threaten its current political system. Second, it shows us that economic systems will rule over political systems in today’s world and economy. This bodes well for America.

 China’s central preoccupation is to protect its ruling elite. Most governments operate that way, even our own. But the difference is that China’s entire economy is ruled by its government. As the people become more empowered, the decisions of this centralized leadership will continually come into question. While urban areas like Beijing and Shanghai boast modern airports and telecommunications, if you move one hundred miles from the Chinese coast you’ll find agricultural scenes that mimic those you would have seen several hundred years ago. They’re not as progressive as the media makes them out to be.

 Where China finds itself today is much where the United States was in the 1950s –at the zenith of its industrial/manufacturing economy. Low wages, no benefits and an ample supply of workers provide the engine to China’s current manufacturing prowess. The fight with Google demonstrates that China is best at copying others, and has little or no capability in promoting innovation or in following the United States into the new technological economy. That is where the future lies.

 Google and the new technological economy will win this fight over China – demonstrating that it is the new technological economy that will prevail over the old manufacturing economy – particularly one that is state controlled and weighed to favor the ruling elite.

 At the other end of the spectrum is the Euro. We’ve all witnessed the euro’s heights against the value of the American dollar – allowing some to call into question whether the Euro should be the new world currency. If this were to happen it could foretell America’s fall from world economic supremacy.

 Before you tell your broker to invest in all things Euro, consider the writings of Gerald Warner of the Daily Telegraph. He states, “The European experiment has failed and is only artificially being kept alive on a life-support system of taxpayer funded bailouts. The euro is now a zombie currency…a synthetic European super-state is showing its non-viability and moribundity through the implosion of its currency.”

 His writings reflect recent European problems, including Greece’s economic turmoil, France raising its retirement age two years from 60 to 62 – the prospect of which brought about workforce strikes – and similar problems in Spain. Clearly Europe has a lot of work to do before its currency becomes the world’s safest.

 It reminds me somewhat of what we’ve read over the course of the last several decades. In the 1960s “global communism” was America’s greatest threat – not only politically but economically. Russia and China’s combined power was predicted to overwhelm our economy – particularly with Russia’s extraordinary fuel reserves and steel production capabilities. While the pundits made these predictions – Marxist communism was already in sharp decline – eventually toppled in the 1990s.

 In the 1980s we feared that Japan was going to own the world. I recall hysterical articles about Japanese investors purchasing landmark buildings around our country. Newspapers and magazines published essays lamenting that our children were falling behind those in Japan. All of this was just before Japan fell into a two decade state of stagnation from which it hasn’t returned.

 We read about the European super-state in the 1990s. As I point out above – the European welfare states are collapsing – their welfare and pension promises must be changed or else those countries will fall into bankruptcy.

 Is everything rosy then, in America? We all know the truth there. But our danger appears to be from within – not from without. We clearly cannot spend as we have over the course of the past several decades. Our voting public must wise up to the fact that you can’t get something for nothing – and hold our elected representatives to a higher standard.

 While I believe that low taxes spur economic growth and productivity – something’s going to have to give somewhere. And that’s where this all ties into your estate and financial planning. When talking to your advisors ask for their take on the global picture. Don’t focus on current media hysterics. The media’s been wrong before and they are likely wrong today.

 ©2010 Craig R. Hersch