I think Canada could have the highest GDP per capita in the world in some time...if they get over the Seperatist B.S. and stop their protectionism.
Why do I bring up Canada in a discussion about the states? Because Canada is better positioned as a developed country in a free trading world, despite being too socialist for many. Canada has so much more human capital PER CAPITA. Everyone has a degree in engineering, finance, accounting, chemistry, etc. and the universities are much better ON AVERAGE. The very smartest people are in the U.S., no question. But the median person in Canada is a million times smarter. I have only lived in Canada for 2 years, so this isnt Canadian pride or anything.
And, Canada benefits from a massive trade surplus with the states. The oil sands sure help with that one. So, Canada has the old world inputs, plus the human capital to develop it. I am in Chile right now, and many of the smartest engineers are trying to become citizens in Canada. The taxes are not a detterent.
The U.S. has two problems, resulting from free trade: a current account deficit, and a population unable to make the transition to a knowledge based economy. Free markets will never take care of investment in human capital. People, left to their own devices, under invest in RELEVANT education. We are always left with less than socially optimal amounts of human capital. Why? Because people game the system, taking advanatge of assymetric information, and creating false signals by getting business degress from 4th tier crap schools. These people have no real skill, and American society misalocates resources to educate and pay salaries for people who have not added any value. You have to have collective incentives for people to get competitive, hard science based educations. Again, with free markets for education, you have a game theoretic problem where people self optimize without cooperation, and the equlibrium pay off leaves everyone worse off.
