Should the U.S. Disguise Itself As An Emerging Market?

by Bob Schwartz

The term “emerging market” was coined in 1981 by Antoine van Agtmael. According to the Economist:

He was trying to start a “Third-World Equity Fund” to invest in developing-country shares, but his efforts to attract money were being constantly rebuffed. “Racking my brain, at last I came up with a term that sounded more positive and invigorating: emerging markets. ‘Third world’ suggested stagnation; ‘emerging markets’ suggested progress, uplift and dynamism.”

The term stuck, but like many neologisms, its meaning has expanded and shifted according to the times. The Economist suggests that it has outlived its usefulness:

Is it time to retire the phrase “emerging markets”? Many of the people interviewed for this special report think so. Surely South Korea, with sophisticated companies such as Samsung, has fully emerged by now. And China already has the world’s fourth-largest economy.

Whatever they are called, emerging markets continue to be prime targets for investment, with clear risks but enormous upside potential.

The U.S. is having problems getting investors to loosen their purse strings and flood our businesses with cash. Our economy is long past and beyond emerging; the perception among some is that it is post-post-emerged, which is to say a little old and over the hill.

That is a perception, not a reality, but perceptions matter as much in investment as elsewhere. So let us change the perception.

The proposal is to declare the U.S. an emerging market. There is a huge underclass just waiting for the means and opportunity to take their place in the middle. There is a middle class with upside potential of its own: although that potential is due to its having receded recently, potential is still potential.

Will investors be fooled by such a trick, what amounts to a name change and disguise? It wouldn’t be the first time. Anyway, as Antoine van Agtmael might say, “emerging market” sounds more positive and invigorating than “mired in recession.”