We were told that business was relying on increased consumer spending over Christmas to boost the economy.

So we were told – by commentators with little or no first hand experience of commerce. Those of us who have been in business for more than a year or two know that an extravagant Christmas means an austere New Year – or, sometimes, vice versa. There is never something for nothing in economics. Simply waiting for consumers to spend more ignores the fact that their resources are finite. If they go beyond their limits, there is a price to be paid later – and if business profits from their self-indulgence, it must also pay its share of that price. That is basically why our economy is now so weak: we partied for more than a decade and now the bill has arrived.

More importantly, just hoping that consumers acting stupidly will solve their problems for them distracts businesses from trying to solve those problems.

There are two sides to economics, supply and demand. Most media commentary focuses on the demand side, consumer spending. Politicians are also obsessed with it because everyone is a consumer but only a minority are suppliers – and, in our materialistic democracy, high consumption is equated with happy voters.

Yet many of the problems in the West in particular – especially Europe, Britain, and the United States – are due to a failure to address the supply side. During the party years of high demand, the money kept on flowing – much of it borrowed but no one cared so long as it kept coming. Structural inefficiencies were increasing, but they were tolerated because no one wanted to be the party-pooper.

Now the cheap money is gone and we find ourselves in a far more competitive world, and the West is at a disadvantage. Much of our leadership is short-sighted. Executives are largely untrained and come out of university with unrealistic attitudes. Directors often pay themselves too much relative to their results. Workers in Britain and America in particular are poorly educated. Unions still impose restrictive practices. Government adds to costs, increasing risks and decreasing rewards, through excessive taxation and regulation.

Western businesses need to stop waiting for the next one-off spending spree and knuckle down to the hard, unpleasant, unpopular work of restoring their competitiveness.

Friday is 11/11/11 – for once a date that works in the American date format as well as that used by the wider world, for whom 9/11 technically means the 9^th of November). Childish it might be, but many of us will not be able to resist the temptation of purposefully using the date somewhere, even if just for posterity, perhaps by writing out that increasingly archaic financial instrument, a cheque (or check in the American spelling).

Friday is also the day when veterans are honoured in the United States, and those who died in war are remembered in a number of other countries of “the developed world” – an expression that seems almost as increasingly dated as a cheque – including Britain, France, Canada, Australia, and New Zealand.

So it seems a fitting moment to pause and reflect. Could those who have died for those countries over the last hundred years have predicted the world we have today? Would they have approved of it? Would they be disappointed?

Perhaps if a Canadian or an Australian or a New Zealander from 1911 could have looked forward in time he would have been pleased to see his country today prosperous, dynamic, and fully independent. However, a patriotic American, Briton, or Frenchman of 1911 – or 1941, or 1961, or 1991, or even 2001 – might be quite shocked to see how much his country has declined in power and prestige.

Globalisation is a fact. The world is no longer the exclusive preserve of a handful of major powers run by white men. This is a right and necessary change.

What is neither right nor necessary is the crisis of confidence into which the old major powers have plunged as a result of this desirable development. For some years now, the United States, the United Kingdom, and the European Union have been living on borrowed money and the memories of past glories. Now both are drying up, and the West is drifting, lost and leaderless, in an unfamiliar world.

It is not too late to turn things around. The 1960s and 70s saw a similar loss of confidence and direction. Yet new leaders were found and old values revived, the Cold War was won with remarkably little violence, and the West went on to enjoy a prolonged period of peace and prosperity.

It could happen again, but only if we find leaders who are prepared to admit there are problems and face up to the challenge of making American, British, and European businesses competitive in the truly global economy we now enjoy. The world offers greater opportunities than ever – but only to those who understand that it has changed.

Businesses around the world – not just in America – are concerned about the continuing listlessness of the US economy.

This is one area where “Change” really is necessary. Yet Tuesday’s elections exposed how vacuous that word has become. It was Barack Obama’s slogan in 2008 – but this year it was the Republicans who were using it. Of course, what Mr Obama meant by “Change” and what the Republicans mean by the same word are two very different things, but what really matters to those of us who have to deal with the practical consequences is that major change of any sort is unlikely for the next two years.

Here are the hard facts. If the Republicans, who now control the House of Representatives, try to implement their idea of “Change”, it will be squashed by President Obama, who has power of veto, and by his Democratic allies who still control the Senate. If, on the other hand, Mr Obama still wants to push his own idea of “Change”, it is most unlikely to get through the Republican House.

It would be nice to think that this might encourage Mr Obama and the Republicans to work together for the common good. President Reagan was often able to charm Democratic Congressmen to vote his way in the 1980s, and President Clinton worked well with the Republicans on deficit reduction and welfare reform in the 1990s. However, there is little inter-party goodwill left in Washington these days. Whatever the rights and wrongs of the way Mr Obama rammed healthcare reform through Congress, it left him with no friends on the Republican side.

The irony is that all this might help Mr Obama. President Clinton faced a similar situation in 1994: after a disastrous start to his Administration, he lost control of Congress to the Republicans – and thereby saved his Presidency. A hostile Congress forced him to the political centre – where his Administration became more successful – while simultaneously giving him someone to blame. His party’s defeat in 1994 led directly to his own re-election in 1996.

Tuesday’s result has therefore made Mr Obama’s re-election more likely in 2012. However, unless he comes to a second term with a new economic agenda, real “Change” will be delayed for another four years. In the meantime, America’s enterprise culture will probably deliver a degree of recovery – in spite of the government rather than because of it: at least the squabbling among the politicians will mean they will have less chance to make things worse. However, all that time America will be losing her competitiveness, and the shift of global economic power across the Pacific will continue.