Thread: Why is America so rich?

Originally Posted by Parihaka

oh oh please Sir, I'll pick 1991 (really 85 - 91)

Are you selecting what year the US became the hyperpower vice a superpower?

Originally Posted by Parihaka

oh oh please Sir, I'll pick 1991 (really 85 - 91)

I would call that rather the year in which the US became a Hyperpower, not a Superpower*

Superpower here defined by me as more or less a country that can influence, or even dominate to a degree events on the whole world and on a global scale.

If I had to make a pick for Superpoweryear it would be 41-45.

You say tomatoes, I say tomatoes. I'm selecting the time that the US became the undisputed world power, circa Britain 1870's.

Edit: O.K, I see there's clear recognized definitions, then 1944.

Well it is MY definition, which certainly does not have to be correct, but I would say there can only be one current Hyperpower, while there can be several Superpowers at any given time, as I would define a Hyperpower by being greatly more powerful then even the second most powerful nation.

Which again is just my personal definition, and not a "textbook definition".

Originally Posted by Tarek Morgen

Well it is MY definition, which certainly does not have to be correct, but I would say there can only be one current Hyperpower, while there can be several Superpowers at any given time, as I would define a Hyperpower by being greatly more powerful then even the second most powerful nation.

Which again is just my personal definition, and not a "textbook definition".

You're right.

Some food for thought.

The US was a top agriculture nation by the time of the American Civil War. The South thought that a self-imposed embargo on "King Cotton" would bring international recognition. It turned out that Britain needed grain from the North more.

Within a quarter of a century from the end of the American Civil War, the US was the top manufacturing nation in the world.

By the start of WWI, the US had the largest economy in the world; in fact, it was double the size of the next closest economy.

By the start of the Korean War, the US's economy was more than three times the size of the next closest economy.

Bottomline, by the time the Bretton Woods regime was essentially put into place, the United States was already a rich country.

Next, when we look at the actions of the United States during the course of the 28 years of Bretton Woods (as defined by the n-1 currency agreement, which has been the context of the "causality" of why the US is so rich), the United States pursued policies focused on growing other economies. The Marshall Plan, the defense of Europe and Japan so that those two economic regions could concentrate of recovery, is a prime example. The focus of the Truman and Eisenhower Administrations to balance the budget and pay off debt as possible certainly doesn't smack of living high off of any advantage of the dollar being the n-1 currency (the Keynesian spending of the Kennedy Administration would mark a departure, but not a drastic one). In fact, it would be a decade after the demise of Bretton Woods and the large deficits of the Reagan Administration until you could point to a hint of fiscal irresponsibility, although the large rise of American defense spending provided access to the commons and a protective blanket to the West and its economic interests. Next, when you looked at what Bretton Woods really did, it was a system designed not to make America "so rich," but a system designed to prevent another Great Depression and help war torn countries recover and become rich. The fixed exchange rate system was designed to encourage trade. The World Bank and IMF were designed to assist countries with technical advice and loans, although they weren't leveraged much in their earlier years and their activism in the past two decades has come under fire (much of it for good reason IMO).

Essentially, I'm having a hard time here seeing where America's prosperity had to be hitched to the wagon of Bretton Woods. In fact, the first time where I'd see an argument to where the dollar's status as the world's reserve currency resulted in potential economic rents, a status that would have been de facto in the absence of the Bretton Woods regime from 1945-1972/3, would be in the 2000's under the informal Bretton Woods II, where China recreated the fixed exchange rate system of the earlier Bretton Woods by pegging unannounced to the USD, resulting in other Asian economies doing the same. However, given the fact that Bretton Woods had been dead for over a quarter of a century, it wasn't Bretton Woods that caused this - it would be because the US was the world's largest economy with the least economic barriers, and therefore the best target for growing Asian economies that were looking for export-led growth options.

However, while this may have allowed for average Joe American to become "rich" through the ability to buy cheaper products from Walmart et al, in anything, it has allowed the US Congress to undertake policies that would make America poorer.

In the end, an argument that Bretton Woods made America so rich ignores a heck of a lot of history and economics. However, if someone can point me to the peer reviewed literature that argues otherwise, I'm happy to revise my viewpoint.

Some sources:
Economic history of the United States - Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/List_of..._past_GDP_(PPP)
Bretton Woods system - Wikipedia, the free encyclopedia
http://www.gpoaccess.gov/usbudget/fy04/pdf/hist.pdf

Ah the wonderful world of econometrics...Figures,charts,diagrams everything shows that things are ok, yet they are not. Why is that? Well,to put it simply, economists lack the understanding of much broader picture of things. When the article raises the question, why America is so rich, the first three things it quotes are: The Common Law,Massive immigration and enormous scientific influx during the WW2. Plain and simple. Well if only things were so plain and simple, but they are not.
First of all, the America's rise started after the Civil war, where two models of economy,two life philosophies fought for dominance. One was Southerner philosophy, relaying heavily on slave labor and agriculture, with strong theological component in it, while the Northern philosophy was relaying on industrial expansion accompanied with all supporting things, such as science progress, rationalism etc. After the end of Civil war, the Northern way was victorious and the whole country was unified. But what gave the power to the both sides was the actual geography, the richness of natural resources, the quantity of the land, the number of population, in other words physical assets. That was the base for all these things. Also the distance of the American continent made the direct foreign meddling into it, virtually impossible. Yet the article doesn't mention the geography at all.
A small remark to Shek, about why "King Grain" was supported and not the "King Cotton". It was the failure of the crops in Europe from 1860 to 1862 that made the demand for grain. So in fear from famine, the Europeans supported the Union, Union supplied the Europe with grain and in return the Europe was obligated to stay away from the American Civil war. So it was again, the geography with the help of meteorology that was the base for pushing the things in this direction. Somehow, when reading the history I always get impression that the France and Great Britain would rather support the Confederation than the Union, but circumstances compelled them to do otherwise.
After the Civil War ended and the country unified, the system was organized in a such a way, so that nothing similar,like the civil war happens again. And the way how it is done is amazing and successful. By pushing the individualism, competition,private interest and personal gain which lead to liberal way of thinking and pursuit of personal freedom. These conditions were ideal and attracted many immigrants whom were coming to the US to fulfill their dreams. But again, the immigration was possible because there was a place to go, aka geography again, to the brave new world where dreams come true. Now, many of the immigrants fulfilled their dreams but also there were many others whom didn't make it.(myself included). But the emphasis was on the ones whom did make it, so over years and now days centuries, this lead to the victorious slash success slash from rags to riches mantra that presented the idea, that you can make it in America only if you work hard enough and that everything is up to you and if you fail it is your own fault and if you do fail, you deserve to fail. The emphasis on successful individuals whom did make it, combined with individualism added the component of exceptionalism to the whole story. That is why, it is often said that Americans love winners and despise losers. Since the winners are exceptional, special, unique super duper, mega ,fantastic, they are in one word grandiose. True super heroes. True meaning unique and exceptional and therefore super which in essence means powerful, heroes meaning just and brave. And for one nation having such, well let's say "mythology" behind its back, gave the Americans one crucial advantage over their adversaries. It gave them confidence. So with the geography, with natural resources included and vast human potential included, this sense of confidence is the second factor that plays a major role in the creation of American wealth. Americans are confident people and that confidence gives them the basis for courage, which than gives them the initiative to deal with the challenges that lie in front of them.

I don't really see, how it could turn out any different than the way it did.

I just see it as a simple equation of fertility & rainfall Shek. Although there are plenty of examples of nations not requiring the former to meet the latter on their list, of economic development, it is something all Superpowers have had.

Without rain & rivers, there is no fertility to support a community to grow stuff to meet a demand of a population. Population is a result of service industries initially (In my view) servicing Primary industry & of course, an export industry. To meet a manufacturing demand it always helps (although is not crucial to) to have population within relative geographic reach - especially early in the piece, certainly within access of port or manufacturing shops. The same goes for mining & natural resources to some extent.

The hidden diversity in this is that it makes the population able to be relatively fluid in it's movement where employment opportunity exists is the envy of many. I don't believe, for example, that the People are any better or any more spirited than any other where there is a will there is a way as they say - certainly though the laws seem more conducive to business and life that many could aspire to and hence best to start up in the U.S. I believe the U.S is so rich because of the very favourable geography it has which readily lends it's self to civilisation. The U.S isn't only LA or NY, Washington or those others that we get sold as travel destinations. It's those very populous centers that exhibits the aforementioned characteristics, like DFW, Houston, Chicago, Sacramento, Seattle, Tampa (and in their own rights formerly Detroit, Pitsburg, Buffalo) etc.

Without water the U.S wouldn't be great at all. Since it will always have water, it will always be rich. Economists like to project that China will reach parity with the U.S in 25-30 years. I don't see that happening not at least without significant further reform which helps and encourages fluidity of movement out of agrarian life, but again, it has water. Countries like Australia are not rich, we dig holes in the ground and sell the contents to China, fluidity of movement is hard and exceedingly expensive for housing. We don't have water, we bicker over a cesspool river because our population is constrained both politically and developmentally to the south east and farmers are paid to remove their fruit trees because their is no longer water, because someone decided it would be good to grow rice in Australia. So then we build desalination plants, so then Tax's go up, then we get "Save the River" levies on our water bills. End result = population constraint = domestic market pressure = living standards decline. Your rich if your happy IMV, I can't see Australia maintaining it's lifestyle balance it has now in say, 40 years time, because equation one, water & hence fluidity of movement, hence opportunity limited.

I am not to sure whether it is a false analogy and it probably is, but what if the U.K was the same geographic size as the U.S, or if Canada wasn't (Sorry OOE) mostly frozen. Then there is Brazil to consider -- Which I haven't, I don't know anything about the place. The U.S is a web of population centres, which means a great many recurrences of independent business/service industries.

Originally Posted by Shek

Are you selecting what year the US became the hyperpower vice a superpower?

So what happens when you guys actually go on a war footing proper?

You know, increase defence spending by three times, start pumping out munitions etc...

Originally Posted by Chunder

I am not to sure whether it is a false analogy and it probably is, but what if the U.K was the same geographic size as the U.S, or if Canada wasn't (Sorry OOE) mostly frozen.

Doesn't explain why their snow belt has more money than our snow belt.

Originally Posted by Versus

I would say that the main factor was the geographical location and a set of lucky circumstances at the beginning.

Those sure have a lot to do with it. However, without a capitalistic system, a legal system that recognizes personal property and individual rights, we would not have been this rich, this quickly.

My examles were the natives who lived here before us. They never developed large cities and industries, yet they occupied the same piece of land.

The legal system in the US is almost unique in the world. Coupled with respect for individuality, it almost pushed us to be rich.

Originally Posted by Shek

In what year did the US become a superpower?

1917, by the end of the year of the slaughter (1916) the US owned Britain and France they way China owns us now. by 19 the US was not only the worlds biggest creditor and breadbasket but also its biggest industrial producer and the only power really capable of military expansion. Even the Great Depression didn't really hurt this potential long term as WWII shows. The rise of the US was almost pre-ordianed from the time Princip shot the Archduke.

The roots of this power can be seen even earlier than WWI. The US insurance industry was very busy in the Ottoman Empire. By 1900 the US had over 1/3 of the globes steel production and was leading the way with armaments or duel use technologies- maxim, torpedo, submarine, catapillar tracks, super firing battleship turrets. telephone, electricity, radio (Dolbear), assembly line production (Model T) and other technologies. WWII was no accidental rise.

Well, of course Gunnut, that is my point. The whole point of legal system in the US and the conditions it creates, are in favor of individualism and personal prosperity. With such system in place, it is almost impossible to get conditions that can mushroom into a new civil war. It is a very stable and resilient order of things which enabled the US to thrive. That is why, the ideas that push for any type of congestion are not welcomed, suppressed and opposed in the US. Ideas that promote public interest, social plans are seen as threats to the system.
As far as natives story goes, well things are a bit different there. It is the system of values that makes the difference in this case. The Native Americans had a different system of value and were living according to it, so maybe they considered themselves rich and advanced just as the Europeans did. It is all a matter of point of view. For an example, today's American whom owns three cars and a McMansion is equally rich as an Native American whom caught, I don't know, let's say 20 beavers and two Buffaloes. With the animal skin he can build his McWigwam, he can make clothes, he has food for his family and he has things that he can trade with the others , just as today's rich American can work hard, earn money and trade with other people. The only difference is, that the natives didn't have to pay for their goods and they didn't have to pay taxes.

I mean, its all relative and depends on the point of view...

Originally Posted by gunnut

The legal system in the US is almost unique in the world. Coupled with respect for individuality, it almost pushed us to be rich.

How is the legal system different from ABCA? The King/Government lost absolutely right with the fall of James. Parliment (ie, the people/legislative) is the superior authority, not the Crown (the Executive) and the Judical enforces the written word.

You will have a hard time convincing me that our systems are that different.