Page 1 of 13 12345678910 ... LastLast
Results 1 to 15 of 193

Thread: Why is America so rich?

  1. #1
    Defense Moderator
    Defense Professional
    Lei Feng Protege
    xinhui's Avatar
    Join Date
    17 May 06
    Posts
    7,980

    Why is America so rich?

    Why is America so rich?

    Growth: Why is America so rich? | The Economist


    Nov 9th 2010, 13:50 by R.A. | LONDON

    ECONOMIC gloom and doom aside, America remains the world's richest large country. It's generally estimated to have a per capita GDP level around $45,000, while the richest European nations manage only a $40,000 or so per capita GDP (setting aside low population, oil-rich states like Norway). Wealth underlies America's sense of itself as a special country, and it's also cited as evidence that America is better than other economies on a range of variables, from economic freedom to optimism to business savvy to work ethic.

    But why exactly is America so rich? Karl Smith ventures an explanation:

    I am going to go pretty conventional on this one and say a combination of three big factors

    1. The Common Law
    2. Massive Immigration
    3. The Great Scientific Exodus during WWII

    You’ll notice that four of the top five countries in the Human Development Index have the Common Law and the top, Norway, is a awash in oil. Without the petro-kronors they probably wouldn’t be so hot.

    You’ll also notice that 3 of the top 4, again with Norway the odd man out, are immigrant nations. The founder effect here should be clear.

    The bonus from the great exodus is definitely waning. Most of our hey-day German and Jewish scientists are dying off, but its still given us a boost that lingers to this day. There is no fundamental reason why the US should be the center of the scientific world but for a time it was the only place in the world safe for many scientists.

    It's a difficult question to tackle because there's so very much to it. America jumped to a huge productivity lead early last century by developing a resource- and capital-intense, high-throughput style of manufacturing producing mass market goods. The fractious, class-riven European continent struggled to copy this technology, and while adoption of these methods eventually led to a period of rapid catch-up growth, the process of catch-up was never quite completed. And so that's one gap to explore.

    There's also the question of what exactly one is comparing. What if we take similar European and American metropolitan areas and adjust for human capital and hours worked? On that basis, the difference between America and northern Europe looks relatively small. One might then focus on the ways in which America's more integrated domestic market leads to a lower level of within-continent inequality, even though national inequality levels in Europe compare favourably with America's.

    The size of the market may be more important than we imagine. As Mr Smith notes, four of the top five HDI countries share the Common Law. They also speak English. In a world in which national and cultural barriers still bite, America's wealth could be chalked up to the fact that it's a uniquely large and uniform nation. Common rules, culture, language, and so on facilitate high levels of trade and mobility. National and cultural barriers within Europe, by contrast, work to limit the extent to which the economic potential of the continent can be reached.

    Mr Smith also gets at something important in discussing immigration and talent. The economic geography of the world is lumpy, and talent likes to clump together into centres of innovation. Through fortune and foresight, America managed to develop world-leading centres of talent in places like Silicon Valley, Boston, and New York. Relatively open immigration rules and the promise of a safe harbour for war refugees, including persecuted Jews, helped build these knowledge centres. When one combines that innovative capacity with a system that makes it relatively easy to develop ideas and relatively lucrative to exploit them economically, the potential is there for rapid and sustained growth.

    America does seem to be special in important ways, but it's not always clear what those ways are. A liberal economic order and geographically mobile population are important, but so is the level of education, the promise of social mobility, and the openness of America's borders. It's worth keeping all of that in mind as the country's leaders think about the ways economic policy should change in the wake of the Great Recession.
    “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

  2. #2
    Official Thread Jacker Senior Contributor gunnut's Avatar
    Join Date
    27 Jan 06
    Location
    DPRK, Demokratik People's Republik of Kalifornia
    Posts
    22,784
    How about "liberty?"
    "Only Nixon can go to China." -- Old Vulcan proverb.

  3. #3
    Defense Moderator
    Defense Professional
    Lei Feng Protege
    xinhui's Avatar
    Join Date
    17 May 06
    Posts
    7,980
    what is that?
    “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson

  4. #4
    Official Thread Jacker Senior Contributor gunnut's Avatar
    Join Date
    27 Jan 06
    Location
    DPRK, Demokratik People's Republik of Kalifornia
    Posts
    22,784
    Quote Originally Posted by xinhui View Post
    what is that?
    Minimal government interference. I know it's a funny word these days, but we had it once back in the days.
    "Only Nixon can go to China." -- Old Vulcan proverb.

  5. #5
    TTL
    TTL is offline
    Contributor TTL's Avatar
    Join Date
    20 Oct 07
    Location
    ANKARA
    Posts
    345
    Scientists were not the only effect of WW2 on US. What about Bretton Woods? This is from wiki :
    if we can "stop subsidization of labor and sweated competition in the export markets," as well as prevent rebuilding of war machines, "oh boy, oh boy, what long term prosperity we will have..

  6. #6
    Contributor
    Join Date
    14 Sep 08
    Location
    Alberta
    Posts
    389
    Abundant resources, lots of space, liberal economic policies.

  7. #7
    Military Enthusiast Senior Contributor
    Join Date
    15 Aug 03
    Posts
    4,993
    America wasn't rich during one time in the 20th century. It was Great Depression Era.

  8. #8
    Administrator
    Lei Feng Protege
    Defense Professional
    Join Date
    23 Aug 05
    Location
    Arlington, VA
    Posts
    11,188
    gunnut,

    Minimal government interference. I know it's a funny word these days, but we had it once back in the days.
    the govt actually interferes less now than back in the 40s or 50s, the american heyday. both directly and indirectly.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."¯- Isaac Asimov

  9. #9
    Official Thread Jacker Senior Contributor gunnut's Avatar
    Join Date
    27 Jan 06
    Location
    DPRK, Demokratik People's Republik of Kalifornia
    Posts
    22,784
    Quote Originally Posted by astralis View Post
    gunnut,



    the govt actually interferes less now than back in the 40s or 50s, the american heyday. both directly and indirectly.
    And we are better off now than in the 1950s.

    We can argue that 1940s included 5 years of war so government had to intrude.

    If only we can get the government to intrude less by reducing social security, medicare, medicaid, and unemployment insurance... Make the next 10 years better than the last 10 years.
    "Only Nixon can go to China." -- Old Vulcan proverb.

  10. #10
    Official Thread Jacker Senior Contributor gunnut's Avatar
    Join Date
    27 Jan 06
    Location
    DPRK, Demokratik People's Republik of Kalifornia
    Posts
    22,784
    Quote Originally Posted by InExile View Post
    Abundant resources, lots of space, liberal economic policies.
    Resources and space definitely help.
    "Only Nixon can go to China." -- Old Vulcan proverb.

  11. #11
    Administrator
    Lei Feng Protege
    Defense Professional
    Join Date
    23 Aug 05
    Location
    Arlington, VA
    Posts
    11,188
    gunnut,

    And we are better off now than in the 1950s.
    growth rates were much higher back then, which is what i was getting at. why was US growth higher in the 50s despite having a 94% tax rate on the wealthy, despite incredibly discriminating laws, and a considerably bigger government relative to the size of the US populace?

    while we can play the "what if" game and say "what if the US government had lower taxes, etc", it also indicates that other factors play a greater role on growth.

    We can argue that 1940s included 5 years of war so government had to intrude.
    aren't we at war now?

    If only we can get the government to intrude less by reducing social security, medicare, medicaid, and unemployment insurance... Make the next 10 years better than the last 10 years.
    this is a philosophical issue, though. economically, it's been pretty conclusively demonstrated that once income tax rates are lower than approximately 50-60%, tax cuts have at best a secondary influence on the economy.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."¯- Isaac Asimov

  12. #12
    Turbanator Senior Contributor Double Edge's Avatar
    Join Date
    11 Sep 10
    Location
    Bangalore
    Posts
    4,840
    WW2 and the fact it did not happen in the US

    Everything else is compounded growth from that headstart.

  13. #13
    Administrator
    Lei Feng Protege
    Defense Professional
    Join Date
    23 Aug 05
    Location
    Arlington, VA
    Posts
    11,188
    DE,

    that explains why the US is so dominant, but not why it's so rich. had WWI/WWII not happened, the US would probably still be the wealthiest country in the world today, but it would be closely followed by Germany and the UK. Russia would probably have the GDP per capita of a central european country today.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."¯- Isaac Asimov

  14. #14
    Administrator
    Lei Feng Protege
    Defense Professional
    Join Date
    23 Aug 05
    Location
    Arlington, VA
    Posts
    11,188
    sorry guys, think i accidentally closed the thread. fixed.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."¯- Isaac Asimov

  15. #15
    Official Thread Jacker Senior Contributor gunnut's Avatar
    Join Date
    27 Jan 06
    Location
    DPRK, Demokratik People's Republik of Kalifornia
    Posts
    22,784
    Quote Originally Posted by astralis View Post
    gunnut,

    growth rates were much higher back then, which is what i was getting at. why was US growth higher in the 50s despite having a 94% tax rate on the wealthy, despite incredibly discriminating laws, and a considerably bigger government relative to the size of the US populace?
    No social security; no medicare; no medicaid; no unemployment insurance; no civil rights act; no voting rights act; no affirmative action; no EPA; no Department of Education; no FEMA...etc. All of them serve as a drag on the economy.

    Quote Originally Posted by astralis View Post
    while we can play the "what if" game and say "what if the US government had lower taxes, etc", it also indicates that other factors play a greater role on growth.
    I agree.

    Quote Originally Posted by astralis View Post
    aren't we at war now?
    From our defense spending point of view, not a war like WW2.

    Quote Originally Posted by astralis View Post
    this is a philosophical issue, though. economically, it's been pretty conclusively demonstrated that once income tax rates are lower than approximately 50-60%, tax cuts have at best a secondary influence on the economy.
    Lower tax rate is better than higher tax rate. And not just the "tax rate" like the federal income tax, but various other "fees" and regulations that don't show up on studies. Why do you think CA is consistently near last in rankings of business friendly environment? Not only the high tax rates, but huge number of fees a business owner has to pay before he even starts. Now we have this "global warming solutions act" coming into effect. It will further kill jobs in CA. You can reduce the "income tax" rate to zero in CA but these job killers will still deter people from working.
    "Only Nixon can go to China." -- Old Vulcan proverb.

Page 1 of 13 12345678910 ... LastLast

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. India's rich, richer than China's
    By OrdinaryGuy in forum International Economy
    Replies: 5
    Last Post: 18 Mar 06,, 20:28
  2. How do we know the rich and the poor?
    By froggy in forum International Politics
    Replies: 1
    Last Post: 26 Feb 06,, 09:01
  3. The rich and the poor
    By froggy in forum International Politics
    Replies: 0
    Last Post: 26 Feb 06,, 08:29
  4. The rich and the poor
    By froggy in forum International Politics
    Replies: 0
    Last Post: 26 Feb 06,, 08:28
  5. US general pledges military aid for oil-rich Azerbaijan
    By Ironduke in forum Europe and Russia
    Replies: 28
    Last Post: 18 Jan 04,, 04:03

Share this thread with friends:

Share this thread with friends:

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •