Why is America so wealthy?

[GuiltyCowboy]

So, obviously, there's not going to be one reason. But I figured the discussion might be interesting. And recently there have been a few comments here suggesting people have a somewhat confused sense of deregulation - as if it's a magical thing that makes America rich.

So, what's your order of importance when it comes to America's wealth:

1) Geography
2) Education
3) Immigration
4) Capitalism
5) The Stock Market
6) Commerce
7) Tax
8) Slavery
9) Dollar as primary reserve currency

As I'm such a bored nice person, I've put some handy info below to argue for each one.


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1) Geography - it's a vast country and unified coast-to-coast so it has an enormous internal market, with abundant natural resources, a temperate climate, a fertile East Coast Plain, and many navigable waterways.

2) Education - every country now educates its people but the USA got a head start over Western Europe by educating more of its population. By the 1950s, 80% of 12-17 year olds were in education. At the same time it was 20-30% in UK and France. And investment in universities trains the American workforce and drives innovation - almost every invention and medical advancement we enjoy is the result of years of taxpayer-funded research and development at universities. America's private sector is built on the enormous investments it makes in its universities.

3) Immigration - a huge influx of immigrants drove the second industrial revolution between 1880-1940. Millions of hard-working, gritty, entrepreneurial types were required to generate the chemical, steel, electricity, automobile, and household appliance industries - and then to buy all the products. Education and navigable waterways and captialism is great but it's all for nought without immigration.

4) Capitalism - USA does not just consume what it needs, it produces and consumes far more than is necessary for the sole purpose of generating more profit on capital. It's not just using money to make more money, but using everything as a financial instrument: cars are no longer cars, for example, they are a tool for loan interest payments and insurance (the automobile industry makes more from that than it does from selling the actual cars); buildings are no longer buildings, they are mortgages etc. If everyone lived like Americans, it would require 10 planet earths to sustain the world. It's selfish and deeply inefficient (and most likely self-defeating in the long run) but it made America rich.

5) Stock market - the USA pays cheap labor around the world to manufacture goods, and Americans buy those goods, and then all that money is returned to America anyway as the world invests in the American stock market.

6) Commerce - The government may lay the foundations in the form of education, infrastructure, a legal system, and massive research and development, but after that, it leaves the economy to the private sector. The free market encourages competition which encourages commerce.

7) Tax - At the end of the 19th century, total tax receipts in the US represented less than 10% of national income. Between 1914 and 1980 it tripled, if not more (and quadrupled in Europe). The expansion of the fiscal state was a major driver of economic development because the US was then able to provide education and healthcare, transportation and infrastructure, replacement income such as pensions, unemployment insurance to stabilize the economy...all that provided opportunities and created growth. And none of it was possible without the increase in tax.

8) Slavery - vast immediate wealth from profiting off unpaid labor - it accounted for roughly 60% of the US economy at its height - but perhaps a hindrance of long-term growth, holding back modernization and concentrating wealth and depressing the generational wealth of descendants of slaves. Compare today's economies of the old slave-owning South to the industrialized north.

9) Reserve Currency - The dollar is the main reserve currency, which allows the USA to purchase everyday goods at comparatively low prices. At the same time, strong global demand for the reserve currency enables the USA to borrow on more favorable terms, including lower interest rates.

 

[justawnnabewriter]

So, obviously, there's not going to be one reason. But I figured the discussion might be interesting. And recently there have been a few comments here suggesting people have a somewhat confused sense of deregulation - as if it's a magical thing that makes America rich.

So, what's your order of importance when it comes to America's wealth:

1) Geography
2) Education
3) Immigration
4) Capitalism
5) The Stock Market
6) Free market competition and commerce
7) Tax
8) Slavery
9) Dollar as primary reserve currency

As I'm such a bored nice person, I've put some handy info below to argue for each one.


///



1) Geography - it's a vast country and unified coast-to-coast so it has an enormous internal market, with abundant natural resources, a temperate climate, a fertile East Coast Plain, and many navigable waterways.

2) Education - every country now educates its people but the USA got a head start over Western Europe by educating more of its population. By the 1950s, 80% of 12-17 year olds were in education. At the same time it was 20-30% in UK and France. And investment in universities trains the American workforce and drives innovation - almost every invention and medical advancement we enjoy is the result of years of taxpayer-funded research and development at universities. America's private sector is built on the enormous investments it makes in its universities.

3) Immigration - a huge influx of immigrants drove the second industrial revolution between 1880-1940. Millions of hard-working, gritty, entrepreneurial types were required to generate the chemical, steel, electricity, automobile, and household appliance industries - and then to buy all the products. Education and navigable waterways and captialism is great but it's all for nought without immigration.

4) Capitalism - USA does not just consume what it needs, it produces and consumes far more than is necessary for the sole purpose of generating more profit on capital. It's not just using money to make more money, but using everything as a financial instrument: cars are no longer cars, for example, they are a tool for loan interest payments and insurance (the automobile industry makes more from that than it does from selling the actual cars); buildings are no longer buildings, they are mortgages etc. If everyone lived like Americans, it would require 10 planet earths to sustain the world. It's selfish and deeply inefficient (and most likely self-defeating in the long run) but it made America rich.

5) Stock market - the USA pays cheap labor around the world to manufacture goods, and Americans buy those goods, and then all that money is returned to America anyway as the world invests in the American stock market.

6) Commerce - The government may lay the foundations in the form of education, infrastructure, a legal system, and massive research and development, but after that, it leaves the economy to the private sector. The free market encourages competition which encourages commerce.

7) Tax - At the end of the 19th century, total tax receipts in US represented less than 10% of national income. Between 1914 and 1980 it tripled in the US, if not more (and quadruped in Europe). The expansion of the fiscal state was a major driver of economic development because states were able to provide education and healthcare, transportation and infrastructure, replacement income such as pensions, unemployment insurance to stabilize the economy...all this provides opportunities and creates growth. And none of it possible without the increase in tax.

8) Slavery - vast immediate wealth from profits off unpaid labor - accounted for roughly 60% of the US economy at its height - but perhaps a hindrance of long-term growth, holding back modernization and concentrating wealth and depresing generational wealth among descendents of slaves. Compare today's economies of old slave-owning South to industrialized north.

9) Reserve Currency - The dollar is the main reserve currency, which allows the USA to purchase everyday goods at comparatively low prices. At the same time, strong global demand for the reserve currency enables the USA to borrow on more favorable terms, including lower interest rates.

you forgot attitude of I can do it better or omg, there has to be a better way of doing xyz

 

[GuiltyCowboy]

you forgot attitude of I can do it better or omg, there has to be a better way of doing xyz

No, that's included in immigration - and the diversity of ideas and experience that immigrants contribute, and of course the risk-taking attitude that comes with moving away from their home country.