Explaining America’s Economic and Social Stability, Part 2

In posts Explaining America’s Economic and Social Stability and The Trajectory of America, I outline a generally optimistic assessment for America as to why it has done so we compared to most countries an will continue to do so. Unlike many on the ‘right’, I don’t foresee collapse or upheaval anytime soon but rather a continuation of America’s global economic and militaristic dominance.

America leads the world in:

GDP growth. America has the highest real GDP growth of all major developed nations, although it’s still not much growth. Germany and France have had close to zero percent compounded GDP growth since 2007.

Academic output in the sciences, as well as intellectual property. This includes leading the world in patents, Nobel laureates, and academic papers.

Currency and bond market: The US dollar is the strongest currency of all developed nations.

The biggest stock market gains of all developed nations, since 1995.

Finally, the strongest profits and earnings growth and expansion of all major countries except perhaps China (which has faster growth).

So why is America so successful and resilient? Here are some additional reasons:

America is magnet for top foreign talent. Elite universities such as MIT, Harvard, Caltech, and Stanford are flooded with applicants by high-IQ foreigners who want a part of the American capitalist dream to start the next Tesla, Google, or Facebook. Having the world’s best and brightest helps the economy, although it creates diversity, which may dilute and displace preexisting cultures. According to a report from the Partnership for a New American Economy, 36% of the top 25 U.S. public tech companies were founded by people born outside of America.

But why are all these smart, talented people immigrating? Because America rewards exceptional talent more so than any other country, both through the free market and a media and culture that rewards individual exceptionalism. Countries like Germany, Japan, Norway Switzerland have much more restrictions and regulations for entrepreneurs, higher taxes, and less prestige and accolades for top talent. Being exceptional in Norway doesn’t bring as much recognition as being exceptional in America. You can immigrate to America, be really smart and successful, make a lot of money, and be super-famous. Nowhere else in the world is that possible quite like in America. Arnold Swartenagger, for example, couldn’t have been who is is today if he stayed in Austria. Unfortunately, because of its welfare state and liberalness regarding immigration policy, America, much like Northern Europe, attracts many unproductive immigrants too.

The free market in America bolsters the economy and takes weight off the political sector. This means there is more redundancy. Redundancy is a crucial reason for America’s stability. Right now there is a tug-of-war between the forces of decay (welfare parasitism, bad politicians, non-productive immigrants, SJWs, etc.) and the private sector (which is productive and funds the parasitic class). If the latter is stronger than the former, which is presently is, collapse can be avoided, and the economy can keep growing. If its equal, the result is stagnation (which is what is happening to Japan, but there are other explanations than parasitism). One reason why China, despite being Communist, has done so well is because of its quasi-private sector. Same for South Korea vs. the despotic wasteland that is North Korea.

IQ matter a lot, too. Countries with social and economic stability tend to have average national IQs of around 100. Low-IQ countries are more dependent on natural resources (for exports), foreign capital infusions, and IMF aid, because these countries are too dysfunctional to create viable industries and self-sustaining economic growth on their own. Their economic growth comes from hyperinflation and foreign credit infusions at super-high interest rates, not self-sustaining, organic growth. Despite a lot of low-scoring groups, America’s national IQ is above 100, as are the Nordic countries and parts of East Asia. It also helps, as stated above, that America poaches top talent from all over the world, but this makes other countries worse-off due to ‘brain drain’.

Private property and rule of law is enforced. This is extremely important, because chaos and socialism equals capital flight. Compare Soviet Russia to present-day Russia to see the stark difference.

Finally, America doesn’t give anyone, including top politicians, much power. The United States government is very big, with many senators, congressmen, and governors, as well as the intricate presidential line of succession and the peaceful transfer of office. Again, this goes back to redundancy. Having many people running things, without much power bestowed on anyone, means the effect of incompetence and or malice for any one individual is lessened. Also, the strong private sector lessens, to some extent, the power and importance of government.

Autocracies are viable and better than democracies if the autocrat is competent, but autocracies can fail if there is neglect and incompetence. This is because it’s hard to depose an autocrat, but also because the autocrat has much more influence over things are run than in an oligarchy or any of other form of government where power is distributed. Some examples:

1. Hitler, who rebuilt Germany after the Wiemar-era hyperinflation and the Great Depression, but was undone by disastrous military campaigns that destroyed the economy and eventually the nation, and nothing could be done about it.

2. Extreme examples include Fidel Castro, Mugabe, Idi Amin, Pol Pot, and the Kim dynasty of North Korea.

3. King Saud, an incompetent Saudi king who was abdicated in 1964 by the house of Faud after a decade of economic mismanagement.

Redundancy means that even the assassination of presidents (such as JFK) have only minimal impact on the overall economy and national stability, whereas assassinations of autocrats can plunge nations into prolonged war and turmoil. Even natural deaths can be problematic, as in the case of king Bhumibol Adulyadej who died in 2016, creating uncertainty for the future of Thailand’s economy.

Ideally, you want the most competent in power, but this is far from reality, and sometimes competent leaders can later become incompetent. The bureaucratic state, much like America’s pubic school system, suppresses exceptional individual talent and is sclerotic, but it also limits potential harm by any one individual. If a country is struggling after a prolonged depression or war, having a competent autocrat can quickly get things off the ground (a business analogy being Steve Jobs, who in 1997 returned to Apple and saved the company) without being encumbered by bureaucracy, but being that America is a superpower, all it needs to do now is just coast along. It doesn’t need the added risk.

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