Explaining America’s Economic and Social Stability

Fred Reed ponders the ‘endgame ‘ for America.

Things do not look good. The country is disintegrating. The borders are open, against the will of much of the population. Our universities are in sharp decline, the students a rebellious unschooled rabble portending a peasant future. The economy gutters and standards of living fall. Jobs are few and becoming fewer. Racial animosity is high and rising, with blacks out of control and looting at will.

It is hard to see how this can continue without Something Happening. Yet no sign exists that the tide will abate—that standards and discipline will be reimiposed in academe, that grade schools will cease being indoctrination camps, that immigration will be stopped, that blacks will become calm and content, that some new form of economic order will halt the slide into semi-impoverishment.

He mentions moral decay, economic malaise, and civil unrest as reasons for some sort of cataclysmic change.

I tend to resist doom and gloom predictions about the United States because the economic data doesn’t support it and such predictions have a long track record of being wrong. The ‘something happening’ will likely only be a continuation of the the way things are, but more so. The best prediction of tomorrow or next week is today or last week.

The universities, despite the media attention they get, are only a small part of the US economy, which is mostly consumer and intellectual-property driven. If people keep buying stuff, exporters keep exporting, and high-IQ people keep innovating and creating companies, the economy will likely keep chugging along in spite of the moral decay, as I’ve written about here. Or at least that’s the way it’s been for the past 200 or so years of American history. In the 60’s you had the Vietnam protests and Nixon’s ‘silent majority’ against social changes, yet the economy and stock market not only preserved, it boomed. Racial strife goes back to the inception of the United States – it’s nothing new and it’s not going to improve. That’s not to say I condone this social change, but it’s not going to influence my economic or investing outlooks.

As others have mentioned, the labor market will continue to change, with more ‘gig’ jobs and fewer salaried ones. Technology will make certain things cheaper (food, clothes, electronics), but some services may still remain expensive (college, healthcare, rent, insurance, daycare, phone bill).

Somewhat counter-intuitively, America’s diversity and geographic size may be behind its long-term resiliency, as other countries have suffered from upheaval, civil war, and revolution. It’s this apparent ‘disorder’ and heterogeneity that engenders stability whereas homogeneity may give rise to either nationalism or mutiny. Similar to how prisons try to separate groups to prevent communication and hence upheaval, this system works on a greater scale in America, but automatically. Revolution is more likely when everyone has the same language, same shared interests and is crowded, than if everyone is different and spaced far apart. Geographically, America is a huge country with stark cultural differences between various regions that are spaced thousands of miles apart. Manhattanites and Deep-Southerners for example diametric opposites.

The success of capitalism, markets, and trade is also a major reason for America’s stability, providing enough for everyone of all socioeconomic levels, whereas countries that fail to provide these bare minimums tend to fall under disarray. Also, the reserve currency status of the US dollar allows cheap borrowing to fund social programs to help the underclass, paid for by bond holders.

Related: The Second ‘Great Experiment