[This post is the second in a series on American Exceptionalism. I’ve written on this subject elsewhere, so some of you may want to skip this one.]
In my last post I argued that American exceptionalism derives from our almost unique attitude toward private wealth. We are different from other countries – “legacy” countries, as I called them – because we were born at the same moment as the Industrial Revolution. Americans welcomed the explosion of private capital it generated, while other countries, mired in a very different cultural past, feared and resented the growth of private wealth.
In this post I argue that our positive attitude toward wealth made America not just different from other countries, but better: economically stronger, militarily dominant, culturally explosive, freer, history’s leading champion of human possibility, a magnet for talented people from across the globe.(1)
All this was made possible because our positive attitude toward wealth led to the creation of staggering amounts of capital owned privately, not by the government. And the uses to which that capital has been put proved to be a decisive competitive advantage for the United States. I’m going to take a look at some of the ways private capital has led to American dominance, but, first, a few caveats.
° As an American talking about America, I’m as prone to jingoism and chauvinism as anybody else. So just to be clear, I’m intensely critical of much of what goes on in the US; that just happens not to be my topic today.
° I’m not talking about the importance of wealth to its owners (important as that is), but about the importance of wealth to others. I want to talk about why people who aren’t wealthy should care about wealth.
° This isn’t a political conversation. It’s not about whether the rich pay their fair share of taxes (or, more interestingly, whether the middle class pays its fair share of taxes). It’s not about whether wealth and income are fairly distributed in America. (For what it’s worth, the Gini coefficient of the United States ranks us in the middle of the pack. Our Gini is lower – more equal – than that of poor and emerging countries like China, but higher – less equal – than small, homogeneous countries like Denmark or Norway.)
° This isn’t about the importance of wealth as an incentive for people to accomplish great things. Theoretically, it’s possible to believe that even if private capital is a positive evil in the hands of its owners, we should still tolerate it because the lure of becoming rich is what motivates people to do things that improve all our lives. But that’s also a separate issue, not my topic today.
° Finally, people who read about this subject in my book, or hear me speak about it, sometimes complain that I’m putting down other societies. Well, hell, I admit it. One of the Things That Annoy Me – maybe I’ll write a whole blog post about it some day – is the toxic and growing phenomenon among wealthy, developed countries of free ridership. I refer to these countries in my book as “providential societies.” I used that word partly because of a poem by Elizabeth Bogan(2) – where it was used with bitter irony – and partly because I was struggling to find a Politically Correct way to put it. These are countries that have become so comfortable they no longer care about anything but that comfort. They aren’t willing to take risks that might compromise their comfort. Not entrepreneurial risk, for goodness sakes – an efficient new business might put the inefficient old one they have lifetime security at out of business! Not even military risk – amazingly enough, these are incredibly rich countries that can’t begin to defend themselves. Historically, of course, such societies didn’t last very long. Today’s free riders will remain rich and comfortable only as long as the US continues to produce the ideas and companies that improve their lives. And they will remain free only as long as the US military protects them. Let’s hope we, as a country, don’t emulate them.
(1) Ok, ok, I realize that making value judgments about countries (or, really, anything) is hopelessly Politically Incorrect. But since it’s impossible to be Politically Correct and think straight at the same time, I’ll just have to be Incorrect for a minute or two
Next up: American Exceptionalism: Fueling the Entrepreneurial Society
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Please note that this post is intended to provide interested persons with an insight on the capital markets and is not intended to promote any manager or firm, nor does it intend to advertise their performance. All opinions expressed are those of Gregory Curtis and do not necessarily represent the views of Greycourt & Co., Inc., the wealth management firm with which he is associated. The information in this report is not intended to address the needs of any particular investor.