What America (still) teaches us

Even though many find the US narcissistic, on the whole, it has been a global positive force. Take economics. The US is a leader in technology, finance, healthcare and aerospace. Its per-capita GDP is $94,000, 6x global average. Germany is at $65,000, China just below $15,000. The only nations outranking the US are financial hubs (like Switzerland, $1,26,000), tax-optimised jurisdictions (like Bermuda, $1,38,000), and resource-heavy economies with small populations (like Norway, $1,05,000). Britain's per-capita GDP of $55,000 is equivalent to that of Mississippi, the poorest state in the US.

During WW2, it was the US' manufacturing might - not just military strength - that tilted the outcome in favour of the Allies. Today, it's technology.

US economic prosperity is not only an historical accident but also by deliberate design. On the 'luck' side of the equation: fertile lands and river systems, natural resources, and protection by oceans on both sides. On the 'design' side: administrative institutions, in- born culture of welcoming immigrants, and large-scale investments in infrastructure and education.


Today, the US produces 13-14 mm barrels of oil a day, more than Saudi Arabia (about 10 mm). It also produces 1 tn cu m of natural gas annually, more than the next two producers combined. Its administrative system - based on James Madison's famous 1788 maxim in the Federalist Papers, 'Ambition must be made to counteract ambition' - is better than most, despite what Trump-bashers say.

Newly independent US in 1776 had a population of 2.5 mn. It's 340 mn today. Much of this happened because of large-scale immigration. If the US had not experienced immigration, its population today would have been half. Contrary to current rhetoric, immigration has helped the US maintain high productivity, robust tax collections, westward territorial expansion and economic scale. It also brought unprecedented dynamism. 1 in 4 doctors in the US has an immigrant background. SpaceX, Google, Nvidia, all were co-founded by immigrants, or their next generation.

Geopolitically, the US accounts for 35% of global military spending. Much of this is used to subsidise defence of other countries and protect international trade routes. The US has traditionally accounted for 60-65% of Nato's defence spending of $1 tn annually. Most Nato members don't meet the 2% of GDP they committed towards their own defence. Which is why the US expects them to stop giving lectures and say 'thank you' instead.

Sea routes carry more than 80% of global trade. The US security apparatus that maintains open global sea lanes costs it - based on different estimates of deployment for US strategic interests vs trade protection expenses - $100-200 bn a year.

The US ranks highest on the Hofstede Individualism Score at 91 (France 71, India 48, China 20). This individualism has led to residential mobility, entrepreneurship and unprecedented philanthropy. Americans donate $500-600 bn annually, larger than the charitable giving of most other countries combined.

Visiting the US in the 1830s, French diplomat Alexis de Tocqueville noted the American propensity to form civic associations for problem-solving, and not wait for the government. This paradox - of individuality and civic engagement - makes the US more future-proof than most societies.

The US' challenges have less to do with its 'decline' and more to do with 'rise of the rest'. In 1960, the US produced 40% of world GDP. Today, it's about 27%. Its trade deficit of $1 tn a year points to its heady consumption economy. Much of its standard of living is not sustainable. This will require painful resets, not just at the individual level but also at the federal-deficit level. As countries shift their currency holdings, this uncertainty has led to weakening of the dollar.

Many of the US' criticisms are valid but exaggerated. They obscure the US' ability to overcome challenges. In the 1960s, Samuel P Huntington pointed to the risks of US success: accumulated rigidity, complacency and entrenchment of interest groups. Historians William Strauss and Neil Howe came up with Strauss-Howe Generational Theory in the 1990s to examine modern-day US. Its premise: eras shape generations, which, in turn, shape future eras.

As a result, history follows 20-yr phases, each shaped by the generation in power, with the cycle repeating every 80-100 yrs. Strauss and Howe predicted that the US will face a crisis in the early 21st c. and will come out of it in the 2030s. We are in the latter-half of that phase.

Earlier US crisis eras included American Revolution (1770s), Civil War (1860s), and Great Depression (1930s). Each seemed like end of the world, but a new and improved US was born. My bet: the same will happen again. Happy birthday, America!