I am a big fan of US history. However, I have been so reluctant to publish this piece due to the ugly footprint of racism in US economic history. I will try but keep this footnote on your minds.
My recent book was Capitalism in America, a book by Alan Greenspan - the longtime US Fed Chairman — and Adrian Wooldridge. I really enjoyed it but let distil 6 ideas that resonated with me on how the US came to be a gigantic economic force.
- The Gift of God: A nation might have nothing in endowments like Taiwan or South Korea but still find greatness. The US struck luck by sitting on the resources it needed to force its way ahead. The coal, iron ore & oil in Pennsylvania, oil in Texas, the Mississipi river — the worlds second-largest river that flows south for over 3,000km with tributaries draining from 32 states — that aided its early movement of goods before steam-powered engine arrived, the fertile soil of its belly and rocky mountains of Utah, were endowments that most countries did not find such fortune. It has the canal to move to goods when steam engines mattered, steel to power its railroads when it was needed, oil to roar its engines and most importantly, the ingenuity to assemble all. Assembling all include building the Erie Canal, a 363 miles long engineering masterpiece that “took eight years to complete”.
2. Hop on the Wagon: The Homestead Act of 1862 gave 160 acres of land to those who could till was a fortunate experiment. A young man in Europe could forsake all his family and hop on the wagon of hope to own large plain fields and till to productivity. 12 million immigrants arrived in the US from 1870 to 1900. Immigration focused on attracting bright people came to a peak after WW2 when it became the hub of Europe refugees. It is unfortunate the Blacks were seized and tossed on a boat for back-breaking work and never received a fair system — a great stain on US history. However, the title as a land of immigrants represents a clear direction that finding ready minds across the world was needed for a new order.
3. Relentless Productivity: The age of industrialization marked by steam-powered engines, railroads, telegraph, telephone, aircraft and home accessories, entertainment, the internal combustion engine, stock exchange, public quoted companies and so on had strong roots in the US. Eli Whitney, J.P Morgan, Ford, Firestone, Sloan, Carnegie, Rockefeller, Gates & Zuckerberg all personalised different eras of capitalism in the US. The US did not miss a single beat on the orders of industrialization. This is a nation that rose in a frenetic pace, invested in science and backed its entrepreneurs all the way. Its entrepreneurs understood that if productivity would happen, it must be backed by unit improvement enabled by science. The book reveals how productivity moved the US from a largely agrarian society to an industrialised one — a continuous pattern of rising states. US productivity showed with its share of global manufacturing rising from 23.3% in 1870 to 35.3% in 1900. The second World War that left the US with 72% of the global output showed a nation that was ready to take the horns by relentless productivity. Even in the era of plutocrats, it was more about how low can the unit price go? A blitz of productivity.
4. It’s business here: One might find it difficult to name 10 iconic US Presidents because many of its leaders just chose not to be one. The roaring 20s might be the culmination of US progress that was hidden. but who were the leaders — Harding and Coolidge. After the bully pulpit of Theodore Roosevelt tried to dismantle to excesses of its star entrepreneurs, American went into an age of light-touch leadership. It was left to creative destruction, a wave of innovation when the regulation took a backseat. Yes, it would crashland the economy as seen in the Great Depression and make an amateur of distinguished Hoover but it was an elastic band that would not go back to its original shape. While American flirted with welfare, unionization and entitlement schemes, its constant reinvention still lay in the direction of freeing up entrepreneurs to create new things. Reagan remains venerated for this because after the stagnancy of the 1970s, he brought their pride of big businesses back.
5. Leadership for the times: You might have it and still not have the right brains to get into leadership. Leadership is a product of elite consensus. A Washington, Lincoln, FDR, Wilson, Reagan were apt for the moment. When it needs to slow things down, it was present too. The US was unfortunate on the issue of race and all its leadership chose pragmatism as appropriate and just wheeled things forward. The New Deal excluding most blacks was an example of the engagement of Southern Democrats just to find a way out. Jill Lepore in “These Truths” explained this in great detail. However, a nation chose to find leaders for the time; such reinvention is a marvel.
6. The primacy of property, capital and patents: The US had Patent Act as of 1790, which become a model and tourist attraction to the world. It would preserve this from the bureaucratic logjam as it seeks to advance. The preservation of property backed by laws was also a beauty to behold. While patent and trademark might be mistreated by other Western entities, it meant a big deal to the US.
It is undeniable that the US really showed the seeds during the pre-civil war with the Eli Whitney masterpiece and the postwar boom was the real fuel for action. The US built its infrastructure as needed leveraging its immense productivity and earnings from income tax. The author got worried on the less attention paid to education and reduction of patents filed and other metrics where the US gaped the world. Others had learned faster and are doing their best to take the share under the sun. The US is bombast of energy and delivered results that keep attracting more. I am equally a firm believer that this is a land of opportunity. All is possible.