Quantum_sloth, 2023-04-24 15:46:44
America’s Economy: A Success Story
Despite the widespread belief that America’s economy is broken, the country remains the world’s richest, most productive, and most innovative. Since 1990, America has maintained its quarter share of the global economy, even with China’s growth in economic clout. Today, America accounts for 58% of the G7’s GDP, compared with 40% in 1990. Adjusted for purchasing power, only those in über-rich petrostates and financial hubs enjoy a higher income per person. Average incomes have grown much faster than in western Europe or Japan and exceed $50,000 in Mississippi, America’s poorest state.
America has nearly a third more workers than in 1990, compared with a tenth in western Europe and Japan. And, more of them have graduate and postgraduate degrees. Although Americans work more hours on average than Europeans and the Japanese, they are significantly more productive than both.
American firms own more than a fifth of patents registered abroad, more than China and Germany put together. All of the five biggest corporate sources of research and development (R&D) are American, and in the past year, they have spent $200 billion. Consumers around the world have benefited from American innovations in the laptop, the iPhone, and AI chatbots. Investors who put $100 into the S&P 500 in 1990 would have more than $2,000 today, four times what they would have earned had they invested elsewhere in the rich world.
Although America’s spending on social benefits as a share of GDP is much less than that of other countries, they have become more European and have grown even faster as the economy has grown. Tax credits for workers and children have become more generous and health insurance for the poorest has expanded, notably under President Barack Obama.
For the world as a whole, America’s outperformance says much about how to grow. One lesson is that size matters. America has the benefit of a large consumer market to spread the costs of R&D, and a deep capital market from which to raise finance. Another lesson is the value of dynamism. Starting a business is easy in America, as is restructuring it through bankruptcy. The flexibility of the labour market helps employment adapt to changing patterns of demand.
The shadows of the economy are the middle-class, who have seen their post-tax incomes rise by less than those of the poorest and the richest. Additionally, the share of prime-age American men who are not in work has been rising for years and is higher than in other countries, and life expectancy in America lags shamefully behind others in the rich world.
America’s performance is being challenged by the country’s poisonous politics and protectionist policies. Subsidies could boost investment in deprived areas in the short term, but risk dulling market incentives to innovate. With the rise of China and the need to fight climate change, the US faces fresh challenges.
In conclusion, America’s economy has experienced an impressive number of successes, however there are still challenges to be faced. To ensure a successful next 30 years, it is important for politicians to tackle the current problems, such as the middle-class income gap, and for America to remember what has powered its long and successful run.