USA's economy is bigger than ever

America is a big country blessed with vast energy resources. The shale-oil revolution has driven perhaps a tenth of its economic growth since the early 2000s. The enormous size of its consumer and capital markets means that a good idea dreamt up in Michigan can make it big across America’s 49 other states. Yet good policy has been important, too. America has long married light-touch regulation with speedy and generous spending when a crisis hits. Although supersized stimulus during the pandemic fuelled inflation, it has also ensured that America has grown by 10% since 2020, three times the pace of the rest of the G7. By contrast, Germany is mired in recession for a second consecutive year. Just the fact that California alone is the world 5th biggest economy is a good indicator of how far ahead the US is. 

Another factor is USA’s dynamic private sector drawing in immigrants, ideas and investment, begetting more dynamism. It is home not just to the world’s biggest rocket-launch industry, but also its internet giants and best artificial-intelligence startups. Its seven big tech firms are together worth more than the stockmarkets of Britain, Canada, Germany and Japan combined; Amazon alone spends more on research and development than all of British business. Because the dollar is the world’s reserve currency, meanwhile, investors have a keen appetite for American debt. They flock to Treasuries in times of crisis, letting the government dole out vast stimulus packages. So far, USA’s worsening politics have had little visible effect on the economy. Yet the economy is not immune from politics and as a country USA has grown more and more divided in recent times. 

There’s no reason that Europe can’t equal the US in terms of development. All they have to do is CTRL-C and CTRL-V US constitution, laws, and regulations and it could equal out. The problem is that Europe will never want to do this. The culture in Europe is very deeply programmed to support a privileged aristocracy. That’s why a common thread among European cultures is negativity and pessimism. If the future will always be worse, why try to change things? Even ignoring its assets, the United States ranks above its peers. The only country where the median person has more income than in the US, after adjusting for taxes and government transfers like healthcare and pensions, is Luxembourg. Among all the developed economies, the US has some of the highest levels of disposable household income and relatively low costs for necessities. If a citizen movde to Canada to do the same job as in the US, they would earn maybe 70% of what their job would earn them in the US while dealing with substantially higher housing and other costs in both relative and real terms. 

The US is one country with different states. The European Union is a confederation of many countries under a common set of policies. In the US there is one currency, one military, a sense of being an American first and a Texan/Californian second. Nobody questions how much money the feds give to Mississippi (because of the concentration of poor Americans) or Virginia (because of many of the government jobs there). Nobody questions investing tons of money into Military research in Silicon Valley that sparked the tech revolution. But Germans resented transferring wealth to Greece and the so-called PIGS did not like being forced to cut back spending. They used to deal with fiscal issues with things like currency devaluations. Europe gets some of the benefits but not all the benefits the USA gets from the EU and to truly compete, it would need a deeper union. Also, US has way higher inheritance taxes than Europe. 1/3 of European millionaires are self-made while 2/3 of American ones are. Source: www.economist.com