The Secret of Prosperity

June 28th, 2009

Why has America been so extraordinarily successful, politically and economically?

The political answer is easy — freedom and strenuously defended individual rights.  Americans sometimes fall prey to pathological navel-gazing, so closely focused on the cracks and flaws in our system that they can see nothing more.  All it takes is to look up to the horizon and examine the political systems of all other countries.  In terms of freedom and rights, a mere handful can compare to America; all the rest range from deficient but acceptable to downright abysmal.

But what about our unmatched and evidently unmatchable economic prosperity?  Individual freedom and rights are obviously a factor.  More important, though, is the political, cultural, and financial atmosphere that encourages and rewards invention, innovation, and creativity.  It’s hard to define precisely, but the proof is in the many brilliant people who have flowered in America either as immigrants of choice or refugees.

One example:  Nikola Tesla is “often described as the most important scientist and inventor of the modern age, a man who ‘shed light over the face of Earth.’ He is best known for many revolutionary contributions in the field of electricity and magnetism in the late 19th and early 20th centuries.”  Tesla, an ethnic Serb highly honored in Serbia and the Balkans, needed the creative atmosphere and rough-and-tumble American financial environment to permit his creativity to reach its full potential.  His achievements not only resulted in major scientific advances; they were of great benefit to America and its economic prosperity.

Tom Friedman makes the point in Invent, Invent, Invent in The New York Times:

…the country that uses this [economic] crisis to make its population smarter and more innovative — and endows its people with more tools and basic research to invent new goods and services — is the one that will not just survive but thrive down the road.

We might be able to stimulate our way back to stability, but we can only invent our way back to prosperity. We need everyone at every level to get smarter.

I still believe that America, with its unrivaled freedoms, venture capital industry, research universities and openness to new immigrants has the best assets to be taking advantage of this moment — to out-innovate our competition. But we should be pressing these advantages to the max right now. …

We should be taking advantage. Now is when we should be stapling a green card to the diploma of any foreign student who earns an advanced degree at any U.S. university, and we should be ending all H-1B visa restrictions on knowledge workers who want to come here. They would invent many more jobs than they would supplant. The world’s best brains are on sale. Let’s buy more!

[Craig Barrett, the former chairman of Intel] argues that we should also use this crisis to: 1) require every state to benchmark their education standards against the best in the world, not the state next door; 2) double the budgets for basic scientific research at the National Science Foundation, the Department of Energy and the National Institute of Standards and Technology; 3) lower the corporate tax rate; 4) revamp Sarbanes-Oxley so that it is easier to start a small business; 5) find a cost-effective way to extend health care to every American.

We need to do all we can now to get more brains connected to more capital to spawn more new companies faster. As Jeff Immelt, the chief of General Electric, put it in a speech on Friday, this moment is “an opportunity to turn financial adversity into national advantage, to launch innovations of lasting value to our country.”

Friedman compares the potential American reaction to the economic crisis with that of Russia and China, neither of which has the political, cultural, or financial environment necessary to promote the kind of innovation and creativity that leads to extraordinary prosperity.  I think he’s got it right.


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8 Responses to “The Secret of Prosperity”



  1. Clarissa |

    According to the Human Development Index, the US occupy 15 th place among the countries of the world. In the Prosperity iNdex, we occupy place 6. So where do you get this “unmatched and evidently unmatchable economic prosperity”??


  2. Tom |

    The HDI is a UN tool used to try to measure levels of development. For those who may be interested, you can read about it here. It has all the flaws associated with most UNDP efforts; I’ve worked with them in the field and seen them up close. Basically, the HDI measures how Scandinavian a country is. Among its many major flaws, it uses limited data sets and relies on UN member states truthfully and honestly reporting data. That alone gives it highly questionable validity.

    I’ve lived in about a dozen countries and traveled in many more. That goes from the absolute pits in Africa to modern European countries. You can find good things in even the worst countries, but in terms of general prosperity and quality of life, I’ve never been in one better than the U.S.


  3. Larry |

    I have to agree with Tom.
    There is no other place like this country.
    The dream of every foreign country I’ve visited is to be America.


  4. Clarissa |

    “The dream of every foreign country I’ve visited is to be America.”

    -You couldn’t be more wrong, Larry. It is a myth that most people around the world want to have a life that’s all work, work, work, saddled with a 30-year mortgage, where you feel you have to kill yourself working to buy that new plasma screen TV, where there is little sex and even less fun, where people feel enormous guilt for relaxing even for a while, where neither healthcare or higher education are guaranteed to everyone, where you have to be pretty rich to go to college (or saddle yourself with enormous debt.)

    Don’t get me wrong, this is a wonderful country, but the idea that people of all cultures would see this life as perfect and actually want it is truly wrong. I am an immigrant and people from my old country don’t envy me in the least. They think I’m an idiot for wanting to live here. :-) Both my friends and I are right in our own way. Different cultures have different priorities. The very doubtful American prosperity that comes at such a steep price is hardly the envy of everyone.


  5. Tom |

    Well, I don’t know about Larry’s observation, but in the many countries I’ve lived, worked, and traveled in I’m routinely told by many people how much they want to study, work, and live in America. I know some who went and came back because they had unrealistic expectations, got homesick, whatever. But they were the exceptions.

    Among the considerable number of people I’ve dealt with and known in other countries, very few have the negative, anti-American views promoted by American leftists, academics, and most of the American and European media. For the most part, they know better. They want for themselves and their families the prosperity and the quality of life you somehow don’t see all around you.

    As far as your description of life in America — Clarissa, honestly, you need to get out more. :)


  6. Clarissa |

    “They want for themselves and their families the prosperity and the quality of life you somehow don’t see all around you.”

    -For many people, the price Americans pay for what they see as prosperity is too steep. How about such invaluable commodity as leisure?


  7. Tom |

    I agree that leisure time is valuable and that Americans have less of it than people in other industrialized countries. We work about two weeks a year more than the Japanese, Australians, and New Zealanders; about a month more than the British and Canadians; and about two months more than the French and Germans. This comes from ILO numbers of a few years back, and it says very little about who is working hardest in what sectors of national economies, etc.

    When you work hard, you produce more and generate more prosperity. Work is also its own reward for many people. Many other people, I’m sure, would like more time off. In any case, hard-working Americans have created remarkable prosperity, and millions of people who live in societies that haven’t done the same yearn to come to the U.S. to claim a share of that prosperity.


  8. Brian Bagent |

    Like Tom, I’ve lived overseas and traveled rather extensively as well.

    No, not everybody wants to move here. But for those that want to leave where they are and move some place else, America is first choice, especially for those with an education in science or medicine.

    They may not want to be Americans, but any third-worlder can tell you they aren’t crazy about what they have. It is not all Rousseau and his “noble savage” ideal. Have you ever been to South America or Africa? Even to go to urban areas in South America, one needs to get vaccines for diseases that have not been epidemic in this country in decades: yellow fever, cholera, typhus, typhoid, malaria, hepatitis A. Here, you don’t see diseases born of malnutrition like beriberi, scurvy, kwashiorkor, pernicious anemia.

    You want leisure? You are welcome to as much of it as you can afford to pay for, and nothing more. To demand it after the fashion of the Europeans is to make demands on me. That doesn’t amount to slavery, it is slavery.


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