
A 400-year story of progress – How America became the world’s biggest economy - mxschumacher
https://www.economist.com/news/books-and-arts/21729414-how-america-became-worlds-biggest-economy-400-year-story-progress
======
pizza
_The plantation economy developed in the southern states, and the initial
political dominance of Virginia (which provided four of America’s first five
presidents) ensured the continued survival of slavery in the newly independent
country. By 1860 auction prices suggested that the collective value of
American slaves was $4bn at a time when the federal government’s annual budget
was around $69m. That explains both why southern slaveowners, many of whom had
borrowed against their slaves as collateral, would never give up the practice,
and why a financial settlement of the issue was out of the question._

I guess this too would be an example of the 'banality of evil'.

(btw to get around the paywall just clink on 'web' to find it through google;
it'll let you read it if google is the referrer)

~~~
kolbe
Just an aside, but I wonder if the north stood to profit from this dynamic.
Like, if farms were held as collateral against the slave loans, did northern
banks get to take that land when the owners went into default?

~~~
pizza
I know of a different way the North profited -- the opportunity cost of a firm
refusing to do transactions with members from a different group (i.e. both
hiring black labor or collaborating with black enterprise) is equivalent to
institutionalized forfeiture of feasible income (of adding more laborers) [0]

Southern capitalism thus negated capitalism's mission: that society improves
when parties can fulfill each other's desires efficiently if they each have
something that the other desires. So Northern capitalism did tend towards
greater capitalist prosperity, because it wasn't contradicting post-slavery
capitalism like the South. That contradiction depends upon the Southerners not
seeing blacks as anything but "technology", rather than economic agents.

But the result is that white refusal to cooperate with blacks hurts _both_
blacks and whites: neither blacks improve their lot (no productivity), nor do
whites improve theirs (forced to relinquish maximum efficiency and profit that
would otherwise be allowed by allowing black employment) - simply because of
racial stubbornness.

[0]
[https://www.nationalaffairs.com/storage/app/uploads/public/5...](https://www.nationalaffairs.com/storage/app/uploads/public/58e/1a4/aa6/58e1a4aa6e9fd533879253.pdf)

------
Razengan
Honest question: How much of it is thanks to the US being far away and largely
untouched by all the wars in Europe, especially WW2, while still ostensibly
profiting from them?

And then being the ones to end it with the strongest display of force?

~~~
losvedir
None of it, technically. The U.S. became "the world's largest economy" before
WW1.

~~~
afpx
I wasn't sure, so I had to look it up. But, it seems like losvedir may be
correct.

According to these numbers [1], the U.S. was the largest single country
economy several years before 1914. And, if these numbers can be trusted, its
growth trajectory would have sustained that position even without WWI.

[1]
[https://en.m.wikipedia.org/wiki/Angus_Maddison_statistics_of...](https://en.m.wikipedia.org/wiki/Angus_Maddison_statistics_of_the_ten_largest_economies_by_GDP_\(PPP\))

------
zizek23
Let's call it as it is, an entire continent was usurped, a gigantic fertile
landmass rich in resources was stolen along with unlimited slave labour and IP
from Europe. The consequence is predictable.

Using jingoism to spin this into some sort of exceptionalism celebrates the
loot and plunder without a hint of self consciousness or remorse, and cements
a barbaric ideology that fuels more indiscriminate global plunder in the
Middle East, Latin America and Africa.

~~~
newsmania
Slavery actually held the USA back. It kept the south rural, whereas the north
was far wealthier without slaves because it industrialized. Furthermore, the
civil war was incredibly destructive and without slavery would not have
occurred. Lastly the USA was not the biggest economy in 1850.

As for a “usurped continent”, the land was very sparsely populated by the
natives compared to the people who came in, and disease cleared out more of
them making a vast underpopulation. It’s just not right to say that so few
people should get to control the entire continent just because they were there
first. Also I would guess you are a liberal from your comments, and therefore
likely support legalizing undocumented immigrants. According to your logic,
undocumented immigrants are “usurping” America, which is quite unpopular among
liberals today.

America committed plenty of evils, but that’s not what made America great. In
addition to many bad things, the USA did a lot of things right. I believe the
USA had a lot of benefits from geography, but the real thing that made the
country great was recognizing the rights of the individual. It has been
demonstrated over and over again that egalitarianism yields big dividends in
groups. Because the USA had such an emphasis on equality (declaration of
independence), innovation occurred on an incredible level. It took a long time
for that equality to spread to blacks, but the very idea of even equality of
whites was unheard of at the time of the USA founding.

Combine that with the fact that Europe was devastated by two world wars, it
was inevitable that the USA should pull ahead.

~~~
pizza
I'm skeptical of the idea that the tragedy of the unintended epidemic
resulted, fairly, in property rights for the invaders. It means that either:

\- "collective pre-existing rights became held in abeyance because so many
rightsholders died" \-- This assumes the living natives were not the owners of
what was still there, either because they were propertyless, or the dead
rightsholders didn't have a way to transfer property rights - _which they
would necessarily, historically have had_ for rights to have been a pre-
existing Native American cultural notion - at the very instant they met the
explorers.

\- "the natives didn't have a notion of property rights, but the explorers
did. the explorers were able to respect property rights, so it was best and
fair that they acquired as much as they could" \-- If anything this suggests
that the explorers had great disrespect or didn't even understand property
themselves. It was peak hypocrisy to violate the Native American population's
property rights -- that were still their _rights_ even if they were unaware of
them. You cannot steal something from someone else if you think they don't
know it is theirs. I have a suspicion that this idea I keep hearing "natives
didn't have the concept of property" is really just false and veiled racism.

\- "even if natives did have property rights nevertheless the invading
explorers had a different concept of property rights" \-- yes, the explorers
had the same idea of fair property rights as someone going into a convenience
store and shouting "nobody move, this is a stickup!"

~~~
syrrim
It means merely that there were very few people laying claim to a very large
piece of land. That they were killed by disease means that they weren't killed
intentionally in order to take the land.

Property rights don't actually exist. The idea of property rights is a way
nations like to explain the division of property they allocate to their
citizens. In reality, there is very little earth that needs to be divided
among all. A small group cannot claim an unfairly large portion, no matter how
long they've lived there, nor what means they used to claim it.

~~~
pizza
Yes, I agree property rights are not physical law. That said, who determines
what is fairly or unfairly allocated is never who is most sanctimonious but
who is holding the gun.

------
sremani
The 13 colonies fighting for self-determination would not have imagined
becoming the sole super power of the world. Louisiana purchase for strategic
depth, Texas joining the Union and the Mexican American War, leading to
manifest destiny to the west ward expansion. The Civil war, would have ripped
the continent into warring nations, the nation building of USA from sea to
shining sea is never obvious, and its bloody, brutal and downright ugly. In
spite of becoming bi-coastal power, US was still a poor country in 1880s, and
what has transpired in Europe with two world wars and its own role in Pacific
Theater thrusted US into its current role.

Its convenient to dismiss, and over simplify this whole enterprise of making
of America. I am amazed, and simply amazed by the American experiment and I am
not even "technically" American.

------
maxxxxx
It will be interesting to see how the next 400 years will go. For a long time
the US could just keep growing into new territories and absorb a lot of
ambitious immigrants that way. It seems this phase is over. The US is now a
grown up country where everything is owned already so it will be much harder
to grow. The Trump success seems a symptom of this. Instead of just growing as
the US had always done Trump's message was about distributing the pie.

~~~
adventured
Your premise isn't very well supported by the facts. The US added $5 trillion
to its GDP in the last ten years, _despite_ the great recession - a time in
which the most powerful economies of Europe didn't grow at all, nor did Japan.
US wages routinely grow three to five times faster than those in Japan,
Germany, France or Britain.

Where's the lack of growth? GDP per capita went from $46,000x to $57,000x over
those ten years and shows no sign of actually stopping, in contrast to most of
its peers.

To put the growth in context, that $5 trillion is more than Russia, Germany,
Japan, France, Britain, Ireland, Italy, Spain, Brazil, Mexico, Argentina,
Canada, Sweden, Finland, Netherlands, Belgium, Denmark, Norway, Austria,
Portugal, Greece, Poland, Czech, Romania, Slovakia, New Zealand, South Africa
- all added combined.

~~~
maxxxxx
It seems the US is doing a lot of things right. But I still believe that its
main advantage over the last few hundred years was the ability to grow into
"empty" land and also the fact that it's protected by oceans.

Edit: Based on this the US is not really outperforming:
[http://knowledge.wharton.upenn.edu/article/is-europe-
outperf...](http://knowledge.wharton.upenn.edu/article/is-europe-
outperforming-the-united-states/)

~~~
seibelj
The vast majority of the United States is undeveloped. No need to worry about
land

------
adwhit
Given that 400+ years of growth has got us into a position where the
likelihood is that the planet will be unable to sustain human life within a
few hundred years, I'd be curious to find out what future historians will make
of the West's supposedly proud story of progress.

In the end, would we all have been better sticking with the Native American
way of life? Benjamin Franklin: “When white persons of either sex have been
taken prisoners young by the Indians, and lived a while among them, tho’
ransomed by their friends, and treated with all imaginable tenderness to
prevail with them to stay among the English, yet in a short time they become
disgusted with our manner of life, and the care and pains that are necessary
to support it, and take the first good opportunity of escaping again into the
woods, from whence there is no reclaiming them.”

Perhaps some kind of voluntary winding down is necessary. "It was good while
it lasted. For some people."

~~~
bryanlarsen
Humans live in Siberia and the Sahara, it'll be pretty much impossible to kill
us off completely - we're definitely the hardiest large mammal.

It's a good question whether civilisation will be here in 400 years, but
humanity will be.

~~~
gerdesj
"hardiest large mammal" \- hopefully but you might want to be related to
tardigrades for real hardiness.

~~~
craftyguy
Those are neither large, nor mammals.

------
googletazer
America became the biggest economy because of brains and innovation driving
it, its as true a hundred years ago as it is today. The opportunity to make
money for yourself - thats what drove the American economy and still drives it
today. A lot of people are commenting that American wealth came from slavery,
but that is simply not so - nearly every country on Earth had some degrees of
slavery, but how many had succeeded? Slaves didn't smelt steel, nor designed
and built battleships to be sold to the Russian Empire in 1900s.

Today though, you can see countries like Germany take the lead with their
better protections for inventors and better incentives and protections for the
employees.

------
spodek
The review implies the people and culture caused economic growth. I'd say they
resulted from it, which resulted from two oceans and friendly neighbors that
make the country difficult to invade, fertile soil, lots of natural resources.

~~~
dasil003
Your conditions are necessary but not sufficient, I would say, considering the
history of Brazil.

------
cerealbad
page 12[] is where the interesting numbers are.

machinery, iron and steel, cotton, lumber. that's how it became the world's
economy. ww1 and ww2 is how it became the world's military power. the military
industrial complex is how it maintained both of these positions.

manufacturing, construction and population is how china overtook them. america
should be pushing open borders, tax relief on families with multiple children,
ban on abortion, if it even wants to compete for the 21st century. a ussr type
dissolution and depressing collapse is sure to come when their inevitable debt
burden default happens by the 2040s or 2050s. the only question is, will this
occur before or after the eurozone currency implosion and german re-armament.

[][https://web.archive.org/web/20081230063039/http://faculty.wc...](https://web.archive.org/web/20081230063039/http://faculty.wcas.northwestern.edu/~jmokyr/Graphs-
and-Tables.PDF)

------
ionised
Imagine playing a game of Civilization, but you start at 1700-AD-level
technology, with only tribal natives as a threat, on a massive landmass with
oceans on two sides rich in natural resources and you have no immediately
threatening enemies.

That's the US. A game of Civ on easy mode.

------
tmnvix
Defaulting on debt helps: [https://mises.org/library/short-history-us-credit-
defaults](https://mises.org/library/short-history-us-credit-defaults)

------
alistproducer2
Why is this article on the front page? This is just troll bait.

------
gnasr
Stop calling it america, it's north america..

~~~
JBReefer
Hey can someone explain this position? You see it a lot on the internet - we
all know it's just short for the mouthful of "The United States of America",
right?

Is it just garden variety anti-Americanism, or is it based on something else?
You also see the form "American means anyone from both continents," which is
off in exactly the same way.

~~~
myrandomcomment
No one from Canada or Mexico would say “I am an American”. You only here that
from someone from the USA. So whatever the official title is the popular usage
is that is some says they are “American” it means they are a citizen of the
United States Of America.

------
eighthnate
The US became the world's biggest economy in the late 1890s. So how did we
become the largest economy? Stealing a large landmass blessed with abundant
resources and fertile arable land. Growing the population immensely via high
birth rates and immigration. Industrious population and business friendly laws
helped. But it was mostly OIL. The US was the saudi arabia of oil for nearly
100 years from mid 1800s to ww2. Standard Oil became the largest company in
the world for a reason. We had a ridiculous amount of oil and we exploited it.
Oil was discovered in the 1850s and it helped the american economy become the
largest in the world.

~~~
churchill1944
Oil was but one strong American industry. And oil itself didn't turn out to be
in such high demand until the mass production of the automobile, which was
another American thing.

------
vacri
No mention of an incredibly wealthy continent, both in mineral and
agricultural terms (and a temperate climate), that was largely seized by
killing the people who owned it and taking their stuff. No mention of the
Louisiana Purchase. without which 'Manifest Destiny' would never have
occurred, nor the Mexican-American war which added Texas and California, two
of the engine-rooms of American wealth today. No mention of the point that
once 'manifest destiny' was complete, the US was safe on all sides - much
weaker countries to the north and south, and giant ocean-sized moats to the
east and west; rather than deploy military in defense, it could be used to
project power in support of the economy.

All of these things are pretty major additions to why the US is such an
economic powerhouse today.

Edit: wow, I've really touched a nerve with this one. Enough to get some
revenge downmodding on past comments of mine. Wow.

~~~
meri_dian
The fact that the US is separated from a huge chunk of the world by the oceans
is tremendously important.

But pretty much all nations and cultures have spread by one group dominating
other groups and taking their land. That's a given. What happens after the
land is taken and the nation established is more important, which is what this
book seems to address.

The US has huge material advantages over other nations, but it has also
fostered a powerful innovative culture that is just as important to it's
success.

~~~
vacri
> _is just as important to it 's success._

Yes, but this is why I said the things I mentioned were 'pretty major
additions', not 'the only reasons'. The Louisiana Purchase is routinely
ignored in things like this, for example - with no Purchase, there's no
Mexican-American war, no Texas or California, no Great Plains, no Mississippi
trade, and France as a (friendly) neighbour.

------
jorvi
When will this myth stop? Until the UK has left, the EU is the biggest economy
in the world, not the US.

Edit: damn, hit a painful nerve here apparently.

For the tired old '28 countries vs 1 country', America its states and the EU
its countries are very comparable in economic size.

~~~
treehau5
> the EU is the biggest economy in the world

Yes, the EU, or otherwise known as that giant land mass consisting of 28
different countries with unique economies.

Ironically, trying to treat each member state as some homogeneous member is
what is leading to the fracturing and growing nationalism. UK won't be the
last to try and break off.

~~~
skissane
The EU in many ways acts like one big economy due to its customs union,
freedom of movement of workers, capital, goods and services, extensive
harmonised regulations, partially harmonised taxation, wealth transfers
between members, a common currency to a substantial part of it, etc. It is a
lot more tightly integrated than some mere 28 member free trade area would be,
although still not as tightly integrated as say the 50 states of the US are.
(And the 50 US states all have distinct economies from each other, with
sectors that are big in one state being small or even non-existent in
another.)

~~~
treehau5
And still the obvious fact remains: 1 country versus 28 separate countries.

The UK voted to break off. France came dangerously close to heading down that
path with Le Pen. Greece's government might not want to, but the people would
be on board for the same. Potentially Germany when they get tired of carrying
the rest of the EU (especially after UK) on it's back can all leave whenever
they want -- they just need to vote on it.

However, If California, for example, tries to succeed, it would be illegal.

~~~
DrScump

      If California, for example, tries to succeed, it would be illegal
    

I think you mean _secede_. It's still legal to _succeed_ in California... for
the moment, anyway.

~~~
treehau5
Yes, secede, thank you, funny typo though. You are right about that.

