Something Else to Celebrate on Independence Day

Original post

Today Americans rightly celebrate their political independence.

As every school kid knows, the founding of the United States was revolutionary. Not just in the sense of replacing one set of rulers with another but in placing power in the hands of the people.

Our nation was founded on a creed. Thomas Jefferson wrote it, declaring that Americans have an inalienable right to life, liberty and the pursuit of happiness.

Our Constitution and Bill of Rights are the longest-serving foundation for liberty in history.

Today we enjoy political, economic and religious freedoms denied to billions around the world and throughout history.

Our military is the primary defender of the free world. (See World War I and World War II for details.)

The dollar is the world’s reserve currency.

We have the world’s finest university system.

No country attracts more students, more immigrants or more investment capital than the United States.

We are the global leader in technological innovation. The world’s most transformative companies – Airbnb, Amazon, Apple, Facebook, Google, Tesla, Twitter, Uber and many others – were founded here.

The industries of the future – biotechnology, robotics, artificial intelligence, genomics, nanotechnology – are centered here.

And we have much to appreciate this Fourth of July…

Americans have never lived longer. Our standard of living has never been higher. Educational attainment has never been greater. American cities have never been safer. (Despite the images you see on TV, violent crime is in a long-term cycle of decline.)

Work is easier. Most of our ancestors performed hard physical labor in farming, construction, forestry or mining. Mechanization has made those jobs far easier. And you are far more likely to provide white-collar services or technical skills in our knowledge-based economy.

Women traditionally spent most of their waking hours performing routine household chores. But no longer, thanks to central heat and air, indoor plumbing, washers, dryers, microwave ovens, coffee makers, and dishwashers.

We have more leisure time than ever before. In 1850, the average American worked 64 hours a week. Today we work 34.5.

However, the American Revolution was not just about political liberty. Based on a tax revolt, it was also about economic freedom.

In his new book, Apostles of Revolution, historian John Ferling points out that the Founding Fathers strove “to bring an end to a world where wealth and power were restricted to the few.”

Not just power… wealth. And while we still have work to do, that dream is being realized.

The U.S. has the largest and most dynamic economy on the planet. Our citizens represent 4.3% of the world’s population but 15.3% of global GDP.

The Federal Reserve announced last month that U.S. household net worth just hit a record $100.8 trillion.

And in May, Spectrem Group reported that the number of U.S. households with a net worth of $1 million or more hit a record 11.5 million last year. (Include home equity and there are several million more.)

We are also the most charitable people on earth, both in the aggregate and per capita. The Giving USA Foundation reports that charitable donations by Americans rose nearly 4% in 2017 to a record $390.1 billion.

Americans have traditionally avoided class envy, celebrating others’ success instead of resenting it.

Europeans, by contrast, have a long tradition of hostility toward “the rich.” And for good reason.

For centuries, most of the wealth on the continent was inherited or stolen (or both).

Virtually everyone worked for royals, aristocrats and other “nobles” who had done little or nothing to earn what they had.

Contrast that with today’s market-based economy, where all have an opportunity to rise, transactions are entirely voluntary and the wealthiest individuals – like Jeff Bezos and Bill Gates – have generally done the most to transform society for the better.

Greater affluence is important in many ways, some not so obvious.

Studies show that countries with a higher GDP per capita tend to be more peaceful, humane and tolerant.

Rich countries fight fewer wars with each other. They are less likely to be riven by civil wars.

The citizens of richer countries have greater respect for free speech, women’s equality, gay rights and environmental protection.

Not surprisingly, they are also happier.

In short, our amazing free market system has led to less war, more leisure, better health, longer lives, increased tolerance, a cleaner environment, record wealth and greater happiness.

So spend this July Fourth celebrating your political freedoms. But you might pause to appreciate your many economic liberties, as well.

Good investing,

Alex