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Comment by safety1st | Hacker News Reader

Over the years as my perspective has become more global I've come to realize what a privileged position the US is in, economically:

* Ports on both the Atlantic and Pacific

* A very effective transportation system in between

* In the big growth sector where points 1 and 2 don't matter, tech, it's still #1 in the world anyway

* A market of 350 million high income people (by global standards) under one regulatory framework

No other country can compare. No one else has this. These in-built advantages are incredibly hard to beat.

There will be crises but the key insight for me was that because of these advantages the US is almost always going to be better prepared to weather those crises than the rest of the world. That is why it enjoys such a huge inflow of capital and immigration (currently #1 recipient of FDI in the world, most immigrants of any country in the world).

It's just a big risk to bet your money against the success of the US, no matter how dumb its leaders get.

It probably also helps that Americans tend to flip out and go full doomsday mode when anything goes wrong inside of their borders, I mean it's stressful, it's not very well planned, but it does make problems hard to ignore.

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No other country can compare. No one else has this. These in-built advantages are incredibly hard to beat.

It's why it's on our currency - "e pluribus unum".

It's also why Russia and China are constantly working to erode the unity of the American people, whether it's through false narratives that "we're more divided than ever", driving a wedge into political parties, fomenting rage-mode across social media, utilizing Twitter for propaganda or TikTok to keep American minds drained of their creative motivation while they ban the apps in their own countries... the list really goes on.

A cord of many stands is not easily broken, but others will do their damnedest to try.

> "e pluribus unum"

It's been a while, but I translate that as "From many, one".

I think it's an allusion to the thirteen British colonies becoming one United States.

  > It's why it's on our currency - "e pluribus unum".

"United we stand, divided we fall."

“A cord of many strands is not easily broken” is literally Fascism.

The idea people can get more done by working together is literally older than writing.

The "cord" in fascism is usually an ethnic group. I believe that is the problem with fascism, not the fact that there is a cord.

You missed one massive advantage: the US has a good and reliable legal system.

It can not be overstated how good this is for an economy, and it's something emerging markets struggle with, and even some of the advanced economics.

It'll always be easier to start and run a business where you can rely on tribunals to solve problems quickly and somewhat fairly.

Who are we calling an "advanced economy", but also considering having an unreliable legal system?

Contenders, in my mind:

- China, second largest economy, but generally still considered developing, so I don't think it counts as "advanced"

- Russia? They've been a big player in the world economy long enough it is hard to call it a developing country.

Italy for example (second exporter in Europe, tenth by GDP in the world) has notorious issues with its legal system (for a variety of reasons) where trial may take many years to be concluded.

That export sounds like a suspicious claim, do you have sources? afaik DE, FR and NL are much bigger exporters, and a random Google result seems to back that, placing Italy 5th in EU absolutely and almost last by GDP [1] [2]

[1] https://data.worldbank.org/indicator/NE.EXP.GNFS.KD?location...

[2] https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?location...

You're right, I don't know where I got that factoid. Perhaps it was an industrial goods only statistic? I can't find it anyway now, so I may have just misremembered it.

Wow, I stand corrected. Italy is scoring terribly. Somehow I thought “the old guard in EU are okay”

https://www.theglobaleconomy.com/rankings/wb_ruleoflaw/

The other advantage is the total net worth as opposed to GDP. You hear a lot about GDP and the US has the biggest economy by far.

But the total net worth per person in the States is even further ahead of the rest of the world. Only Switzerland is ahead of the US in per-capita net worth (only by a hair though) and one suspects that’s partly due to so many Americans parking their money there.

Having had the biggest GDP for decades led to a amazing amount of wealth being concentrated in the USA.

Actually the U.S. in 3rd place behind Switzerland and Luxembourg in terms of mean wealth per adult and Hong Kong is not far behind. But you are right that the other countries on the upper ranks are mostly smaller nations with large banking sectors: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...

While I agree that the U.S. has an enormous built-in advantage over other countries, I would really highlight one other piece of data: In terms of median wealth, the U.S. is eclipsed by half the E.U. and many Asian countries including diverse economies like France. This points to a terrifying concentration of wealth, which has also been highlighted by researchers like Picketty and this could (or arguably already does) put the social fabric of the U.S. under enormous strain.

While it is true that the US mean is much higher than the median, the median person still benefits greatly from that wealth. The rich invest their wealth in business, real estate for rent, and real estate for themselves, making all these things better.

I'm currently in the EU, in a country that outperforms the US in median wealth by about 20%. While it's clear that life here is good, I'm also struck by how much worse everything looks here, from the rental real estate where I'm staying, to the generally unprofessional standard of business.

So just looking at the slightly-higher median and ignoring the 2-3x higher mean also skews the picture.

True, but look at the rental markets for the majority of Americans that don't live in the rich coastal areas. And talk about unprofessional business - you have unprofessional legal professionals in parts of the US.

Where America is great, it is great. But for the rest of it, it can be a very differently life for most of the inhabitants.

Compare "poor" America with poor (insert geographic area here).

There's no comparison. It's hugely, vastly better in the States. The only other places that have large backwater areas that can compete are maybe Canada and Australia. This is due to investment by rich people in rental real estate and businesses such as Walmart, Costco, Amazon, etc.

When a family like the Waltons have a net worth in the 100's of $Bn's, this money isn't kept in gold bars in a safe. It's actively deployed in a variety of businesses. So the poor don't get a cut of the 100's of $Bn's, but they do benefit from the investment. And in very equal countries, the opposite is true. Everybody's OK, but there aren't really any systems that stand out as being amazing.

It's an empire. Empires are good at concentrating wealth by extracting it from their surroundings.

Personally I would absolutely not want to be a poor person in the US. High crime, police violence, abusive work conditions, random shooters, health care bankruptcy, Fentanyl being pushed by medical professionals, zero Covid protections - it's a dystopian horror show.

This may surprise you, but there are locations around the world with much lower GDP and much happier people.

I find this a weird take. In my country we're always amazed that there are places in most largish US cities where it simply isn't safe to be if you aren't a native, and lethal violence is a daily occurence.

I'm not sure the Waltons are a great example to be honest. They pay many of their employees so poorly that they're in receipt of state benefits. Society is effectively paying a portion of Walmart's labour cost. Until that's no longer the case I don't think the Waltons deserve a penny.

To address some of your other points:

A poor person in my country is allowed to take time off for illness without fear of being fired. That time isn't subtracted from their legally mandated minimum number of holiday days.

A poor person in the US will show up to work sick because they know their boss can let them go. Their colleagues might then get sick.

While I'm not sure how common it is, I've seen US news articles lauding co-workers for donating sick days to a colleague with a life threatening illness. While they're obviously doing a good thing, the necessity of the act honestly comes across as barbaric.

A poor person in the U.S. more likely as not does not have proper health insurance, no unemployment benefits to speak of, is highly unlikely to receive disability benefits even when diagnosed with a disability, is subject to a highly prejudiced and often violent police force, must rely on a famously expensive legal system to press civil claims, must content with a social environment that in many places is shaped by easy access to drugs, has no access to government housing, can be fired at will, etc. etc.

Yes, there are many countries where being poor is even worse. But among developed economies (so about a quarter of all countries), it is hard to come up with a worse place for being poor than the U.S.

> After accounting for all income, charity, and non-cash welfare benefits like subsidized housing and food stamps, the poorest 20 percent of Americans consume more goods and services than the national averages for all people in most affluent countries.

https://www.justfacts.com/news_poorest_americans_richer_than...

This "study" (not peer reviewed) is questionable in various ways and published by a "think tank" that has a strong libertarian agenda and an obvious axe to grind.

First of all, it compares figures from two different data sets. That is usually something that is quite hard to do correctly, because different data sets usually use different definitions for stuff like "household consumption" etc. Without a peer review it is really hard to tell if they've done it correctly and given the intricacies of economic statistics, my guess is they didn't.

But maybe even more importantly, the data concentrates on "private consumption" and thus leaves out all the goods and services that governments pay for – which is the entire point of public services like a public health care system. I.e. when a poor person in the U.S. visits a doctor, they pay for it out of pocket, the transaction will be registered as "private consumption". If I (in Germany) visit the doctor, no money ever changes hands. My contributions to the public health care system are deducted from my income before it ever reaches my account and about half don't come out of my own paycheck anyway, they are the responsibility of my employer.

So my guess would be that this "study" undercounts exactly what it professes to account for: Goods and services consumed (but not necessarily paid for) by the poor.

But how about we measure outcomes? For example in terms of life expectancy, the U.S. is much more "unequal" (if you are poorer, your are more likely to die younger) than other developed economies: https://ourworldindata.org/life-expectancy#inequality-of-lif...

And because the U.S. has worse life expectancy than other developed economies in general, poor people are likely to die younger in the U.S. than in, say, Germany in absolute terms as well. That is just one indicator but if you accept that "the number of years you live" is an important indicator for general quality of life, the U.S. seems to score quite badly on this.

This has all sorts of distorting effects. It turns out that one guy was paying a substantial fraction of New Jersey's budget, and he moved. https://www.nytimes.com/2016/05/01/business/one-top-taxpayer...

(then ended moving back again, because Florida)

Note that it put the income tax forecast at risk.

The individual taxpayer was paying ~hundreds of millions per year into an $86 billion dollar budget. It's kind of wild that an individual would be paying a tenth of a percent (or so) of a state's income taxes, but it's maybe not a substantial fraction.

Not that surprising when you have a progressive tax system and people who make tons of money.

New Jersey certainly has had budget issues and pension issues. But the current leadership has done fairly well with a budget suppress and continuing to fund the pension system. So as of now the loss of the single taxpayer while a loss to the budget hasn’t put a huge hole in the system. Obviously fully funding the pension after years of under funding will take time so we will see how it turns out.

It's basically impossible to do any financial transactions in Switzerland as an American. Even something as mundane as opening a bank account to receive your salary is extremely complicated as most banks refuse to do business with Americans. A lot of Americans there renounced their citizenship because of this.

That's due to American regulations. If any American has an account at your bank, they can audit your whole bank.

So now there are banks that will never take an American customer, and banks that specialize in Americans.

I'm not sure this is the best example. The reason America puts Swiss banks with American customers under extra scrutiny is specifically because Swiss banks are infamous for enabling tax evasion.

It's a global thing, not just Swiss. USA has some high-powered financial regulations and the ability to enforce them

All that but most of all, the fact USD is the world reserve currency is the biggest privilege. Every other countries have to stock up on USD/ have swaps in place and follow US when they raise fed interest rates instead of doing what’s best for the domestic economy.

For example, South Korea’s USD reserves has been sharply going down as they’ve been trying to resist following the recent rate hikes to soften the blow to the economy. This is happening all across the globe.

However, US can do (and seems to be doing) whatever they want.

within reason of course. it's a position of privilege, but that position used to below to the UK. they lost that position over/after the world wars, and we got it. it is possible that doing whatever we want could push people to the euro as the reserve or the pound. it seems far fetched, but I could see a world where the euro the the world's reserve currency

The yuan may be the competition we should fear. Since we disconnected Russia from our financial systems, Russia is willing to do business with our biggest rival, China, in their currency.

Well, what do you expect? The US over the past several decades has effectively crippled economies for its own interests by cutting off USD access. When you do this to a non-trivial number of countries they get around it by trading among themselves and dumping the USD for their own currencies. There are many countries including India, Japan, Korea, China, Russia, etc who are opening up bilateral or trilateral agreements to trade in their own currencies bypassing the USD. The US has pissed off a significant portion of the world that its days as reserve currency are certainly numbered. However, unbelievable it might sound today but the world is inching closer to non-USD centric future.

Im not sure you understand what reserve currency means.

When Korea buys something from Japan, they don’t have to pay in USD. They can use whatever currency they want.

The yuan has capital controls. You can't move money freely in and out of China even (especially) if you're a Chinese national. Absolute non-starter for any kind of reserve currency idea.

For now. China has been actively working on making the yuan a world reserve currency [1], including relaxing the controls if it is adventageous.

[1] https://finance.yahoo.com/news/putin-strengthening-yuan-role...

That would require a wholesale change in the way the Chinese government wields it power.

Money flees China now despite the capital controls.

Even the Chinese would rather keep their money in Singapore, Switzerland or the US than at home.

The privilege is maintained by having the biggest military force in the world - which is why the UK used to be in that position, and the US is in that position now.

It's not inconceivable China could take over. Russia won't (lol...) and the EU doesn't have much interest in becoming militarised.

Does anyone seriously believe the US military is forcing the world to use dollars? What’s the leverage? Does France get invaded if the Euro becomes too important?

You left out:

* Issues the global reserve currency

* Maintains the largest military

* Has the widest media reach

* Has significant natural resources

There are problems too, but the unfair advantages are quite strong, and self-perpetuating.

Which is fortunate for Americans, because very few countries could be so haphazardly managed, without failing.

I would argue the perceived haphazardness is an advantage. The more centrally planned the economy, the more likely an incompetent government takes power and mucks it up. Part of America’s genius is the (fairly) restricted powers and decentralized nature of responsibility.

Is this why the US financial system blows up so regularly?

That may be. But whatever those blowups are they tend to be a lot less damaging than at other places.

I lived through two growing up, and both times almost everyone lost almost all money. I will take the risk on my US bank account over those any time. My 2c.

And why it recovers so quickly.

Asian financial crisis? Euro crisis? It’s not unique to the US.

It just makes headlines.

Whenever the "what actually backs the US dollar" discussion comes up I remind them: 11 aircraft carriers.

USD is ultimately backed by plutonium.

> 11 aircraft carriers.

That only works when the US has to fight military super-powers that rely on sea-transport in order to feed their people and their military, like Japan had to do in WW2.

The moment another super-power stops depending on sea routes in order to provide basic needs for its people and its military then things start getting more complicated. Case in point, the current Russia + China alliance. They could basically sustain a conventional war against the West while avoiding sea routes basically forever, thanks to Russia's fertile lands and minerals and with the help of China's human capital. There's no US aircraft carrier that would be able to stop the logistic links going through Central Asia.

I don't know the exact number but almost all of China's oil is imported, and almost all of that comes through Sea. That is not something Russia can fix on a short timeline. It's one reason why Pacific naval power remains an important advantage of the US and why they're so aggresive in the South Chinese Sea territorial "disputes".

The real purpose of the carriers is not to fight a war, but to assert control of sea lanes. In a globalized economy your country needs access to maritime shipping lanes to survive. The carriers basically act as an area denial threat, preserving the ability of the US and its allies to trade and prosper, denying that to anyone who messes with them.

If Russia and China decide they're going to get together and be super trade buddies but the US denies them the trade lanes with everyone else, that's fine, they can share food and oil which are certainly important, but they'll still be broke and their economies will still collapse, especially China's which is super export dependent and seemingly approaching collapse right now anyway. China needs huge exports to survive in its current state and Russia doesn't have that much purchasing capacity.

You forgot the most important thing, especially for war. Oil.

China imports a fuckton of it. But not from Russia, but the Middle East (by sea) because it’s cheaper and easier.

It’s actually very difficult to move that much oil over land. The best way is by pipeline but that takes many years and is fairly easy to disrupt. And it still leaves you with the problem of having to distribute it at the other end.

Now consider grain can’t flow in a pipe.

I personally do not think it is that difficult. It is indeed more expensive compared to sea transport, definitely (I said the same thing regarding the transport of grains in another comment), but it's certainly doable.

In case of a war starting I do think China won't look at the money getting spent anymore, so at that point importing oil from Iran via train [1] or from Russia (again, via train) won't be a problem for them in terms of money.

I also do think they'll switch to "war economy" mode pretty soon after the war starting, so no more private cars on the roads and such, which will greatly alleviate China's oil-related needs.

Later edit: And there's also the Northern route. I don't think any US aircraft career will be brave/stupid enough (depending on how you look at it) to position itself close to the Sakhalin Island or close to Kamchatka, that's prime hunting ground for the Russian subs. Never mind going into the Arctic Sea itself.

[1] https://www.youtube.com/watch?v=bd-hxBVZDqY

Aircraft carriers are not for disrupting sea transport.

The utility they provide is the ability to deploy a US airbase and a full air wing within strike distance of any foreign capital.

In a kinetic war with a hypersonic wielding power, those 11 carriers will be at the bottom of the sea in the first week. Any threatening surface ship, really.

I’d argue the real power are the US underwater assets.

> No other country can compare. No one else has this. These in-built advantages are incredibly hard to beat.

You left out the most important advantage: the US has plenty of oil and gas;

It's weird how people keep forgetting the US is the world's largest petrostate

It's quite mind blowing !

Quite frankly, I always knew oil / gas was big in US, when I realized it's THE largest petrostate, it felt weird.

The US is not a petrostate. Petrostates are defined not just by the large amounts of oil and gas they extract but the relative absence of other economic activity and the dependence of the state on that money.

42% of Saudi GDP is petroleum. 35% of Kazakh GDP is petroleum. 8% of US GDP is petroleum.

I like these kind of comments. They’re much more analytical than the ones predicting recessions and what not.

Seems like in economics it’s also useful to analyze qualitatively. Of course you cannot run doomsday headlines with that.

> It probably also helps that Americans tend to flip out and go full doomsday mode when anything goes wrong inside of their borders

Indeed. American doomerists are just ridiculously parochial. Panicking about the dollar when it's the currency that everyone else runs to as a safe haven. The biggest risk to America is its debt ceiling mechanism; the opportunity to completely destroy America's credit and economy to own the libs is very tempting to some people.

>> No other country can compare.

Except canada. The coasts. The transportation system, the tech industry... and canada has a far better-regulated banking sector, one that surfed past 2008 almost without incident. And for every natural resource, from water to uranium, Canada has more than it will ever need. I would far rather ride out the comming climate/economic crisis in calgary/vancouver than LA/SF.

Well tech and banking are clearly eclipsed by the US. And much of Canada has no transportation infrastructure. Are you sure you’re not comparing select Canadian cities to select American cities?

Nope. Canadian populations live closer to their transport infrastructure than American populations. Canadian people actually live closer together than Americans, mostly in relatively tight cities. The big empty parts of the US are in reality inhabited by thousands of small towns. Drive any highway in the US and there is a town every dozen miles. The big empty parts of Canada are actually empty. Highways can go for hundreds of miles in some areas between towns. This is largely a result of historic land laws, crown ownership and mining in Canada v. frontier land grabs and farming in the US.

> A market of 350 million high income people (by global standards) under one regulatory framework

China almost has the same number of millionaires. Per capita it’s not as good, but in terms of volume. And I’d say they’re closer to a single regulatory framework than the US which has all sorts of conflicting state laws which get in the way of interstate commerce (despite the commerce clause). Sure there are a lot of advantages as you say. But they’re not indefinitely insurmountable.

Yeah but there’s all sorts of weird business dynamics w china. For the most part, government exists to enforce business/personal rights in the us versus the reversed in china. Like I’d say the single regulatory framework is actually a bad thing there

For sure China has a ton of people and a huge economy. Fair point that the regulatory framework there may be more homogenous, but it's also weaker.

And it lacks all the other inbuilt advantages I mentioned.

Remember, the USA can ship goods back and forth between itself and what... 90% of the ex-US global economy? With very little geopolitical interference.

This is largely a function of geography, plop a cargo ship in the water, sail it, boom you arrive in Western Europe, or East Asia, without getting anywhere near some other country's sphere of influence.

China can't say the same. To ship cargo to America they have to sail near multiple political rivals (and they seem to enjoy antagonizing America itself as well). To ship cargo to Europe they need to do the same. So there are all these countries and political forces that could disrupt Chinese trade at any time. In the long run they have inbuilt geographic risk, the US has inbuilt geographic immunity.

I think this is a skewed perspective. In case of a war the Chinese leaders won't care about the fact that they won't be able to sell their plasticky stuff to Europe or the US, they'll only care to have enough food for their population and enough raw materials for their Army (it takes lots of iron and access to cheap energy to make lots of artillery shells). Lack of enough food for their population was what brought the Germans down in WW1, partial lack of raw materials helped bring down the same Germans in WW2.

By itself China won't be able to feed its people in case of a US naval blockade, but that's where the alliance with Russia comes into place. Transporting grains by rail instead of by sea is not as cost effective but will do the trick, and Russia has lots of grains. The same Russia has also lots of raw minerals.

That's why throwing Russia into China's open arms is such a geo-strategic stupid thing to do from the West's point of view, really, really stupid.

Spot on. Russia will have much more grain if it crushes Ukraine, which is very possible.

The alternative of allowing Russia to conquer another state and openly threaten further states would be far worse. The West has disengaged with Russia (and Russian money and gas) only very reluctantly.

China has been a clear threat since the 1990s. The US utterly failed to recognise it as a strategic danger.

Russia could have been Westernised with a little more effort, and turned into an ally and partner. (Which is not to say it would have been easy, but it would have been possible.)

Instead Russia was neoliberalised, turned into a mafia economy with huge concentrations of wealth on top of raging poverty, and its imperial pretensions were tolerated for two decades.

Ukraine and Russia are both direct US foreign policy failures.

> Russia could have been Westernised

> Instead Russia was neoliberalised

The West has also been neoliberalised.

Sadly I think that's why nothing better happened to Russia; everybody was comfortable with having a strongman to deal with and oligarchs to take money from. Even to the extent of overlooking crimes like the Salisbury poisonings and the airliner shootdown. It's a common pattern in US partner states.

Most of the former USSR and Yugoslavian states have sought freedom, although there are questions about Serbia, Hungary and to a lesser extent Poland.

Nah. It's time to let Russia fall apart; if they can't even throw their weight around in their region they aren't any use to us against China.

We'll have to buy their nukes at some point.

Sure, just like we did with Ukraine. That's what a money spigot is for.

I'm not convinced this analysis holds up to the numbers. China imports around $135B of food per year. Before the war Russia was exporting around $35B. Admittedly a lot of the Chinese imports are luxury foodstuffs but that's still a big big gap. China can't feed itself, even with Russia's help. This is a recurring problem throughout China's history.

I think you underestimate the importance of "plasticky trinkets." Exports are the backbone of the Chinese economy. Without them it can't afford to import food, and millions of Chinese starve. If China declares war and isolates itself so that Russia is its primary remaining trade partner, millions of Chinese starve.

The biggest importers of food to China today are the US, Brazil, Australia, and a handful of Southeast Asian countries - basically that's all gone if China goes to war or isolates itself in some other way.

Now I mean sure anything can happen in a war and the CCP might very well choose to let millions of Chinese starve, they've done it before. My point here was that isolation would inflict terrible and permanent damage to China. A war is unlikely to happen in the first place because not only is this damage so great, but China would probably lose any battle that wasn't very close to their home theatre.

By the way, Chinese food security is a great topic for illustrating how dysfunctional they are as a country. Here's an article on the topic - https://www.cfr.org/article/china-increasingly-relies-import... - basically they don't have food security, achieving it is one of their top priorities, and they are failing to achieve that priority. The cost to grow soybeans in China is 30% higher than in the US, and the yield is 60% lower!

That isn’t true - the US has 39% of all millionaires, and China has 10%. [0]

Clearly a lead that can be overcome, but now with China’s turn back to proper communism, they will probably never get there.

[0] Page 27: https://www.credit-suisse.com/media/assets/corporate/docs/ab...

Very interesting figures. Crazy that the US increased by 10% and China by 20% in a year (and during covid) - but there is still a large gap between the figures. In a decade they may converge, but not yet.

China is not, of course, turning back to proper communism. It is a wildly corrupt dictatorship, and will be for the foreseeable future. It was an oligarchy for many generations (traditionally, their central committee was allowed to preserve opposing opinions among factions, a practice Xi extinguished), but Xi has definitely removed the vast majority of his competent opponents.

Guess where many, many Chinese millionaires have been moving the last 10 years or so?

Anywhere but China. It is a failing state with a plummeting economy and subject to even more arbitrary control over the money, its citizens own than the USA.

* even more arbitrary control over the money its citizens own than the USA.

Thanks for inserting that comma, Siri

Every country has a single regulatory framework. Unfortunately for China 1 person can completely rewrite it.

China has a larger domestic market. The downside is the domestic market is still relatively poor and its state controlled by a uniparty government. When tough decisions need to be made, the CCP will protect the CCP over China.

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