Why the US is a superpower

The secret to US exceptionalism is likely random

While there is some evidence we may be shifting to a multi-polar world, since at least 1917 the US has been the world’s foremost superpower. I use “superpower” rather than “best” or “greatest” so I can avoid any subjective wrangling on whether the US fits the bill. Of course, when it comes to many measures the US is doing poorly, you only need to look at our low life expectancy, homicide rate, or general government dysfunction. But despite these and other selective metrics, when it comes to wealth, power, innovation, and destination for immigrants, the US has dominated the competition for the last 100 years.

The natural next question, then, is why?

Culture

Culture as the source of American exceptionalism would dictate that there is something about the US that causes its people to work smarter and harder. This cultural edge is what caused the US to become the world’s superpower. There are many ways to break down “culture”, but I am going to focus on two that are commonly cited: Protestant work ethic and individualism.

“Protestant work ethic” was coined by Max Weber in his 1905 book The Protestant Ethic and the Spirit of Capitalism. The argument basically goes like this: in Protestantism, success in one’s work is a sign of virtue and favor from God; therefore it incentivizes hard work and entrepreneurship. Since Protestantism has been the largest religion in the US for most of its existence, its ideals permeated the culture, causing us to work harder and be more entrepreneurial than other societies.

But here’s the problem: Max Weber was a German. He was writing about the German Protestant work ethic after seeing Germany experience an insane economic boom from 1870 to 1905. Germany also has no shortage of Protestants considering the religion started there. While this does not counter the existence of a “protestant work ethic” (the Germans aren’t exactly known for being lazy), it doesn’t explain why it would be the cause of American exceptionalism exclusively. If you said that Protestantism explains British, Dutch, German, and American exceptionalism, I might buy it, but American only, not so much.

What about individualism? The argument here, like the one above, is that the individualistic nature of the US leads to more personal autonomy and bottom-up decision making. Per Hayek, this leads to optimal decisions as opposed to a tops-down bureaucratic approach. The argument for individualism as the secret to US exceptionalism is what sits on top of it: capitalism. Although the issue, again, is that this isn’t unique to the US. There are many countries that are “more capitalist” and “freer” than the US that are far from reaching superpower status.

Just to be clear, I am not saying that culture doesn’t matter, it does matter. In fact, you could even go as far as to say it is a prerequisite, but it is far from the primary driver.

Government System

Another frequently cited reason for the US’s strength is its system of government. The founding fathers were the first people to take the ideas of the Enlightenment and put them into practice. The genius of the Constitution and the Bill of Rights, spearheaded by James Madison, is so great that it has given the US a huge edge over other countries. Further, if other countries wanted to have the same level of success as the US, their first step would be to model their governments similarly.

First, there are many other countries with democracies who aren’t anywhere close to becoming a superpower. There is a lot of subjectivity on determining which democracies are “better”, but it's hard to say that any can be so much better as to dictate superpower status. Also, what are the odds that the first country to implement a democratic republic happened to get it perfectly right the first time? Seems highly unlikely to me.

Second, democracies don’t have a great track record when it comes to economic development and world domination. The two previous world superpowers - the Dutch from 1600 to 1750, and the British from 1750 to 1918 - were not very democratic compared to democracies today. Additionally, all the following semi-modern empires/countries at their strongest were not governed democratically at all: Imperial Japan, Bismarckian Germany, Nazi Germany, Napoleonic France, and Russia at any point. Therefore, the interesting point is not how the US’s system of government contributed to its primacy, but how did the US become a world power despite its government? (To understand more about why the world is becoming more democratic, see my book review on The End of History and the Last Man).

Why the US is the world’s superpower

The real reason for US primacy is simpler and far more random: geography. The United States has been bestowed with by far the best geography and it's not even close. If America’s rise to a superpower is 1 part culture and 1 part government system, it's 8 parts geography. 

So, what makes up “good” geography? The areas we will explore in this section are borders, size, rivers, farmland, and resources. Much of this geographical analysis comes from Thomas Pueyo and Peter Zeihan.

Borders

A good border is one that makes it challenging for an opposing country to invade, such as deserts or mountains. Switzerland is the poster child for good mountain barriers - they are literally surrounded by mountains - which is extremely effective with preventing invasion, hence why during WW2 Switzerland was virtually the only European country not invaded by Germany.

The best border though is an ocean, of which the US has two. It's nearly impossible to stage a successful invasion thousands of miles away. We consider D-Day a challenging amphibious invasion and that was only 100 miles (and the Germans were relatively ill-prepared). In addition to the defense benefits, being bordered by the Atlantic and the Pacific gives the US direct shipping lane access to both the European and Asian markets.

This then just leaves the northern and southern borders. To the south is Mexico which has the southern Rockies going right through the country, making it very hard for them to maintain a stable state (let alone an invasion). The northern border, then, includes two of the most homogenous and friendly countries in the world. The US-Canadian border is the longest undefended border on Earth.

Size

The US is the third largest country on Earth by land area behind Russia and China. However, if you were to look at usable land (aka not mountains, deserts, or frozen wastelands), it easily jumps to number 1. Most of this usable land is farmland, of which the US has the most arable acres of land in the world.

Being able to grow your own food has the obvious benefit of being cheaper (lower transport costs), but it's also a boon to security. Not having to depend on other countries for food means an already unlikely blockade against the US would be a complete failure. (Of course, this would require us to start growing something other than corn and soy.)

There is another, less obvious, benefit of having so much useful land - wages.

Manifest destiny was such that American settlers were “destined” to expand from the Atlantic to the Pacific Ocean. This philosophical justification, or whatever you want to call it, meant that the US territory expanded rapidly throughout the 19th century. This new land happened to be highly fertile and was interconnected through an extensive river network. There was so much land, in fact, that the government just gave it away. Roughly 10% of US territory was given away for free to 1.6 million homesteaders. This led to many people from the east coast moving west in search of better opportunities.

The impact of the workers migrating westward was to artificially increase wages in east coast factories - less workers led to higher wages for the existing workers. These high wages served a few purposes. First, they incentivized innovation from the capitalists; when the labor costs increased, it spurred the need to find alternate (cheaper) ways of building things. Second, high wages caused a mass migration of immigrants from Europe, giving the US a population to support its industrial base. Having a large population makes it a lot easier to become a superpower, and the US has the third highest.

Rivers

The US has the most extensive navigable river system in the world. Here is a quote from The Accidental Superpower:

The Mississippi is the world's longest navigable river, some 2,100 miles long from its mouth at the Gulf of Mexico to its head of navigation at the Twin Cities in Minnesota. That's about one-third longer than the mighty Danube and triple the length of the Rhine. And the Mississippi is only one of twelve major navigable American rivers. Collectively, all of America's temperate-zone rivers are 14,650 miles long. China and Germany each have about 2,000 miles, France about 1,000. The entirety of the Arab world has but 120.

Ok, but who cares? The first benefit of rivers is cost reduction. The cheapest way to move something from point A to point B is, and always has been, to float it. Since transportation costs are baked into the price of a good, this makes goods cheaper and increases the range with which your goods are competitive. Great news for US producers of goods.

Second, the US river system is what allowed the states to stay together and preserve national identity. The miracle of the US is that it managed to stay together during the 1800s. Any country as large as the US, especially back then, would likely be fractured into small subsections that maintained their own culture and sense of identity. These small mini societies would not interact much with each other because they were all “a few days' ride away”. This eventually would lead to differences so large that secession ensues.

This only happened once in the US, and it had less to do with multiple sub-cultures but instead a binary division based on a single issue. The extensive river system connected the country not just economically, but culturally.

Resources

The icing on the cake for the United States is they also have the one resource that is imperative to becoming a world superpower: oil. When the US was first industrializing there were easily accessible oil fields in Pennsylvania and Ohio. As the country expanded they found a little more in Texas, Oklahoma, and then California. These fields were enough to satisfy the needs of the country but were not so much that the US got a massive windfall from exporting oil. This was important because getting too much oil very quickly is bad. Selling oil to the entire world at a windfall profit tends to lead to mismanagement and a lot of corruption. There is even a name for this: the resource curse.

Just as the US begins to run out of oil deposits towards the end of the 20th century, fracking gets invented, which boosts the US to become the biggest oil producer in the world.

Why does this matter

While individually, having strong borders, size, rivers, or resources can be a boon to a specific country. Having all of them is more than enough to become a superpower. These factors combine to give the US the best geographical hand out of any country, ever.

We have shown that the US is a superpower mostly due to its geography, but who cares? I don’t want the takeaway to be that since our geography is good nothing else matters and we can just sit back and chill. The other things do matter. But understanding that something as benign and random as geography being the secret to our success is a humbling proposition. 

For one, it can dampen nationalist impulses. It's a lot easier to justify nationalistic rhetoric when your country has shit geography, and you manage to overcome it. Two, it removes some of the firepower out of the “cultural preservation” arguments. While we should want to protect from fundamentalism, changes in culture probably won’t move the needle much when it comes to the success of the US. Lastly, from a finance standpoint that is 100% not to be taken as investment advice, it likely means that the S&P is still a great place to park your money.