Why the American Dream is Alive and Kicking… And How You Can Take Advantage
by Carl Delfeld, Global Equities and Emerging Markets Expert
Monday, March 28, 2011: Issue #1478
I’ve got a message for those people who favor a more closed, inward-looking American economy and society…
In today’s globalized age, that would be a prescription for American decline because our open economy and society is our ace in the hole.
And an open economy is also a resilient and flexible economy.
But don’t just take my word for it. In a recent Wall Street Journal interview, Tony Tan Keng Yam, chief of Singapore’s $100-billion sovereign wealth fund, stated that: “(Americans)… don’t see the potential in their own economy, which is one of the most innovative, open economies in the world. Foreigners seem more optimistic.”
He’s putting his money where his mouth is, too. About one-third of his fund’s assets are invested in the United States, where he forecasts 4% to 4.5% GDP growth this year.
So what does this top Asian fund manager see that many Americans don’t?
America’s Openness and Optimism
Let’s break it down into four main groups…
- Open to Innovation and Business
Right off the bat, America has long offered opportunities for business and entrepreneurs. It’s perhaps unique in the way it’s both fully open to the world, yet independent.
The slogan that America is “open for business” is renowned and one of its key competitive edges is that it’s also open to new ideas, capital, products and people. And that openness and innovation leads to progress, growth and prosperity.
- Open to Immigrants
A touchy subject these days, for sure. But openness also leads to curiosity about the world and guards against overconfidence and complacency.
For example, noted historian Barbara Tuchman described the closed-off British attitude at the time of the American Revolution as a “sense of superiority so dense as to be impenetrable.” A similar lack of curiosity and acceptance of others also led to the downfall of the Chinese empire.
There are several instances of America’s prominent role in its openness to immigration…
- Academia: America leads the world in the number of foreign students at our universities and colleges, with 22% of foreign students opting to study in America. In addition, five of the six top-ranking students at Yale University last fall were from overseas – China, Germany, Moldova, Slovenia and Turkey.
- Business: According to research by Vivek Wadhwa, and published in BusinessWeek, about half of Silicon Valley start-ups over the past decade were founded by immigrants. That growth filtered down to Americans, with immigrant-founded technology companies employing 450,000 workers and notching sales of $52 billion in 2009.
Wadhwa’s research also examined global patent filings with the World Intellectual Property Organization of Geneva by foreign nationals residing in the United States. Such people were named as inventors in 25.6% of international patent applications filed from the United States from 2006 to 2009.
The issue now, however, is that as of September 2009, there were more than 1.3 million educated and skilled professionals waiting to gain legal permanent-resident status in the United States. This can take a decade – far too long for creative people longing to become American citizens.
- Open to Trade and Investment
There’s no doubt that wealth and power follow trade and investment. America’s average tariff on imports is just 1.6%, compared with a world average of about 5%, as many foreign countries block U.S. goods with impenetrable non-tariff barriers and regulations.
America also remains open to foreign investment, provided that it’s from private companies in areas outside of national security. With only 1% of American firms now exporting at all, the upside growth potential is huge, given the wave of fast-growing emerging markets. America also remains committed to treating private foreign companies operating in the United States just like domestic firms.
- Open to Everyone (a.k.a. The “Melting Pot”)
American society is more socially fluid and egalitarian than any other – even for people from vastly different economic situations. Alexis de Tocqueville noticed this egalitarianism more than a century ago – and it remains in place today.
In some other countries, if you’re rich, powerful, or from a certain group, the trappings of aristocracy surround you. That is, being treated as a superior person. In India, for example, the rich enjoy innumerable servants, who attend to their every need. In America, however, the culture and attitude towards wealth and power is vastly different.
So what does this mean for you as an investor? And how can you best take advantage of America being the “ace in the hole?”
It starts by remaining intelligently invested in the U.S. markets. (Now’s not the time to bury gold in your back yard, or send all your money to the Bahamas.)
And that means you’ll want to invest in companies poised to fuel America’s next great leap forward.
Good investing,
Carl Delfeld
Any investment contains risk. Please see our disclaimer.
2 Responses to “Why the American Dream is Alive and Kicking… And How You Can Take Advantage”
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I agreed with most of the article except for the comments on egalitarianism. I believe that american society is getting less egalitarian ( note the number of gated communities) wealth is becoming less equally distributed with the bottom 50% having a lower percentage of the income earned. Note how the income relationship between workers and top management of most corporations has changed over the past 50 yrs. And consider the legal system; if you can afford an expensive lawyer you can often get away with “murder” figuratively and literally. Witness the recent financial crash.The perpetrators walk away scott free with immoral bonuses and the average taxpayer is burdened with the bailout: fair? I think not.
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America is on the critical list and it is not going to come off of life support anytime soon!We can no longer believe in the old adage of work hard and get ahead. There is no way a family can get ahead on an average typical job in this country anymore. The system is totally out of whack with all of society’s benefits going to the rich and privileged. American style capitalism is destroying the rapidly declining middle class and promoting the surging masses of the lower class. The only available way out of this mess is through social upheaval. It’s totally ridiculous that I work hard for my family and extended family making less than 60,000 a year and I pay far more federal income taxes than GE!
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