Secure property rights, deep capital markets, the rule of law, and a culture that rewards risk-taking all acted in combination to make the United States the dominant economy of the modern era.
If those foundations erode, stock market returns should eventually erode with them. Businesses will earn less, invest less, and innovate less.
America’s 250th birthday arrives at a moment when self-described socialists are finding surprising success in American electoral politics. This is alarming, but it is not the first time socialist ideas have gained traction in the U.S.
America has faced calls for redistribution, government control of enterprise, and hostility toward capitalism before. Each time, the country adapted.
As we celebrate Independence Day this year, it is worth remembering—as both citizens and investors—what made the American economic model so successful in the first place.
The political threats to this success are real and need to be taken seriously.
But they also create an opportunity for the country to recommit to an economic framework that, despite its flaws and imbalances, has delivered more innovation, more prosperity and more upward mobility than any system in history.
The core ingredients of American economic success remain intact. Indeed, we may now be entering an era of progress that will look impressive even against the extraordinary achievements of the past 250 years.
To fend off the emerging socialist threat, the key political challenge will be to make sure this progress is experienced broadly.
