Compared with those of other developed countries, the U.S. economy is enviable, with a high economic growth rate, a low unemployment rate, a strong stock market and moderate inflation and wage growth. Even if people are worried that long-term interest rates will be lower than short-term interest rates, rates are still higher than those of Western ally countries. Economists call this a “Goldilocks” economy. The question on everyone’s mind is how long these good times will last. Another important question is how long can the U.S. remain the most powerful country?
Many people detest President Donald Trump. Americans have accused him of lying; in fact, according to statistical data reported by U.S. media, since taking office, President Trump has lied 7,000 or 8,000 thousand times. He has also very possibly deepened racial divides, even saying that America is full during a visit to the U.S.-Mexico border. Despite this, many believe that he will be reelected. Regardless whether Americans like Trump, his campaign slogan, “Make America Great Again,” reflects the feelings of an overwhelming majority of the American people. Americans like to win, to win fairly by following the rules and then to be respected for it. Trump’s frequently repeated “We will win, and we will win big,” reflects this traditional American culture.*
The design of the U.S. legal system encourages competition and ensures that everyone competes according to the rules. For example, antitrust laws in the U.S. prevent companies from becoming monopolies that stifle competition. According to draft rules in professional U.S. basketball, stronger teams make their selections after weaker teams do to, hopefully, encourage competition and make games more interesting to watch. And it’s illegal for U.S. companies to bribe foreign governments. In discussing the U.S.-China trade war, the U.S. has similarly emphasized fair competition in trade: allow U.S. companies to have the same competitiveness in the Chinese market, protect U.S. company intellectual property rights, and reduce the amount of subsidies and protection the Chinese government gives state-run enterprises. At the same time, the U.S. demands sanctions when agreements are not met.
In order to win, the U.S. will obtain advantageous competitive positions allowable under the rules. For example, the U.S. emphasizes that the South China Sea and the Taiwan Strait are international waters, and therefore, U.S. naval ships can pass through freely. Or it creates rules to safeguard U.S. competitiveness, such as when it launched the International Monetary Fund and the World Bank in 1944. When the rules do not favor its competitive advantage, the U.S. tries to change them, such as in trade disputes, when it switches from multilateral agreements to individual negotiations with rivals. The WTO is no longer the main forum through which the U.S. confronts its trade rivals.
America’s strength stems from a culture of sustaining competition. Because individuals and companies are used to having winners and losers — survival of the fittest — banks, insurance companies and brokers can go bankrupt. To gain a competitive edge, U.S. companies can tell employees during hiring that they might be dismissed anytime without severance pay (but not, of course, because of discrimination or on other illegal grounds). New ventures appear all the time, and while many disappear just as quickly, many often replace older companies. Despite the fact that the U.S. government is restricting immigration, exceptional foreign talent still has a place in American institutions. As long as foreigners have the talent, they can still make something of themselves in America. The reason American universities are so competitive is to win; to think of ways to attract the best people and eliminate those who are less competitive.
As long as the U.S. continues to maintain this type of competitive culture, other countries will find it hard to compete with it. After the global financial crisis in 2007, the speed with which the U.S. recovered was impressive; to this day, countries in the European Union are still struggling. Of course, everyone thinks this is ironic, as the U.S. was the primary culprit in creating the crisis, and yet now struts around, demanding everyone else comply with its trade policies.
The U.S. will still have its problems. To be competitive, it must remain open. It will also inevitably be affected by international economics and geopolitics. For example, because of China’s sudden rise to power, trade and geopolitics related to China will inevitably determine U.S. short-term economic performance. In the mid to long term, as emerging countries continue to rise, the U.S. can no longer dominate international affairs. However, because of its unique competitive cultural mentality of desiring to win, it will remain strong well into the future.
*Editor’s note: Although accurately translated, this quoted remark could not be independently verified.
The author is professor of financial management at National Chengchi University.