Why the usa Is stronger than everyone else

English colonisation in North America

When the English colonisers arrived in Jamestown in 1607, they found a landscape entirely different from the wealthy Aztec and Inca empires conquered by the Spanish in South America. Because they were latecomers to European expansion, the desirable areas with vast riches and easily exploitable populations had already been claimed.

North America also had a low population density compared to the dense societies of Central and South America, and groups like the Powhatan Confederacy were not strongly centralised like the Inca Empire. Because of this, the English could not control a single ruler or force a large population into labour (the fashionable way to colonise), making it difficult to rely on local people for support.

What did they have to do differently?

The English colonists had to adapt by doing the work themselves, as John Smith enforced the rule, “he that will not work shall not eat,” to keep Jamestown alive. The Virginia Company then tried to control and exploit the settlers through strict laws and harsh punishments, but this failed because many colonists could easily escape into the open land or join indigenous communities. As a result, forced labor on English settlers proved ineffective.

The Solution: Land and Political Incentives

After 12 years of failure, the Virginia Company learned they could not coerce either the locals or the settlers, the only alternative was to give the settlers incentives. Starting in 1618, they radically changed their model to offer these incentives:

·      Property Rights (The Headright System): The company began giving each male settler 50 acres of land, plus an additional 50 acres for each family member or servant they brought to Virginia. Settlers were finally freed from their contracts and given their own houses.

·      Political Rights (The General Assembly): In 1619, the company introduced a General Assembly, which effectively gave all adult male property holders a say in the laws and institutions that governed the colony.

Ultimately, because the Spanish model of extraction was impossible in North America, the English elite were forced into creating inclusive economic and political institutions.

They had to distribute land and political power broadly because it was the only way to incentivise work and invest in building an economically viable colony.

How did this lead to modern North American prosperity?

North America started developing inclusive economic and political institutions that rewarded individual effort and innovation.

·      By the 1720’s all 13 colonies of the United States had similar structures of government. There was a governor and an assembly consisting of male property holders. It was not perfect, but these political rights were broad compared to societies elsewhere. These early colonial assemblies eventually coalesced to form the First Continental Congress, leading directly to the drafting of the U.S. Constitution.

·      This Constitution established democratic principles, placed strict limitations on the use of political power, and distributed that power broadly in society, ensuring that the government acted as an agent of the citizens rather than a tool for a small elite to expropriate wealth.

·      Because political power was broadly distributed, so were economic opportunities. The United States developed a patent system that protected property rights in ideas for everyone, not just the rich. Between 1820 and 1845, 40% of those who took out patents had only primary schooling or less, proving that the U.S. was more democratic than other nations when it came to innovation. Inventors like Thomas Edison, who had little formal schooling, were able to patent their ideas and build massively successful companies.

·      Then marked the era of increased access to Finance and Capital. In 1818 there were 338 banks in operation in the US, with total assets of $160 million, by 1914 there were 27 864 banks, with total assets of $27.3 billion. There was a fiercely competitive banking industry that provided broad access to loans at low interest rates.

These inclusive institutions meant that citizens trusted the rule of law, did not fear arbitrary expropriation, and had the incentives to become educated and adopt new technologies. As a result, North America was able to enthusiastically adopt the mass education, railways, and the Industrial Revolution, propelling it to the high living standards it enjoys today.

A key insight here: They had been building up this system for 200 years.

By the time the great opportunity of the Industrial Revolution came, they were ready for it.

Are you willing to build patiently, for a 200 year opportunity?

It would mean that you will become the most powerful nation in the world. 

Your turn:

Be patient with yourself and what you are building.

As you can see in the story, even the big boom was only a reset of the 200 years of small steps. The race is not won on race day, it is won by every decision you made getting up to run before then. Do the next small thing in front of you. When a big opportunity comes you will be able to take hold of it because you have good structures in place.

With the environment you are in, make sure it has the capacity to carry a heavier load before the load is put on it. Most counties around the world in the 1800’s, through fault of their own or others, did not have the political and economic roots/foundations in order to hold or carry the opportunity that was the industrially revolution. As such they did not grow as fast. Make sure the structures you find yourself in can handle the next ‘boom’.

Progress is to be found in the small incremental differences, not the big steps.