The United States frequently frustrates me. Its potential for
creating wealth is great; much greater than most people realize.
I say that because our country, as much as any, is peppered
with entrepreneurs. But unfortunately and inevitably, politics
and politicians thwart their ability to create wealth at full
potential. Politicians everywhere and always raise cost and
create uncertainty. (Look no further than Obamacare and
Still, the United States remains my preferred investment
market, and it's the one I spend most time vetting.
Despite the government continually tossing obstacles in the
way, our irrepressible entrepreneurial spirit survives and keeps
the needle moving forward. We continue to lead the world in many
businesses: technology, medicine, media come readily to mind.
Now with the quantum leap in horizontal fracking, we will soon
lead the world in energy production - and possibly manufacturing
The natural-gas boom has dramatically lowered the cost of
running energy-intensive factories. More companies are decamping
oversea locales to return to the American hinterland. (The
December 2012 edition of
offers an excellent
America's manufacturing renaissance.)
The United States' economic advantages become more apparent
when considering the alternatives.
The European Union (
) suffers from sclerosis and shrinking populations. Germany's
population has shrunk every year since 2006. Its economy
grows at half the rate of the United States...and that's the EU
As for Japan, its economy barely grows 1% each year - and
that's been the case for the past 10 years. Moreover, its central
bank is even more reckless than our own, having promised to pump
$1.4 trillion worth of yen into an economy that's a third the
size of the United States.
China is an option, but I don't believe a better one. To be
sure, its 7.5% annual GDP growth dwarfs our own. But China's
growth rests on a shaky, highly leveraged financial system and
massive government-directed infrastructure and housing
China's grotesque one-baby-per-couple policy is another
deterrent. This has led to a surfeit of boys and a dearth of
girls. Males outnumber females by 78 million. The ratio is even
more lopsided among the young and the fertile. A country composed
of frustrated males hardly ensures social stability over the long
Other emerging markets, especially those between the Tropics
of Cancer and Capricorn, leave me cold.
Wide swaths of India remain mired in grinding poverty and
unconscionable bureaucracy. U.S. bureaucrats are appallingly
intrusive and inefficient, but things still get done. India's
bureaucrats take intrusiveness and inefficiency to stratospheric
heights. The World Bank ranks India at132 in ease of doing
business and at 173 in ease of starting a business (on a 1-to-185
scale). In comparison, the United State ranks 4 and 13,
Africa has become an investing novelty, but one likely to
flame out in the near future. In Africa, like in China, the
bulk of investment is in infrastructure, energy and agriculture -
the grand schemes that aggrandized the political class and are
prone to booms and busts. In addition, Africa's near-sighted and
stagnating propensity to export raw materials in exchange for
final consumer good continues unabated.
Other emerging economies, particularly those in South America,
remind me of an unlucky woman caught in a perpetual state of
parturiency: These countries are always about to emerge, but
never do. A demagogic
is always waiting in the wings, ready and determined to derail
any economic progress.
In short, the world's economies remind me of a hamper full of
dirty shirts. None are clean, but the United States is the
cleanest of the dirty bunch. More important, the United States'
shirt still has the most clean patches that investors can readily