Why Is America So Rich

Have You Ever Wondered Where the USA Gets All Its Wealth From? Find Out Why America Is So Rich.

Oh America, the land of the free, home of the rich! How did the US amass such a sturdy wealth to become the world’s largest economy by nominal GDP and net wealth?

Some say the US wealth is a result of being the oldest free market, or the most international currency, or because it has such a mixed economy. Does this play a part? Or do Americans work harder, have more military spending, or pay less tax? Perhaps it’s the fact that the US is the largest importer and the second largest exporter? Or is it because of democracy or because they have the second largest PPP aka purchasing power parity.

There are endless options, and even more right answers, but in this article, we hone into some of the novelties that makes America so rich!

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Reading an article about the US economy can get boring at times. You are free to switch over to the fun video version of this article:

Without further ado, let’s jump right in.


Natural Resources

First things first, the USA is playing with a full hand that’s for sure. They have the seventh highest total estimated value of natural resources. As of a 2015 estimate, this was valued at $45 trillion.

One of the greatest resources is energy producing oil and gas reserves, making the USA energy independent. On top of this advantage of not relying on anyone else’s pricey fuel, they are the largest producers of petroleum and natural gas and therein lies the ka-ching!

Where other countries nationalise natural resources, America allows private ownership of land and mineral rights. This has helped rapid development of fracking to access these natural resources.

We aren’t going to get into the politics of ancestral-land rights, or the environmental impact, that’s an entire topic on its own. This article is just pointing out some of the ways America got so rich.


War Is Big Business

War is one of the oldest businesses of all times. Since Caveman Ron opened up his first skull clobbering chain store, people have been making money from the art of war. Nothing could be truer for the USA. The U.S Department of Defence is the largest employer in the world with 3.2 million employees as of 2015. So that adds a lot of employed consumers to the country with salaries to pay taxes from and spend.

Then there is the task of uniforms, equipment, housing, transport, catering and communication for this massive workforce. All of this creates business opportunities.

Aside from US forces, early on, the US government got into the international war-loans business. Realising that war is expensive, the American government made loans available to European states since the first world war. As the European states weakened, the American economy was bolstered with new business in the loan game.

The second World War offered even more opportunity to the U.S, and because their country’s infrastructure was uniquely protected from the devastation of the war by the Atlantic between them and Europe, they retained their industry and infrastructure when European nations had to rebuild.

If you want to know more then we recommend listening to Arthur Herman’s Freedom’s Forge:

How American Business Built the Arsenal of Democracy That Won World War II.  You can get a free audible book by using our link: alux.com/freebook


Unhindered Labour Markets

The U.S has excellent ease of access between workers and joys. They don’t have restrictive labour regulations, or state-owned enterprises that make the process of job seeking difficult.

They also don’t have large trade unions that make staffing complicated and might put off companies setting up industry in a country. This keeps employers in the country, which in turn adds to the economy.

While lack of unions does have effects on working conditions that can negatively affect workers, those problems are still brought into the public space and are improving slowly as consumers drag corporates online and stage boycotts for poor labour practices.

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If you want to know more about why there is a lack of labor unions, check out 15 Things You Didn’t Know about Labor Unions.


A System That Encourages Entrepreneurs

America has long been described as a “land of opportunity”, and people come here to get rich. And while that may or may not be true, it does encourage people to take any opportunity they see and make a business of it. Fostering an entrepreneurial culture is central to American economic growth.

There are no penalties or stigma’s around trying and failing in business in U.S culture. Endless American success stories in the tech, energy, fashion and entertainment industries all prove this.

Of course, it takes money to make money and the United State financial system is set up to assist entrepreneurs in this way. The US equity finance system is more developed than other countries and their decentralized banking system lends to helping entrepreneurs at a local level. The country boasts more than 7,000 individual small banks, as well as having Angel Investors and Venture Capitalists with an appetite to invest in new ideas.

If you want to know which other countries advantage business, be sure to check out our video:


Working Culture

Despite excellent resources and other forms of income, you’ll be surprised to know that 50% of the U.S GDP comes from income tax. A working population is important to keeping America rich. America has a culture of hard work, and long hours.

In Germany the average person works 1,400 hours per year, where in the US this figure is 1,800 hours annually. Yes, some Asian countries boast over 2,200 hours a year you might say, but 1,800 is high. The US tax-transfer system also encourages increased earnings instead of penalising it, which is a big incentive for many.

In 2019 the per capital wealth grew by 13 percent. A lot of this is owed to the fact that wealthy Americans saved their tax cuts.

Of the OECD member state, American citizens have the highest average households and employee income. They rank ahead of Switzerland and Japan!

In terms of wealth equity they aren’t top of the class.


Invention, Innovation, and Scientific Research

The U.S. doesn’t mess around when it comes to its world-class research universities. These lend to scientific breakthroughs, tech start-ups and innovation that all lend to new business. Holding patents and licencing for new technology is also a great way to bring in the bacon. 

There is a large overlap between universities and business which attracts top talent from around the world, and the U.S knows how to leverage this talent for their gain.


Internal Competition for Business

Fostering competition on home soil is a large part of what keeps the U.S. so wealthy. The decentralised political system encourages states to compete for investment from business and property owners. This competition drives states to set their own taxing and laws that work to attract business and residents while protecting their resources and citizens as required.

Some states offer no income tax, or limit unions with their labour laws. Others offer quality education and low-fees for in-state students at local universities. This decentralised system is unique amongst developed nations but is an integral part of how the U.S. remains wealthy.


Manufacture and Services

With all the business it drums up, and the employment it creates, the U.S has a huge population of consumers. Although there is a huge discrepancy between the mega rich and the low-income earners today, we’re discussing the effect this general consumer power has towards making the U.S so rich.

Before exporting a single item, the U.S has the largest internal market for goods and services trade. In 2018 total U.S. trade totalled $4.2 trillion. What is more remarkable for a western nation is that they are the second-largest manufacturer in the world, so plenty of the goods consumed are U.S. brands. The U.S manufactures a fifth of the global manufacturing output.


It’s impossible to cover everything in one article, so let us know what you believe is the U. S’s greatest economic advantage.

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