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An Economist's Thanksgiving List

November 20, 2018 by J.H. Cullum Clark
We should spare a moment to be thankful for the remarkable prosperity of our country, and for the American institutions we sometimes take for granted that sustain our economic growth.

Entrepreneurship, ingenuity, and hard work drive economic growth. But good institutions create the healthy soil in which these seeds take root and flourish.

America has long been blessed with extraordinarily resilient and durable institutions. This Thanksgiving, we should remember what brought us to our current position of unprecedented prosperity. 

Limited government and robust property rights. America remains among the most property-respecting economies in the world based on the International Property Rights Index, alongside Australia, Canada, New Zealand, and the UK, plus Japan and several small Northern European economies. We’re well ahead of Germany and France, and leagues ahead of China. 

In this year’s annual Fraser Institute ranking of more than 160 countries for economic freedom, the U.S. ranked 6th, behind only Hongkong, Singapore, New Zealand, Switzerland, and Ireland. Underpinning these strengths is an independent judiciary headed by one of the most respected institutions in our country, the U.S. Supreme Court. 

A trio of trusted economic regulatory institutions. While public sector bureaucracies are justly held in low regard in some cases, a handful deserve our gratitude. The Securities and Exchange Commission has played a crucial role in creating the world’s most successful capital market, critical to how America finances productive investment. The Federal Deposit Insurance Corporation, the most under-rated innovation of the New Deal era, has eliminated retail bank runs and engendered a relatively stable banking system, an essential bedrock for modern prosperity. 

Most important, the Federal Reserve System has brought us a greater measure of financial and monetary stability than any country in history. The Federal Reserve has made mistakes – overly tight policy in the early 1930s and overly loose policy in several more recent episodes – but it’s nonetheless a spectacular success story. 

The U.S. armed forces. Thriving economies depend on peace and security, which America has enjoyed to an extraordinary degree for most of our history. Like the air we breathe, America’s security is easy to take for granted. But we owe much of our prosperity as well as our freedom to those who’ve sacrificed to defend it. 

American universities. In most rankings, American institutions occupy 6 to 8 of the top 10 positions among the world’s universities. Great U.S. universities serve as powerful drivers of innovation and local economic development, while turning out hundreds of thousands of well-trained graduates each year. Universities face thorny questions about their financial model, but they’re still the envy of the world.   

The world’s preeminent business sector. U.S. firms constitute 56 of the 100 most valuable companies in the world. As stock markets are forward-looking, this statistic tells us where the highest rates of productivity and innovation are taking place. And America’s startup and small-business culture are unmatched in any other large economy. According to a World Bank ranking, the U.S. ranks behind only five small economies as the best country in which to start a business.


Author

J.H. Cullum Clark
J.H. Cullum Clark

J.H. Cullum Clark is Director, Bush Institute-SMU Economic Growth Initiative and an Adjunct Professor of Economics at SMU.  Within the Economic Growth Initiative, he leads the Bush Institute’s work on domestic economic policy and economic growth.  Before joining the Bush Institute and SMU, Clark worked in the investment industry for 25 years.  He served as an equity analyst and portfolio manager at Brown Brothers Harriman & Co. (1993-96), as a portfolio manager at Warburg Pincus Asset Management (1996-2000), as President and Chief Investment Officer of Cimarron Global Investors, a Dallas-based hedge fund firm (2000-02), and as President of Prothro Clark Company, a Dallas family investment office (2002-18).  Prior to entering the investment industry, he served for one year on the staff of the U.S. Senate Select Committee on Intelligence.

Clark fulfilled a lifelong goal by earning his Ph.D. in Economics at SMU in May 2017, and subsequently joined the faculty of SMU’s Department of Economics.  His research has focused on monetary policy, fiscal policy, financial markets, economic geography, urban economics, modern economic history, and economic growth. 

Clark's volunteer leadership activities include serving on the boards of Uplift Education, the Eugene McDermott Foundation, the Yale University Art Gallery, and the Foundation for the Arts, as well as on the investment committee of SMU.  He earned a B.A. in History from Yale University in 1989 and an A.M. in Political Science from Harvard University in 1993, in addition to his Ph.D. in 2017.  After graduating from Yale he lived for one year in Japan.  Clark and his wife Nita have three daughters: Lili, Annabel, and Charlotte.

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