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An Economist's Thanksgiving List

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.

Article by J.H. Cullum Clark November 20, 2018 //   4 minute read

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.