American Prosperity At 250

Americans are poised to celebrate 250 years of independence on July 4, but they seem to be pessimistic about the nation. When asked to think about the Declaration of Independence, 77% said the signers would be disappointed by the way the United States has turned out, according to a recent Gallup poll. The upcoming anniversary is a good occasion to assess where we are and what this country has accomplished.

Americans bestowed onto the world wonders such as the steamboat, the telegraph, the telephone, the phonograph, the light bulb, the assembly line and mass production of goods, the polio vaccine, the artificial heart, GPS, the airplane, the typewriter, the transistor, the microprocessor, the internet, the personal computer, and countless more innovations. U.S. companies have propelled the world forward in the areas of computers, communication, materials, energy, and we’re now at the cusp of AI. Americans have won a majority of Nobel Prizes across the sciences.

And we’ve been responsible for the great bulk of innovation in medicine and technology. With just 4% of the world population, we produce nearly 50% of new medicines. Together, these achievements have contributed to an increase in life expectancy by four decades.

What explains these successes?

Political and economic historians have tried to explain why the United States was so successful. Some point to geographic size and abundant natural resources. Yet there are larger countries and countries better endowed than the United States. The real reasons are structural. The founders were opposed to tyranny and concentration of power, so they established a balance of power between three different branches of government and carved out power for competitive policymaking by the states.

In short, the framers set us up for success.

The American system is based on freedom and minimal government intervention. The Constitution itself strengthened property rights and contractual obligations when they were under threat globally. The Bill of Rights locked in several rights for Americans that the government could not violate, and the Ninth and 10th Amendments explicitly constrained the scope of the federal government and limited its ability to expand beyond the powers enumerated in the Constitution. The Commerce Clause granted the government only the power to regulate commerce between states and withheld the power to regulate interstate economic activity. Further, the Constitution ensured a national free trade zone among the states by prohibiting states from imposing tariffs on goods from other states.

Fundamental to the design of the U.S. system was that the federal government would be limited in enumerated powers and constrained by the need to get the chief executive and two legislative chambers to agree on policies. Further, the states were more directly represented in the Senate due to state legislatures appointing two members regardless of the population, so New York’s interests were no more represented than Delaware’s

As a result, commerce and innovation could move much faster than government, growing without impediment. Innovators could build and create before the government could regulate them, stop them, or absorb them. Moreover, taxes were low for most of American history, and even now are low by international standards, so there was less drag on innovation.

Another important aspect of the founding was that, unlike many other countries, America was founded by capitalists and innovators. George Washington, for example, was not only the wealthy owner of a large plantation but also an entrepreneur, as John Berlau documented in his aptly named book: “George Washington, Entrepreneur.” Thomas Jefferson was a scientist and inventor. Benjamin Franklin was, reportedly, America’s first millionaire. Alexander Hamilton founded a newspaper as well as a bank. Even Paul Revere was an entrepreneurial silversmith.

The founders imbued their entrepreneurial and capitalist spirit into the nation they built, and the subsequent generations expanded on that foundation. The United States became aspirational for people throughout the world who were held back by the political systems in their home countries. The most enterprising and innovative people, believing they could succeed if they had the opportunity, emigrated to the U.S.

High-skilled immigration had a compounding effect. As the U.S. drew more and more of the world’s best people, the allure became even stronger for those who hadn’t yet emigrated. America eventually came to serve as a sort of salon for innovators, some working together, some competing against each other, all accelerating innovation.

That may be the deepest legacy of the American founding: not merely a government that endured, but a system that repeatedly turned liberty, ambition, and talent into world-changing progress.

Jeremy Nighohossian is a senior fellow and economist with the Competitive Enterprise Institute.