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Boston, Mar.22, online stock trading .- St. Petersburg, Florida - the site of last week's Investment U annual summit - can't be beat for a sunny climate.
Its daily paper ran a promotion for 76 years offering a free paper any day the sun didn't shine. It happened only 296 times, which means only 1.1% of the days were gloomy.
But in contrast to the sunny weather last week, a majority of Investment U attendees seemed a bit downcast and even downright puzzled by our enduring bull market.
"Carl, how can the U.S. stock market be hitting all-time highs when America is such a mess?" was a common refrain.
I guess they didn't read my last book, Red, White & Bold: The New American Century, which is an optimistic take on America's future - provided we follow the right path.
My response to this question was that the gridlock in Washington is actually a great sign that the country is finally taking Federal spending and debt issues seriously. And, beyond the reach of Washington politics, America is very much on the move.
The America That Works
The Economist, for which I was a cub reporter in Tokyo many years ago, captures this thinking nicely in an optimistic column, The America That Works. This article highlights that America's cities, states, schools and businesses are grappling with key challenges.
Its daily paper ran a promotion for 76 years offering a free paper any day the sun didn't shine. It happened only 296 times, which means only 1.1% of the days were gloomy.
But in contrast to the sunny weather last week, a majority of Investment U attendees seemed a bit downcast and even downright puzzled by our enduring bull market.
"Carl, how can the U.S. stock market be hitting all-time highs when America is such a mess?" was a common refrain.
I guess they didn't read my last book, Red, White & Bold: The New American Century, which is an optimistic take on America's future - provided we follow the right path.
My response to this question was that the gridlock in Washington is actually a great sign that the country is finally taking Federal spending and debt issues seriously. And, beyond the reach of Washington politics, America is very much on the move.
The America That Works
The Economist, for which I was a cub reporter in Tokyo many years ago, captures this thinking nicely in an optimistic column, The America That Works. This article highlights that America's cities, states, schools and businesses are grappling with key challenges.
✓ American spending on research is at an all-time high of 2.9% of GDP.This "bottoms up" approach is yielding significant success.
✓ Twenty-seven of the world's top scientific research universities are American.
✓ Forty-two states are rapidly expanding charter schools, and more and more teachers are on merit pay.
✓ Ohio has privatized its economic development agency.
✓ Louisiana and Nebraska are moving to abolish corporate and personal income taxes.
✓ Private companies are at the vanguard of near-term American energy independence
✓ American companies, flush with $2 billion in cash, are bringing some manufacturing home and attacking emerging and frontier markets - home to 80% of the world's consumers.
In Singapore, the chief mission of our U.S. Embassy is to promote American business in the region. Singapore's top sovereign wealth fund has one-third of its assets in American stocks.
Cambodia has adopted a Steve Forbes-like approach with a 20% flat tax and zero capital gains taxes. American investment in this region of 620 million rising consumers is 30% higher than China, and 10 times that of India. Forty thousand Southeast Asian youths study in America, and during my trip I visited the University of Chicago and the University of Nevada campuses in Singapore.
But despite this progress, some propose that America become a more closed, inward-looking society and economy.
This would be a sure prescription for American decline, because our open society and economy is our ace in the hole. And an open economy is a resilient and flexible economy.
Open to Innovation
America is perhaps unique in the opportunity to be both fully open to the world and independent. American business is "open for business" worldwide, and one of America's key competitive edges is that it is open to new ideas, people, capital and products. Openness and innovation lead to progress, growth and prosperity.
Open to Immigrants
Openness leads to a curiosity about the world and guards against overconfidence and complacency. Noted historian Barbara Tuchman described the closed British attitude at the time of our Revolution as a "sense of superiority so dense as to be impenetrable." A similar lack of curiosity in the world led to the downfall of the Chinese empire. One example of America's openness is the number of foreign students at our universities and colleges, with 22% of those students studying abroad coming to America.
Worth magazine notes that between 1966 and 2011, the rate at which immigrants started businesses was up 50%, and last year immigrants launched 28% of all new firms. And immigrants are starting more than 25% of all new businesses in booming sectors such as health care, tech and retail.
Open to Trade and Investment
Wealth and power follow trade and investment. Our average tariff on imports is just 1.6% compared with a world average of about 5%, with many foreign countries blocking U.S. goods and services with impenetrable non-tariff barriers and regulations. America also remains open to foreign investment, provided that it's by private companies in areas outside of national security. With only 1% of American firms now exporting at all, the upside potential to rise with fast-growing emerging markets is huge. America also remains committed to treating private foreign companies operating in the United States just like domestic firms.
Open to Everyone
American society is also more socially fluid and egalitarian than any other, and this is true even for people from vastly different economic situations. Alexis de Tocqueville noticed this egalitarianism more than a century ago, and it remains the norm today. Despite all the politically driven calls to "soak the rich," Fidelity finds that only 14% of those with portfolios exceeding $1 million were "born to wealth."
There will always be bad patches in the markets, but optimism usually prevails. So look at the bright side and join the world in recognizing the potential of America by keeping a nice slice of America in your global portfolio. ...
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