The challenge is to be aware of the upsides of the United States without becoming defiantly hostile to any discussion of specific shortcomings or ways the U.S. could improve, or, conversely, becoming so immersed and versed in America’s downsides as to become blind to the unique positive capabilities, characteristics and opportunities the U.S. offers.

When you live in the United States, it often seems as if the U.S. is either all bad or all good depending on which political party is in power and which talk radio station, screaming cable channel or hyper-partisan web site or publication you are feeding into your head at the moment.

In addition, the United States has a long cultural history of and peculiar cultural affection for jeremiads, mournful and often bitter lamentations about the state of society and government. If you spend any time exposing yourself to discussion or media concerning public or foreign policy, it won’t be long before you come across one form of jeremiad or another predicting the imminent doom of the country, accompanied by a long list of complaints and depressing statistics. However, as they say about paranoia, just because a jeremiad shouts that the sky is falling doesn’t mean it isn’t true. The challenge is to sort out the real threats from the partisan fueled hyperbole and opponent bashing.

Faced with so much hyper-partisan ideology and agenda-advancing content, it can be difficult to establish and maintain an assessment of where the country actually is relative to the rest of the world, much less where it needs to go.

Here are some objective facts to help achieve that goal.

Upsides:

• The U.S. leads the world in innovation, which provides incalculable benefits for everyone else on the planet. The modern world is filled with technology that was invented in the United States, from the personal computer to the laser. In addition to general technology, it is estimated that 8 out of 10 inventions and advancements in medicine and health care in the last 50 years originated in the United States. Just as American general technology innovations are used to drive productivity growth worldwide, American health care inventions and advancements are used by every country on earth to improve the health care of their citizens.

At the same time they are reaping the benefits of increased productivity and reduced costs, those countries have not needed to invest in the education, science, facilities, supporting infrastructure, tax credits and research and development that brought about those advances. In effect, the United States subsidizes the entire world by funding the invention and development of new technologies that are used worldwide to advance societies and increase productivity.

In addition to technologies, life saving drugs developed in the United States are often sold here for many times higher prices than elsewhere. We pay higher prices for those drugs to pay the pharmaceutical companies for the $500 million to more than $1 billion dollars required to discover, develop and bring a new drug to market. Other countries get those drugs for low prices, essentially getting all the research and development required to develop new drugs for free. The same is true for medical devices, such as diagnostic imaging, and medical procedures. In these ways, the U.S. effectively subsidizes health care for the entire globe. Consequently, other countries, especially the European Union, have enjoyed relatively low societal costs of health care relative to the United States.

• The U.S. leads the world in military spending, by a huge margin, spending nearly eight times as much as the next closest country, China. The U.S. spends nearly half of the world’s total military spending at 45 percent. The upside of all of this spending is that it has guaranteed peace and security for countries from Europe to the oil producing Gulf states in the Middle East. The latter, maintaining stability in the Middle East, is often used as a negative example of American intervention, but the fact remains that nearly every oil importing nation in the world relies on Middle Eastern oil, and those oil dependant nations include most of America’s harshest critics on this score.

The inherent threat of America’s military muscle has enabled it to settle disputes between upstart nations, rogue regimes, regional enemies and global powers. Perhaps most significantly, it provided a shield that allowed multiple generations of Canadians and Europeans to grow and prosper within an artificial bubble that has never known conflict or war.  This enabled Canada and Western Europe to build their nations while spending a tiny portion of their budgets on their military forces.

In the case of Europe, the money they would have otherwise spent keeping the Russians at bay went instead to building very generous welfare states, including cradle to grave benefits. As such, it is impossible to compare those societies, which have rebuilt or grown within the bubble of America’s security shield, to the United States, especially in terms of social benefits and economic structure. Those European economies that have profited from the protection of the United States have never been required to have an economy that could fully support themselves, they have all been subsidized by American military spending. That American military spending not only negated the need for those nations to buy a viable and effective domestic military, but also subsidized the local economies through direct injection of billions of dollars via American bases, contracts and procurement. The colloquial version of this reality is the paraphrase of Margaret Thatcher’s comment on socialism, “The problem with socialism is that eventually you run out of other people’s money.” In this case, the other people’s money has been and continues to be provided by America’s free market capitalist economy, a system often roundly derided by the very Europeans who have been profiting from its subsidies for generations.

The United States also is a leading nation in the world on multiple additional objective measures:

• Universities, 1^st in the world with 18 of the top 25 and 31 of the top 100 ranked institutions. In the top 100, the U.S. ranks ahead of (2) United Kingdom (UK) with 18 in the top 100, (3) Australia with 8, (4) Canada with 4 and (5) China with 3.
• Top 500 businesses, 1^st in the world with 140 of the world’s top 500 companies, leading (2) Japan with 68, (3) France with 40, (4) Germany with 39, (5) China with 37, (6) United Kingdom (UK) with 26, (7) Switzerland with 15, (8) Canada with 14, (9) South Korea with 14 and (10) Netherlands with 12, including the world’s largest company, Royal Dutch Shell.
• Top 100 software companies, 1^st in the world, with 74 of the top 100 companies, leading (2) Japan with 8, (3) France with 4, (4) United Kingdom (UK) with 4, and (5) Germany with 3.
• Internet hosts (a computer connected directly to the internet), 1^st in the world with 338 million, leading (2) Japan with 47 million, (3) Germany with 24 million, (4) Italy with 22 million and (5) Brazil with 16 million.
• Aid to developing countries (official direct aid (ODA)(2008)), 1^st in the world at $25.4 billion, leading (2) Germany at $13 billion, (3) United Kingdom (UK) at $12 billion, (4) France at $10 billion and (5) Japan at $8.3 billion. Note that these numbers do not reflect direct private giving to charity, a category in which the United States leads the world, by far. 
• Kilometers of railroad track, 1^st with 226,427 kilometers ahead of (2) Russia with 87,157, (3) China with 77,834, (4) India with 63,327, (5) Canada with 46,688, (6) Germany with 41,896, (7) Australia with 37,855, (8) Argentina with 31,409, (9) France with 29,213 and (10) Brazil with 28,857. Note that the railway systems of India, Argentina and Brazil were largely built during their colonial period with widely varying levels, often very low, of investment in maintenance since.
• Airports (airports or airfields recognizable from the air, may be paved or unpaved), 1^st with 15,095, leading (2) Brazil with 4,000, (3) Mexico with 1,744, (4) Canada with 1,388, (5) Russia with 1,216, (6) Argentina with 1,130, (7) Colombia with 992 and (8) Bolivia with 952. Note that Mexico, Colombia and Bolivia are heavily involved with the production and shipment of illegal drugs, thus leading to a very high density of airfields relative to their population and geographic size.
• Roadways (kilometers of paved and unpaved roads), 1^st with 6,465,799 kilometers, leading (2) China with 3,583,715, (3) India with 3,316,452, (4) Brazil with 1,751,868, (5) Japan with 1,203,777 and (6) Canada with 1,042,300. Note that many roads in the developing world, such as India and Brazil, are not what most Americans would term a road. Also note that Japan’s roadways represent an extraordinary amount for such a limited geographic area, highlighting the hyper-developed nature of that country.
• Market value of publicly traded shares (price per share multiplied by the total number of outstanding shares, cumulated over all companies listed on the particular exchange on December 31 of the noted year), 1^st at $19.95 trillion dollars (2007), leading (2) European Union at $15.57 (2008), (3) China at $6.23 (2007), (4) Japan at $4.45 (2007), (5) United Kingdom (UK) at $3.86 (2007), (6) France at $2.77 (2007), (7) Canada at $2.19 (2007), (8) Germany at $2.11 (2007), (9) India at $1.82 (2007) and (10) Spain at $1.80 (2007).
• Gross Domestic Product (GDP), purchasing power parity basis(PPP), 2^nd  with $14.26 trillion dollars, trailing (1) European Union at $14.52 and leading (3) China at $8.77, (4) Japan at $4.14, (5) India at $ 3.55, (6) Germany at $ 2.81, (7) United Kingdom (UK) at $2.17, (8) France at $2.11, (9) Russia at $2.10 and (10) Brazil at $2.02.
• Fixed telephone lines, 2^nd with 150,000,000, trailing (1) China with 365,600,000 and leading (3) Germany with 51,500,000.
• Imports (exchange rate basis), 2^nd with $1,445 billion dollars, trailing (1) European Union with $1,690 and leading (3) Germany with $1,022, (4) China with $ 922, (5) France with $ 532 and (6) Japan with $490.
• Movies produced annually, 2^nd with 611, trailing (1) India with 946 and leading (3) Japan with 310, (4) China with 212 and (5) France with 203.
• Annual household Income (purchasing power parity (PPP) adjusted), 2^nd at $50,233, trailing (1) Switzerland at $60,288 and leading (3) Canada at $44,000, (4) New Zealand at $41,000, (5) United Kingdom (UK) at $39,000 and (6) Australia at $38,000. Note that this metric can be difficult to compare as the value of various social programs may or may not be included in the source data for each country.
• Mobile (cell) phones, 3^rd with 270,000,000, trailing (1) China with 634,000,000, (2) India with 427,300,000 and leading (4) Russia with 187,500,000, (5) Brazil with 150,641,000, (6) Indonesia with 140,578,000 and (7) Japan with 110,395,000. 
• Oil production, 3^rd at 8,514,000 barrels per day (bbl/day) (an oil barrel is 42 U.S. gallons or 159 liters), trailing (2) Russia at 9,810,000 and (1) Saudi Arabia at 10,780,000. The U.S. leads (4) Iran at 4,174,000 and (5) China at 3,795,000, (6) Canada at 3,350,000 and (7) Mexico at 3,186,000. The total North American oil production of Canada, Mexico and the United States is 15,050,000 bbl/day, although due to very low re-investment in equipment and exploration by their state owned and operated oil monopoly, Mexico’s production has dropped dramatically in the last few years and will continue to dwindle until significant investments are made.
• Exports (exchange rate basis), 4^th with $995 billion dollars, trailing (1) European Union with $1,952, (2) China with $1,194, (3) Germany with $1,187 and leading (5) Japan with $516 and (6) France with $ 457.
• Steel production (2009), 4^th with 58.142 million metric tons, leading (5) India at 56.608 and trailing (3) Russia at 59.940, (2) Japan at 87.534 and (1) China at 567.842. In 2009, China produced 47 percent of the world’s steel.
• GDP per capita, (PPP basis), 10^th at $46,400. In this ranking the U.S. trails, (1) Liechtenstein $ 122,100, (2) Qatar $ 121,400, (3) Luxembourg $ 77,600, (4) Bermuda $ 69,900, (5) Norway $ 59,300, (6) Jersey $ 57,000, (7) Kuwait $ 55,800, (8) Singapore $ 50,300, and (9) Brunei $ 50,100. Note that aside from the U.S., all of these countries except the city-state of Singapore are either oil producers, tax havens or off-shore banking centers often used to launder money for criminal activities and tax evasion. In the sense of normal nation-state economies, the U.S. leads this ranking.

In addition to these objective measures, the United States leads the developed world in diversity, integration of immigrants, and opportunity for upward mobility. The U.S. is among the world leaders in creativity, discovery and innovation as measured by patents, Nobel Prizes and other recognitions of scientific and creative achievement. Perhaps the most telling measure of all is that the United States leads the world in aspiration. More people perceive the United States as the best place to live than anywhere else on the planet. More people want to come to the United States to realize their dreams of prosperity and advancement for themselves and their families than anywhere else in the world.

But as we know, all is not sweetness and light in America. The United States has shortcomings, downfalls and persistent unresolved issues. Among them are:

Downsides:

• Oil consumption, 1^st at 19,500,000 barrels per day (bbl/day) (an oil barrel is 42 U.S. gallons or 159 liters), leading (2) European Union at 14,440,000 bbl/day, (3) China at 7,999,000, (4) Japan at 4,785,000, (5) India at 2,940,000 and (6) Russia at 2,800,000. Of these nations, only Russia produces enough oil to meet its current domestic needs. Both China and India are experiencing high growth rates in net oil imports. China and India’s foreign oil dependency will be 61 percent and 85 percent respectively in 2010, meaning China will depend on foreign oil imports for 61 percent of their oil needs while India will depend on foreign imports for 85 percent of their needs. Due to limited domestic oil resources, both percentages are expected to rise as their respective economies continue to grow. By 2030 India will pass Japan to become the fourth largest consumer of oil.
• Science knowledge by 15 year olds (2006), 21^st at 489, trailing (20) Iceland at 491, (19) France at 495, (18) Denmark at 496, (17) Poland at 498 and leading (22) Slovakia at 488, (23) Spain at 488 and (24) Norway at 487. The top scoring country was (1) Finland at 563 trailed by (2) Canada at 534.
• In percentage of citizens living below the poverty line, the U.S. ranks 22^nd at 12 percent, trailing (21) Syria at 11.9 percent and leading (23) Slovenia at 12.9 percent. Among developed nations, the U.S. trails (20) Germany at 11 percent, (18) Canada at 10.8 percent, (17) Netherlands at 10.5 percent, (8) Ireland at 7 percent, (6) France at 6.2 percent and (5) Austria at 5.9 percent. Note that many countries use different methodologies to establish the poverty level, so these statistics are not viewed as necessarily reliable or “apples to apples” comparisons, especially by global organizations such as the United Nations and the World Bank. In addition, some countries statistics are viewed as unreliable and unrealistic, especially in the developing world.
• Infant mortality rate (deaths per 1,000 live births), 6.22, ranking 44^th, trailing (43) Northern Mariana Islands at 6.00 and (42) Cuba at 5.82 and leading (45) Faroe Islands at 6.32 and (46) Croatia at 6.37. The next highest ranking developed nation above the U.S. is Italy, at 5.51. Singapore holds the best ranking, 1^st, at 2.31 and Sweden is 3^rd with 2.75. Note that the infant mortality rate in some countries is skewed lower (better) due to forced abortions of suspected flawed fetuses, such as in Cuba.
• Life expectancy at birth, 78.11 years, ranking 49^th behind (48) Portugal at 78.21 among developed nations. The leader is (1) Macau at 84.36 years with (3) Japan holding the top developed nation spot at 82.12 years.
• Education expenditures as a percent of GDP, tied with Jamaica and Belize at 5.3 percent with a ranking 57^th, trailing (54) Ghana, (53) South Africa and (52) Austria at 5.4 percent. (16) Iceland leads the developed nations at 7.6 percent followed by (20) Norway at 7.4 percent.
• Public debt as a percentage of GDP (PPP basis), 64^th at 39.70 percent, leading (65) Dominican Republic at 41.50 percent and trailing (63) Yemen at 39.60 percent. The last spot is held by (129) Zimbabwe at 304.3 percent, with the worst developed nations trailing at (128) Japan at 192.10 percent, (123) Italy 115.20 percent, (122) Greece 108.10 percent, (120) Iceland 100.60 percent, (119) Belgium 99.00 percent, (114) France 79.70 percent and (113) Germany 77.20 percent. Note that the purpose of the purchasing power parity (PPP) adjustment is to create a common unit of comparison between economies of different value. The public debt as a portion of GDP represented here is valid for some comparisons between disparate economies, but it is not related to the direct, unadjusted ratio of U.S. public debt to GDP commonly used in U.S. government departments, congress or the media.

On a non-PPP basis, the non-partisan Congressional Budget Office (CBO) projects that under the current proposed budget, debt held by the American public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020. As a result, net interest would more than quadruple between 2010 and 2020 in nominal dollars (without an adjustment for inflation). Net interest payments on the public debt would expand from 1.4 percent of GDP in 2010 to 4.1 percent in 2020.

• In income distribution, a measure of the degree of inequality in the distribution of family income in a country (using the Gini Index, a United Nations (UN) metric, best = 0, worst = 100) the U.S. ranks 92^nd at 45.0, trailing (91) Cameroon at 44.6 and leading (93) Uruguay at 45.2. The U.S. trails, by relatively modest margins, communist or recently communist countries, countries that would, at least in theory, be closest to to the ideal score of zero by government and social structure design. Those current or recent communist countries include (81) Russia at 42.3, (79) China at 41.5 and (57) Vietnam at 37.0. Among non-communist developed economies, the U.S. trails (61) Japan at 38.1, (43) United Kingdom (UK) at 34.0, (37) France at 32.7, (35) Canada at 32.1 and (12) Germany at 27.0. Sweden leads the world at 23.0. Note that these results show that the goal of universal social equality that is the basis of communism has not been achieved by any country that uses or has used that political system. The closest to that ideal has been achieved by the democratic socialist countries of Western Europe, all of which have enjoyed subsidies from the U.S. in the form of technological innovation, health care innovation (drugs, products and procedures) and military protection.
• In gross fixed investment as a percentage of GDP, the measure of total business spending on fixed assets, such as factories, machinery, equipment, dwellings, and inventories of raw materials, which provide the basis for future production, the U.S. ranks 144^th at 12.50 percent. Rapidly growing economies rank highly, such as (3) China at 42.60 percent. More mature economies come in lower, such as the (98) European Union at 19.70 percent.
• Aid to developing countries as a percentage of GDP (PPP) (Official Development Assistance (ODA)), dead last, 22^nd at 0.18 percent. The U.S. trails (21) Greece at 0.19 percent, (20) Japan at 0.20 percent and (19) Italy at 0.23 percent. (1) Sweden leads at 1.35 percent, trailed by (2) Norway at 1.32 percent and (3) Denmark at 1.29 percent. Note that these figures are official government ODA aid only and do not include direct private contributions to charity, of which the U.S. leads the world at $307.6 billion in 2008. Adding allocations of private charity donations targeted to international aid to U.S. government ODA yields a ranking for the U.S. of 17^th at 0.33 percent, leading (18) New Zealand at 0.30 percent and trailing (16) Canada at 0.36 percent.
• For weights and measures, the United States ranks dead last. The U.S. is the last meaningful economy to integrate with the way the world weighs and measures things using the easy to teach, easy to lean and easy to use metric system. The United States is one of three countries that have not officially adopted and implemented the metric system, the other two being Burma (Myanmar) and Liberia, two countries whose combined GDP is less than Delaware’s. More than six billion people use the metric system for weights and measures. The citizens and companies of the United States operate at an ongoing disadvantage of familiarity and extra costs required to comply with the global standard.

The loss of a $125 million dollar NASA mission to Mars because U.S. measurements were incorrectly mixed with global metric measurements is the best  known cost for clinging to the arcane inch / pound system. However, that $125 million dollars is merely the tip of the iceberg. Based on other developed countries’ experiences converting to metric, the U.S. spends an additional $1.28 trillion annually in excess costs to maintain dual measurements in the production of private sector goods and services. That’s $1.28 trillion a year that could otherwise be invested in science, research and development, new life saving drugs, rebuilding the nation’s infrastructure, education, etc. That $1.28 trillion in annual costs does not include additional expenses related to public sector goods and services, such as the duplicative costs to public education in teaching every single pupil in the country two measurement systems.

In addition to these objective comparisons, the United States has its fair share of subjective and relative failings and shortcomings, including, but by no means limited to, cultural insularity, lingering racism, declining academic performance, deteriorating infrastructure, relentless federal deficits, skyrocketing public debt, inadequate financial regulation, massive illegal drug demand, dependence on foreign oil, declining public health, hyper-partisan political polarization and a paralyzed, ineffective government incapable of addressing, much less overcoming, the range of major challenges the country faces.

***

In summary, the United States is just like any other human or group of humans. The U.S. has its strengths and weaknesses, just like every other nation. The U.S. is neither as ideal and blameless as its most ardent supporters claim, or as degenerate and malevolent as its most shrill detractors assert.

One of its undeniable strengths is that the nation as a whole has proven again and again to have incredible powers to adapt to changing circumstances and rise to meet common challenges.

The question now is whether the nation, or more specifically, the people of the United States, can recognize the speed and scope of the changes and, even more of a challenge, reach common consensus on how to overcome those challenges.

*******

 Sources:

• United States Central Intelligence Agency (CIA)
• Congressional Budget Office (CBO)
• National Aeronautics and Space Agency (NASA)
• Organization for Economic Cooperation and Development (OECD)
• Gallup
• Xinhua News Agency
• International Energy Agency
• World Steel Association
• U.S. Metric Association
• USA Giving
• Metrication Matters
• US News and World Report
• Fortune
• CNN
• Internet Movie Database (IMDB)
• Wikipedia

Even though we all know this story and can intellectually recognize that it is a required component to make a capitalistic economic system work, when push comes to shove, or more realistically, padlocks come to factory gates, things get a lot tougher. When long-standing, treasured companies die, such as Maytag, it is traumatic, especially for the local communities.

If they are big enough or politically well connected, governments sometimes step in and prop up dying businesses. In the last year we’ve seen multiple examples of this in vehicle manufacturing, insurance, financial services and banking. But even while entire economies are distorted by artificial means, the market keeps changing and creative destruction keeps happening.

As an example, consider these two ranked lists of the world’s highest market value companies in the technology, media and telecom segments from 1994 and 2009.

(Click on image to view full size)

Note that only 12 companies made both lists. Fully 60 percent of the world’s leading companies in 1994 disappeared from the top 30 list by 2009, and in some cases, disappeared altogether.

In addition, entire market segments shifted, with media sliding from 15 to 5 percent of the total market value in 15 years.

More significant to those outside that industry, the Asia/Pacific region rose from a trivial 1.63 to a second place 17.02 percent of total market value. Along the way, the Asia/Pacific region eclipsed Europe and is well on its way to overtaking North America.

What drives these massive changes? Along with global shifts associated with the rise of China, fundamental chapters of the evolution of technology and its implementation have repeatedly fed into and accelerated the creative destruction cycle.

We are currently in our fifth primary cycle of computing technology:

1. Mainframe computers
2. Minicomputers
3. Personal computers
4. Desktop Internet
5. Mobile Internet

In the first four cycles, there were clear winners, companies that dominated the cycle and realized huge market valuations. For instance, Unisys did very well in the mainframe cycle, DEC in the minicomputer cycle, Compaq in the personal computer cycle and Netscape in the Desktop Internet cycle. As you will notice, none of those companies is currently dominant. In fact, with the exception of Unisys, none even exists today.

Over the last 50 years there is only one company that has done well through all cycles, ranging from near monopoly to significant player: IBM.

How did they do it? For one, they reinvented the company on a regular basis, breaking apart entrenched and crusted cultures and business divisions. And secondly, they never stopped investing in research and development.

As an example of that commitment to research, IBM ranks number one in U.S. patents awarded in 2009.

As you’ll notice, six of ten of the top U.S. patent producers were in the 2009 top 30 valued companies ranking.

While there is no way to guarantee that any company can and will survive the changes from internal market cycles, such as the rise of the mobile internet, and external influences, such as the rise of China, constant innovation and invention has a proven track record over the last 50 years with IBM.

However, history has taught us that innovation and invention, in and of itself, is not enough. Kodak invented digital photography but the inertia of Kodak’s business model based on analog photography prevented them from capitalizing on it. Xerox invented the personal computer, graphical user interfaces, the mouse and the Ethernet, among other things, but Xerox’s business and sales model inertia rooted in leasing high profit margin copiers to large corporations prevented them from capitalizing on any of those world-shaping innovations.

Invention is one thing. Changing corporate culture to leverage those inventions is quite another. Companies that demonstrate the courage of vision and the ability to execute constant alteration of their business model to leverage new invention and innovation significantly increase their chances for ongoing success.

There are only two things for certain:

1. Creative destruction of companies and market segments will continue as long as capitalism exists.
2. The top 30 market valuation list of technology, media and telecom companies will look different in 2024 than it does today.  

It will be very interesting to see if IBM, or any of the other survivors from 1994, appear on that list.

*****

Sources:

• IFI Patent Intelligence
• Morgan Stanley
• FactSet