Why has the United States had so much innovation?

One of the blog’s loyal readers, N.G., has asked me a great question, here it is in her own words:

“Why is that Americans are more resourceful? Is it because the US is a melting pot, with first- and second-generation immigrants making a significant contribution? Is it because of the Jewish diaspora? Or, is it because the innovative spirit is there in their blood?”

These sorts of questions are interesting, not because they can be verified or proven factually, but because they invite a discussion about the causes that lie at the source of either success or failure.  The idea is that if we can accurately identify the reasons for a success, perhaps it can be replicated elsewhere.  In other words, what follows is just my opinion.  However, I have, in fact, spent quite a lot of time thinking about this very issue, starting back in my college days.  So here is my feeling about why the United States has had so much innovation.

Overview:

1. Blessed geography
2. A population seeded with outcasts
3. A laissez-faire, pro-business, legal atmosphere
4. A culture of innovation

Let me take these points in turn, fully recognizing that there are other contributors, but none that I can address in an educated fashion.

1.  Blessed geography.

This factor, in my mind, is the very most important source of the strength of the United States.

To the east and the west of the United States are vast oceans that separate the country from the resource competitors that have plagued the cultures of Europe, Africa and Asia for millenia.

To the north of the U.S. is Canada, a nation nearly identical to the United States culturally so that there is really not much friction between the two nations.

To the south is Mexico, a nation that has historically been different from the core population of the United States culturally.  However, Mexico is a disorganized state that has not been able to unify its people into a cohesive whole.  The result is a neighbor that is eternally looking internally at itself.  Additionally, the U.S.-Mexico border is largely impassable because of a vast desert and mountains.  These natural barriers keep Mexico bottled up in its part of North America.

So the United States only really has to worry about one other nation, Mexico, and it really hasn’t had to worry about its neighbor for 150 years.  This is very, very significant.  Every other country on the planet has many nations to worry about on its periphery, save Australia.  Which brings me to my next point.

The United States’ geography also contains vast natural resources, from some of the most fertile land on the planet, to vast forests, to vast amounts of fresh water, to oil, natural gas, and mineral wealth.  Australia, my example above of a fellow insulated nation, is roughly the same size as the continental United States, yet its natural resources aren’t nearly what those in the United States are.

Rivers criss cross the United States, running north and south, and east and west.  This means that transporation costs in the United States have been very low and for the two centuries in which industrialization has taken place.  What’s more these rivers do not flood the way rivers in India or China flood.  This navigability is essential to the strength of the United States.

In summary, as long as the United States maintains the sanctity of its geography it will always be a powerful nation simply due to its location.

2.  A population seeded with outcasts.

Save the Native American population of the United States, the folks that came to this nation did so because they wanted to come here.  In many cases they were the downtrodden, the oppressed, or those who had the will power and interest to have a better life somewhere else.  That is, most of the population of the United States is made up of outcasts.

This is somewhat similar to the questioner’s point about a melting pot and an immigrant population.  That point is basically a Darwinist/evolutionary observation that diversity is good.  However, my problem with Darwinism/evolution is that the model is incomplete because it doesn’t include the most important evolutionary element: CHOICE.

Human beings (and I believe other creatures, too) choose their lives.  In the United States, those that risked leaving the known world of their home countries; risked an arduous, dangerous and long sea voyage; and risked that the future might not be what they wanted, all came here because they either wanted to, or had to come here.  That is a wickedly powerful incentive to work hard, don’t you think?

To summarize: the people that came here, came here to work and to innovate.  Often people came here because in their home nations the cultural and legal structures limited their ability to change their lives through the execution of their choices.  Which brings me to the next point.

3.  A laissez-faire, pro-business, legal atmosphere.

From the beginning the United States was more open than other nations in terms of its cultural and legal structures.  The colonists that initially came here wanted religious freedoms.  When they came here they were united by religion and a desire to establish a solid foundation for future generations of their children.  Besides the Native American population that was here, there were no laws or cultural norms to limit them in pursuing their dreams.  So the laws that were created here were created to allow a high degree of future possibility.

The histories of Europe, Asia, and to a lesser extent, Africa, are histories of monarchy and theocracy.  These institutions were clearly established for the benefit of the few on the backs of the many.  There was miniscule upward mobility and power was super-concentrated in the hands of the elite.  Those that questioned the “way things were” had no choice but to keep doing what they were already doing.  In the United States there have always been concentrations of power and an elite class.  But the primary difference is that these groups have not yet succeeded in institutionalizing their power.  Instead the reverse is still true – power still can be earned in the United States, as it was in the beginning.

That has also led to a country that has created tremendous freedoms for the business community.  It takes only one day to incorporate a business in the United States!  Compare this to what it takes in Europe, South America, Asia, or Africa.

Addtionally (and perhaps it has gone too far now), businesses are a part of the political culture in the United States.  So early on the government of the United States partnered with the business community to craft laws and incentives to foster business growth.  This is hugely beneficial.  For real innovation to take place, ideas have to be able to express themselves unfettered by bureaucracy.

4.  A culture of innovation.

What the United States has institutionalized is a supremely powerful idea: freedom of thought is a good thing.  This thought is another way of saying “innovation is not only okay, it is a part of what makes you a citizen of the United States.”  When you grow up in the United States a part of the mythology and cultural sharing is of famous business people, and entrepreneurs and inventors.  This is one of the things that folks strive to be in the United States.  That means that there is a culture of innovation in the United States that perpetuates itself from generation to generation.  I will not say that this is a part of the DNA of the United States because the culture of innovation would be easy to destroy either through neglect or interference.

That culture of innovation means that many citizens here in the United States know that it is okay to think “outside the box.”  It is a trait that is respected and admired here.  What’s more, if you are an employee of a business here and your great idea is ignored by the firm that you work for, then you can quit your job and start a business in one day (see above).

A part of the culture of innovation is also possessing the strongest (not necessarily the most honest) capital markets in the world in the United States.  Great ideas get funding very rapidly here.  There are whole industries (like venture capital and angel investing) that are in place to make sure that innovative sparks turn into wild fires of success.  In other countries, great ideas remain just that because the culture does not revolve around innovation.

I hope that answers your question from my perspective, N.G.  For the rest of you, I hope that this is food for thought.  I would love to hear other opinions.  Write away!

To your weekend!

Jason