Why America Is First

October 25, 1954

There has appeared this year in France a remarkable book, by the distinguished Swiss economist Prof. William E. Rappard, under the title A quoi tient la Supériorité économique des Etats-Unis? (What Is the Cause of the Economic Superiority of the United States? Librairie De Medicis. Paris. 212 pages).

What makes this book remarkable, coming as it does from a contemporary European economist, is not only the generosity with which it acknowledges and insists upon the economic superiority of the United States, but the still rarer generosity with which it attributes this superiority not merely to good luck—such as great natural resources or escape from the direct destruction of the two world wars (the usual European explanation)—but primarily to the character and the free economic institutions of the American people.

“The United States is today,” writes Professor Rappard, “by far the richest nation in the world because it is by far the greatest producer of wealth. And it is the greatest producer of wealth less because its territory has been generously endowed with natural resources than because it has succeeded in deriving from the labor of its people a much better material result than its competitors in the rest of the world.”

Professor Rappard establishes this thesis with admirable lucidity and logic. He takes nothing for granted, but starts out first of all to prove beyond dispute the superior productivity of the United States. He does this by national comparisons of income, and of the output and use of scores of commodities, notably petroleum and gasoline, coal and coke, iron and steel, electrical energy, automobiles, and telephones. He proceeds to show that there has been a consistent balance of trade in favor of the U.S. maintained over many years by loans and gifts to the rest of the world.

Next he views the problem historically, and shows by quotations from foreign observers—Adam Smith in 1776, de Tocqueville in 1831, Michel Chevalier in 1835, John Stuart Mill in 1848 and 1865, the Englishman Arthur Shadwell in 1906, and then by contemporary testimony from both American and European authorities, that the per capita production and income of the American worker has exceeded that of the European from our very beginning as a nation.

To some this proof may seem superfluous. But Professor Rappard, like a true scientist, is determined to establish his facts before he undertakes to explain them. In our higher productivity, therefore, Professor Rappard finds the primary cause of the economic superiority of the United States. He knows that the full explanation of this is complex. But he selects four main elements:

1—Mass production.

2—The application of science to production.

3—A passion for productivity.

4—The spirit of competition.

Professor Rappard places special emphasis on our internal “free market without equal on the face of the globe.” That the spirit of competition prevails far more in America than in Europe, he concludes, is beyond question. He documents this with liberal quotations from both European and American sources. He admits that there are a few American economists who deny that real competition prevails here. Though he makes what is broadly the correct answer to these, his answer could have been more conclusive had he known of and drawn upon such statistical studies as those of George Stigler and A.D.H. Kaplan.

I hope that Professor Rappard’s work can be translated into English and published here. This European sees our achievement in better perspective than most of us do ourselves. We Americans do not need to be reminded of our own economic achievement in order to be smug or boastful about it. But we do need to be reminded that this economic achievement has been the result above all of a free, dynamic, private, competitive economy. It can be preserved only by preserving this type of economy, and not by imitating the socialism, statism, and security-mindedness that have failed so dismally elsewhere.