US strikes stark contrast between economic power, social challenges

The US, often hailed as a global economic powerhouse, is a nation of stark contrasts. As highlighted by the Financial Times, the country boasts unparalleled prosperity, technological innovation, and a leading role in the global economy. 

The US is both the best and the worst of high-income nations, standing out for its prosperity as well as its brutality. This has been my perspective since I first visited in 1966 and lived there during the 1970s. 

The enduring prosperity of the US is truly remarkable. While a few Western countries, like Switzerland, have higher real incomes per capita, the real GDP per person in most other large high-income nations falls below the US average. What's more, these countries have continued to fall further behind in the 21st century. In 2023, Germany's real GDP per capita was only 84 per cent of the US level, a significant drop from 92 per cent in 2000. The UK, for its part, stood at 73 per cent of US levels, compared to 82 per cent in 2000. This relative outperformance by the US is striking, especially when considering its size and diversity, as well as the expectation that poorer countries would catch up, not continue to lag behind.

Unsurprisingly, the US economy remains significantly more innovative than other major high-income economies. A quick glance at its leading companies reveals that not only are they far more valuable than their European counterparts, but they are also much more concentrated in the digital economy—a point emphasized by Mario Draghi in his recent report on EU competitiveness. MIT’s Andrew McAfee highlights that “The US has a large and diverse population of valuable young from-scratch companies. The EU simply doesn’t. The American population of arrivistes worth at least $10 billion is collectively worth almost $30 trillion — more than 70 times as much as its EU equivalent.”

The US, then, is undeniably an economic powerhouse. So much so that it has consistently run a substantial deficit in its capital account. While Donald Trump may protest, this ongoing trend is, in fact, a strong vote of confidence in the American economy.

So, how can such an economic marvel also be considered "the worst of countries"? The answer lies in its social challenges. For instance, the US had a homicide rate of 6.8 per 100,000 inhabitants in 2021—nearly six times higher than the UK's and 30 times higher than Japan's. Incarceration rates also paint a stark picture: the US had an incarceration rate of 541 per 100,000 people, with over 1.8 million individuals in prison. This is in sharp contrast to England and Wales (139 per 100,000), Germany (68), and Japan (33). The US incarceration rate was the fifth highest in the world, surpassed only by El Salvador, Cuba, Rwanda, and Turkmenistan, and shockingly, it was more than four times higher than China's.

By Naila Huseynova