The World's Fortunes Are Not a Zero-Sum Game

Sometimes, it is quite amazing to sit back and just be in awe about the overall success of the United States. For an economist like me, long-term prosperity—and with it, the key ingredients for happiness—is driven by economic growth, which is driven by the size and growth of a nation’s labor force and productivity.

In principle, countries with a lot of people and favorable demographics should find it easy to be very large and prosperous. The United States, as the world’s largest economy by some distance and amongst its wealthiest, stands as a beacon of how to achieve and maintain this. Amongst the other most-populated nations on earth, few come even close to the size of the US economy, and nearly none are as wealthy for the average of its citizens.

From the turn of this millennium through the last 25 years, the United States has encountered many shocks, including the bursting of the noughties housing price bubble and the subsequent collapse of financial markets and systematic risks to the banking system. But that nor the COVID-19 pandemic and the endless wars around the world appeared to be anything other than another excuse for the United States to quickly reinvent itself in a way that so many other supposed advanced nations just seem to be incapable of doing. It is truly worthy of some celebration and quite fitting that the United States happens to be the rotating chair of the G20, the body that includes the world’s largest economies, the same year it celebrates its 250th birthday.

What the United States needs to be careful about as it moves forward, and probably be more open-minded about, is distinguishing between size and wealth. There seems to be, at times, a paranoia around remaining the absolute largest nation, and a deep aversion to losing this mantle and its focus on its citizens increasing their wealth and sharing in the nation’s overall success. In purchasing power parity terms, when the size of other nations is measured in the same equal manner—instead of through the ongoing actual exchange rate between their currencies and the dollar—some nations’ economies are in fact much closer to the size of the United States, although they possess nowhere near its wealth. If US policies enacted to sustain its greatness, and to stop other nations from becoming bigger, result in economic and financial consequences that significantly undermine the value of the dollar, then that alone would mean the United States would lose its status as top dog. And because of the decline in purchasing power, there would be less wealth for its citizens.

The world’s fortunes are not a zero-sum game. Success in one part of the world typically helps make things better for everyone else, especially if it is a large nation and trades with everyone. For the next 50 years, the American people will prosper and see further significant gains in wealth as other nations rise and climb toward their potential offered by their demographics. The United States’ brilliance in cutting-edge technologies, the service sector, and much of its industries, as well as its cultural and academic institutions, will continue to benefit from seeking more open trade with everyone else—not by putting up barriers and giving false hope that insulation can boost productivity and prosperity. The Chicago Council on Global Affairs will be there to help navigate the right and exciting path.