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M&Ms: America is Antifragile
They're predicting the downfall of America again.
As someone born in communism and an immigrant, brought here young, and raised in The Bronx, NYC, I have a different take.
America indeed has its problems, but when hasn't America had its problems?
I grew up in The Bronx, NYC, in the "great 1990s," supposedly when things couldn't get any better here in America.
But I, a geeky middle-school kid with Harry Potter-looking glasses back then, got robbed at gunpoint going to the Arcade, where I'd spend my quarters after school. I got robbed more than once in The B.X., but this particular instance I remember well. When the cold chrome of a gun touches your forehead, the gun feels and looks massive. It is because all you can do is focus on the gun. I remember the gun and the other guy screaming, "The quarters or your life!"
But I learned my lesson, and from that day forward, it was very much like what 50 Cent once said: "If I ain't got a pistol on me, you better be sure I got a knife, man." 50 Cent, of course, grew up in Jamaica Queens (a different part of N.Y., around the same time).
And while all of that may sound crazy, it’s all true, and that's the America I came up in during "the great 1990s."
Yet, despite all that, it was then and still is the greatest country on earth because of the opportunities it afforded me, my family, and so many others.
Within a few decades, my entire family, parents, relatives, and all were out of poverty, thriving. If you want to work hard here, you can still make your fortune here in America.
Since then, thanks to my work, I've been fortunate enough to visit many parts of the globe. I've been to Europe, to Asia, and so on. I've been to some of the places touted as the most up-and-coming places on earth. I was in Bangalore, India, during the Pandemic. We had a team there. India has made incredible strides thanks to adopting capitalism. They have incredibly smart people with crazy good work ethics. And it shows by how well their immigrants do here in America. So has China. The data and the upward mobility in these places are undeniable.
But it is a stretch to say the third world came up at the expense of America. And the global economy is definitely no zero-sum game, and yet all the comparisons seem to make it feel like it is.
In Poor Charlie's Almanac, Charlie Munger talks about the rise of China and says:
"Everybody in economics understands that comparative advantage is a big deal...
David Ricardo spelled it out in his 1817 book The Principles of Political Economy and Taxation: "In Portugal, it is possible to produce both wine and cloth with less work than it takes in England.
However, the relative costs of producing those two goods are different in the two countries. In England, it is very hard to produce wine but only moderately difficult to produce cloth. In Portugal, both are easy to produce. Therefore, while it is cheaper to produce cloth in Portugal than in England, it is cheaper still for Portugal to produce excess wine and trade it for English cloth. Conversely, England benefits from this trade because its cost for producing cloth has not changed, but it can now get wine at closer to the cost of cloth"."
Charlie goes on:
"But suppose you've got a very talented ethnic group, like the Chinese, and they're very poor, and you're an advanced nation, and you create free trade with China, and it goes on for a long time. Now, let's follow second and third-order consequences. You are more prosperous than you would have been if you hadn't traded with China in terms of average well-being in the United States, right? Ricardo proved it. But which nation is going to be growing faster in economic terms? It's obviously China. They're absorbing all the modern technology of the world through this great facilitator in free trade, and, like the Asian Tigers have proved, they will get ahead fast. Look at Hong Kong. Look at Taiwan. Look at early Japan. So, you start in a place where you've got a weak nation of backward peasants, a billion and a quarter of them, and, in the end, they're going to be a much bigger, stronger nation than you are..."
So, like Charlie predicted, they grew fast from a massive deficit. Communism pillaged those who embraced it, my people, too. Just look at the North Koreans today. That's what my life looked like when I was very young.
But let me stay focused on America.
People share a few charts about China and trade all the time. China has, at the moment, a population that is 4.26x that of the United States. I won't get into speculating what might happen with populations in the future. I am no expert. However, experts seem to think those are easily predictable, thanks to demographic and childbirth data.
But of course, currently China, with its population size being 4.26 larger then the U.S., would eventually grab a larger global trade pie. It is common sense there are more producers and more consumers, the basis of economics.
But people share charts like this and say this proves America is done.
But I look at that chart and see that we've 5x'd. We are exporting 5 times more from a massive base. I see friendly competitors like Japan and Italy, and I see they've only 3x'd from a smaller base. America continues to punch above its weight.
But our former communist competitors have an Achilles heel. Who knows how hard they’ll keep punching? Their leaders still think they're all-knowing. There is no change in ideas. There is no removal of the old. There is no influx of the new. There is no fresh injection of chaos and ambition. There is no fresh injection of new people who love the place, like America has.
That last part, many places in the world lack. It is true of Japan. Japan tolerated no immigrants and flatlined when the birth rates declined. And although the Europeans are trying to experiment with immigration, this is not the norm, and they are struggling.
The Swedish PM recently said: "Mass immigration doesn't work…they have to go back." And then announced a set of policies that will make Sweden the strictest nation-state in the E.U. on immigration. It's hard work to be tolerant.
But you might say, "What does immigration matter?"
What does it matter? Remember 20% of the pea pods make 80% of the peas. Take a look at the stats.
You tell me.
In NYC, before the Mexicans came in, the eastern Europeans came. Before the Eastern Europeans, the Italians came, before the Italians, the Irish, and before them, the Germans—the Asians. The Africans, heck, they'll all come. Immigrants and the hungry come here in waves. Poor parts of the world have few places to go. This nation has gotten fresh injections after a fresh injection of risk-takers and ambition. No other place on earth has the stomach, the culture, or even the ability to handle that many injections.
But in America, it is woven in the fabric. Many of the Founding Fathers were immigrants. It is impossible to change. No matter what the rhetoric is, this is a society of immigrants.
Some people may say, "Oh, immigrants don't want to come here anymore. We have no social nets." Respectfully, I tell those people, you haven't seen our southern border lately. Of course, I am not saying it is a good thing we have people coming in without checking in anywhere. We need to fix that.
But that southern border proves that immigrants don’t care about social nets. They want opportunity and want not to be oppressed.
I know some recent immigrants living in The Bronx from Eastern Europe who are crushing it. No education and yet making a killing with their hands, unclogging sewage pipes. They could not earn the kind of money they are earning here anywhere else in the world.
I know people from dirt-poor places going into debt for $30k-$40k today just to get to America and risking their lives, crossing oceans, and crossing the desert to get here.
Going into debt for $30 to $40 grand when you have nothing is crazy to me. When I asked one why take all that risk just to get here? He said, “fuck living poor. I’m taking risk.”
Andrew Carnegie once said, "It is not the rich man's son that the young struggler for advancement has to fear in the race of life, nor his nephew, nor his cousin. Let him look out for the 'Dark Horse' in the boy who begins by sweeping out the office.'" Look at the immigrant janitor, the immigrant in the kitchen, or the immigrant plumber unclogging your toilets. They and their children are who's next up in America.
How high can immigrants and their descendants climb in this country? The hard-swearing, frugal-living Cornelius Vanderbilt, the descendent of poor immigrants, died in 1877, possessing more money than was held by the U.S. Treasury. Immigrants and their children today can and do accomplish just as much. A quick Google search will show you that "more than 10% of the nation's billionaires, including the founders of Tesla, Nvidia, PayPal, Google, Calendly, and Zoom, are immigrants."
But let's stop with the anecdotes and look at some data.
Here are the largest companies in the world by market cap. See a trend?
How about we look at GDP per capita, whose punching above their weight?
How about disposable income per capita:
But the funny thing is the predictions of America's collapse aren't new.
The Soviet Union predicted America would collapse from political division and literally split up into multiple countries. Outsiders said, "America will decline because of nihilism and hyper-individualism — both of which lead to skyrocketing inequality, the dissolution of the family, and the utter destruction of the nation's heritage." The Soviet Union must've looked at the murder rate, the drug use rate, and all the other things happening in The Bronx in the 1970s, which apparently was much worse than when I grew up there in the 1990s, and thought, "Surely, they must be collapsing soon." And by the way, I am not saying any of those things are good. But they aren't new here in America. Freedom comes with responsibility and it means you'll have some people do some things that ruin their lives.
But, by the way, that quote about "nihilism and hyper-individualism" isn't from the Soviet Union. It is from a prominent Chinese Communist leader who has predicted our downfall over the last 20 years.
But even our own people saying we're going to collapse isn't new.
Benjamin Franklin wrote, in his autobiography in 1771:
"There are croakers in every country, always boding its ruin. Such a one lived here in Philadelphia, a person of note, an elderly man with a wise look and a very grave manner of speaking. His name was Samuel Mickle. This gentleman stopped one day at my door and asked me if I was the young man who had recently opened a new printing house.
I said yes. He said he was sorry for me because it was an expensive undertaking, and the expense would be lost, for Philadelphia was a sinking place, the people already half bankrupt or near being so...
And he gave me such a detail of misfortunes now existing, or that were soon to exist, that he left me half melancholy. Had I known him before I engaged in this business, I probably never should have opened up my printing house.
But this man continued to live in this decaying place, and to declaim in the same strain, refusing for many years to buy a house here, because all was going to destruction; and at last, I had the pleasure of seeing him give five times as much for a house than he might have bought it for when he first began his croaking."
Here is another quote from Warren Buffet on America and its problems during one of our financial crises:
"Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead.
Charlie and I love investing large sums in worthwhile projects, regardless of what the pundits are saying. We instead heed the words from Gary Allan's country song, 'Every Storm Runs Out of Rain.'"
So take it from this immigrant, born in communism, who started from the bottom. The Bronx was tough, but it toughened me up. And I've since been around and seen a few other places. America has always had problems. And, so far, America always eventually faces those problems, and that makes this place antifragile. And that dosen’t mean the rest of the world can’t come up, I hope we all face our problems and rise.
In the words of American Bishop John H. Vincent, "There can be no rainbow without a cloud and a storm."
And I will leave you with one last famous quote from Warren Buffet since I can't resist:
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Three shares: The post that inspired my essay tonight, productivity, predictions of America’s collapse.
Balaji’s post inspired mine tonight. He makes some great points about the problems we have, I agree with him on many of those.
But having come up in communism and poor I disagree with his proposed solutions to them. Tech can’t fix human nature.
And I think he’s over-valuing the past and under valuing what we are still capable of doing now to fix our problems.
Another post I had saved over time about America’s competitiveness.
The clip of the soviets predicting America’s collapse.
One Meme: “nothing” backing the U.S. Dollar.
This is a video of the supposed “nothing” backing the U.S. dollar, I actually like the song too.
Look, I know we are in a global world, and some people may disagree with me. I always respect people who disagree with me respectfully on the message. And do not resort to trash-talking and personal attacks on the messenger.
Obviously, I love America, but I love the rest of the world, too. And I would like to see nothing more than world peace and everyone prospering.
But given where I was born and how I came up, I am not naive that those things are going to be easy to achieve.
P.S. You can reply to this email; it will get to me, and I will read it.
Thanks for reading The M&Ms Newsletter! Subscribe for free to receive new posts and support my work.