CHAPTER 1
America the Dominator
How the U.S. Became the Most Powerful Country
on the Planet
In this chapter
... âą So you got the book. Letâs see what you get.
âą Who were they? Why did they come in the first place? A change comes: Weâre getting old, and printing too much money!
âą Robin Hood, Sherwood Forest, and the Sheriff of Nuttinâ Doinâ
âą Letâs review: They come, they learn, they leave.
Whatâs First?
Throughout the course of this book, there will be times when Iâll want to get very specific with you. Weâll talk about various investment techniques, and those techniques are as valid today and tomorrow as they were yesterday. The investments themselves, however, well letâs face it, to get this book to you in the winter of 2010, I have to finish it in the autumn of 2009. Iâm giving you my best ideas and strategies, although by the time you read this, some of them may have succeeded, played out, or even failed.
Thatâs OK, because Iâm giving you these ideas as an example of how you should be thinking. Take them in that spirit, because my mission is to help you transform yourself into the new species of think-for-yourself investor youâll have to be in this world without economic borders.
Our world is connected, networked as never before. We send our thoughts to each other everywhere and anywhere via e-mail, video conference, and streaming audio. We collaborate across borders and entertain each other across borders; we even finance each other across borders.
That means the rest of the world is at our doorstep; so yes, weâll talk a lot about how you can take advantage of this new âglobalizedâ economy. But, make no mistake about it: For all intents and purposes, it is American ingenuity that created the wealth our neighbors want so desperately to share in. And there are plenty of great American companies to invest inâcompanies that stand as strong as the Rock of Gibraltar, companies that will continue to stand, continue to grow, continue to be some of the best investments available to make you rich, and richer.
As Iâm writing this, you and I still need and want and buy devices from Cisco Systemsâdevices and ideas that are bargains to us, and extremely profitable to Cisco. I have little doubt that Iâll be buying and selling that stock for the rest of my life. Iâve come to understand the company and the pricing of its stock; I can feel when itâs a bargain, and when the money has been made. You can do it, too. It only takes a little experience and practice. Play with it, and youâll get it, just as you learned to throw a football or play ping pong, to shoot pool or draw blueprints, or to sing or dance.
Iâll also be watching (and buying and selling) the Blackstone Group. Iâll talk about these companies and others in more detail later, but for now, just imagine how Blackstone can fit into your life. This is not only about you and me buying into China, or the rest of Asia, or the rest of the world. Itâs also about them buying into usâremember, itâs a global concept here. Look, the Chinese Sovereign Fund, along with smart people everywhere, has invested billions into Blackstone, and Blackstone, with its experience and savvy, used that money to buy companies, take them private, then develop and sell them, usually for a huge profit. Iâm sure Iâll buy and sell Blackstone many times over the course of the rest of my life. Again, you can easily learn to do the same thing.
The point to be made here is that this is not just us and them. Itâs all of us; itâs a network. A worldwide network to be sure, but hey, it takes a phone connection or a computer connection the same amount of time to go around the corner as it does to go around the globe.
As an American, youâre privileged to belong to a culture made up of inventors and innovators, a vast group of people who have been able not only to survive, but to thrive on their spirit of adventure and a vast store of knowledgeâall long, long before our neighbors around the world began to âcatch on.â The fact is theyâve come a long way toward catching up. But their doors, as well as ours, are all unlocked; the walls are down, the economic borders no longer exist. It is to that point that Iâve put this book together.
So then, are you ready? Good. Now letâs see how we ever got into this terrific position in the first place.
Why America Has Always Dominated: Part One
This is going to be the era when we Americans, the inspiration to the whole world, get to watch the ascendance of everybody else. Itâs hard not to think of yourself in decline, when everybody else is catching up. The truth is if we keep ignoring the free spirit and willingness to take a chance and assume the risk of losing what got us to where we are, we will see some decline. Much of this book is about how to think globally and share in the good fortune of those around the world that we have inspired. More than that, itâs about how you can join me in getting rich helping them get what we haveâthat which they are determined to get!
Great. But donât be fooled. The real long-term success of the United States is still ahead of us. At the moment we may be slowing our own development by focusing on how we split the pie, rather than how we grow the pie, but life in this great country is cyclical.
Our society has more freedom than any other on this planet, and when the governmentâs policies donât work out, we are better able to change policies and governments than anyone else. Thatâs exactly what will happen. So, for now, you and I will make lots of money acknowledging that foolish U.S. policies are going to set us back a little, and give others with courage and initiative a chance to catch up and even surpass us in certain areas for a while.
Through that whole medium-term plan, donât forget for one minute that the worst bet ever conceived on planet Earth has been a bet against American ingenuity, the American economy, and American power. History is littered with the limp bodies of those deceased, and the shells that remain of those still alive, who have made that bet against the United Statesâfrom Hitler and Tojo, to Khrushchev and Brezhnev, to Saddam and Kaddafi. I, for one, do not plan to join them.
There are major reasons for our success. Our advantages over other nations are so profound theyâre difficult to overcome. Sometimes they lead us to make mistakes rooted in overconfidence and hubris, but weâve always recovered, and when the whole world gets used to selling America, I can assure you, I will be buying.
The best and the brightest came to America, because they saw the big magic âOââopportunity. And what created that opportunity was the very nature of the place itself. The guys who landed here way back when, landed in one of the most fertile, well-developed places on the face of the planet. Itâs a well-designed place, with better resources and a better setup than anywhere else in the world. From sea to shining sea, we have good, arable land. Easy to grow stuff on, itâs the largest piece of contiguous arable land in the entire world. The middle of the country is made up of prairie land that is perfect for crops; it didnât even need to be cleaned up before farming. And thereâs more very good farmland on the East Coast, the West Coast, and down South.
Thereâs good, arable land elsewhere in the world, but itâs mixed in with mountains and jungles and deserts. Weâve never been saddled with the enormous burden of having to focus all our energy on trying to feed a country full of hungry, undernourished people, because itâs never been hard for us to get large tracts of land set up to feed our population. Most other nations spend all their time and energy just trying to get food.
The next reason is travel. How easy is this? There are a couple of mountain ranges a few thousand miles apart, but other than that, itâs flat! Weâve easily built roads for horses, roads for stagecoaches and buggies, roads for cars and trucks. Weâve easily built railroads north, south, east, and west. To build roads in most other countries, youâve got to blast through mountains, or dig your way through treacherous land, or clear your way through jungles, and so on. Itâs slow, tedious, and very expensive work. And Iâm talking about everybody: Europe, Asia, South America, Africa, China, Russia, all of them. They have tiny little pieces of arable land mixed with very, very rough terrain, where itâs extremely difficult to move people around.
Those other countries need gigantic armies, too. Because of the layout of the land, armies need to be stationed all over the place in every key populated area. Weâve survived throughout the ages with smaller armies because itâs so easy to move them around. These things are all important because the more resources you have the more creative you can become. We had started writing music and developing the arts while many countries were still trying to figure out how to build roads. And donât even get me started on the rivers and waterways in this country. Not only is the land fertile, weâve got rivers that traverse the country in every imaginable direction.
Now, Europe has a lot of rivers, but they all move in one directionâwithout connecting. Here, the rivers connect! And itâs so incredibly easy to use that network of rivers to move everything around. Itâs made it easy to develop cities, easy to get food there, easy to get equipment to the farms and to the armies.
America is also blessed with this great jagged coastline, which makes for great ports. Itâs easy for us to bring in big ships. They can anchor in those deep water bays just offshore and load their goods. In many of them they can dock right at the port city, which means easy connections to the rivers and more easy means of transporting people and goods. How could this not have turned out to be the dominant force in our world? Itâs really a great place to live and develop a population of people. We accomplish very easily things that are, for other nations, a considerable challenge. And thatâs just the beginning.
Why America Has Always Dominated: Part Two
Because of the physical nature of the United States, as described earlier, it was relatively easy to develop this country. And because that in and of itself created opportunities, it lent itself to an immigration of very intelligent, inventive, and creative people. They were attracted by this wonderful, fertile environment. And once they got here, they began to innovate, which only caused the advantages and opportunities to increase. Itâs what would happen in the NFL if the best team got to pick first in the draft. Imagine what kind of a team theyâd build in a very short time!
I want to give credit to my good friend Harry Dent for this next line of thinking, and Iâm compelled to include it because it really helps define the makeup of the generations of people who carry this country ever forward. Harry called one of them the âBob Hope generation,â and it had a particular role to play. You see, the generation that preceded it was the Henry Ford generation. They were very innovative, building and discovering new things, new technologies, the assembly line, and all the great inventions that served as the building blocks for many of the things that we use today.
The Bob Hope generation fought World War II and made it safe to live here. And it was Harry Dent who pointed out that these generations alternate. One generation invents and innovates; the next distributes and takes the innovation to the masses. One generation built the assembly line for cars, the next created gigantic car companies. Then came the Baby Boomers, to start the innovation process all over again. It goes without saying that computers, along with an incredibly high-speed Internet, have been the greatest of those achievements and contributions. Next? Maybe it will be a generation that will have computers that work without IT guys. Eventually weâll have a generation of computers that work so well and are so easy to manage that weâll be choosing them by how well they go with our dĂ©cor, as we do with lamps and telephones.
So here are all of these very smart, very innovative folks in a land where opportunities abound, and thereâs another new and exciting one waiting around every corner. They take advantage of every one of these opportunities and are now inventing new ways to do things; one in particular is augmenting the human brain: computer networking and wireless digital communication devices. Together these elements facilitate the transmission of information at a speed past generations could not have even imagined.
All this led us to accelerate the speed at which more new innovations could occur. Suddenly our scientists are able to map the gene, and they can go back 15 billion years and look at things through the use of space telescopes and computer modeling. Theyâre no longer limited to the use of their own brains. Every American benefits from the fantastic new ways to communicate with each other. Just like the rivers found in this country allowed a faster means of delivering goods and messages, the rivers of communication now flow at a speed never conceived before.
As the resources increased and improved, naturally, more folks wanted to join in on the fun. The Baby Boomers were the first ones fortunate enough to reap the benefits of all of those improvements in communication and manufacturing and so forth. This was a large generation of people. There were a lot of them to be strong, bright, and innovative. So you can see how things grew exponentially.
I guess the final word on this countryâs ability to dominate is this: Many of those other countries and their societies, particularly the Europeans, are traditionally noblemen with deep heritages. Theyâre steeped in their owned strata, and theyâre basically stuck there. The folks who came over to America, however, were adventurous, ambitious middle-class people. They were merchants who were traveling, trying to develop more trade. Kings and queens and barons and baronesses donât care much about getting out there and developing trade. I guess theyâre too busy looking at their art. The merchants I spoke of (the middle-class folks) werenât so steeped in their traditions. They were far too busy, out there looking for new and exciting ways to conquer new frontiers and always seeking new adventures. You might say they were the artists, not the art collectors.
Why Things Are Changing
Thatâs a lot of great news. Too good to continue this way forever? Well, let me say this: This generation Iâve been talking about, these energetic innovators, are, well, frankly theyâre getting old. And older folks donât have much mental flexibility. They donât particularly like to learn new languages; they donât care for political change. They donât even like to move (or be moved) around much. And once the key to progress becomes technology (instead of rivers), the transfer of knowledge can go anywhere. Like, for instance, to China.
Now, thereâs a place with little arable land, poor roads, and few rivers. So, why all the fuss about China? We Americans have so transformed the world that the new highway of knowledge is the Internet, and China and the rest of the world are using that technology to beat us at our own game. Rich and mature, many of us have a tendency to sit around thinking that we have all the advantages and no one could possibly have a shot at catching up with us. We forget that as we have prospered, weâve taught them the game so well that they might become better at the game than we are. Our realization of this fact has been very slow in coming, but it will become clear quickly and suddenly. This book is not about fighting the inevitable; it is about loving it, embracing it, and riding that wave.
The problem for the average wealth of Americans in the near term is the fact that Americans just donât seem to get it. Weâre not getting the fact that when you print $12 trillion (thatâs what weâre doing, you know) you weaken yourself. Other people in the world are beginning to compete. If we donât get it that you canât make laws dictating that folks buy cars they donât like (made by guys making $65 bucks an hour), then those folks are going to go out and buy cars that are made elsewhere. We donât seem to understand that when people get fed up and feel too much pressure, they can just up and move their businesses elsewhere.
We also donât seem to get it that you canât reward people for being lazy and slothful, and get the same level of ingenuity and aggression weâve become used to over the last couple of hundred years. You canât punish people for being risk takers, because those people are going to either stop being innovative risk takers and/or theyâre going to go somewhere else and conduct business. We (and I say ...