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Why is America rich?
Originally Answered: Why is the USA so wealthy?
Hi, first, to set the record straight, the United States is not the wealthiest country in the world. When measured by per capita — total wealth of a country divided by the population of that country — at least 10 countries are ahead of America. Hong Kong, Singapore, United Arab Emirates and Ireland are among the nations that have higher per capita income than the $57,300 for the U.S.
That said, the U.S. is still the wealthiest among nations with a population of over 300 million. The prime reason why the U.S. is wealthy is because very few industries and businesses are owned or controlled by the government. The principles of free markets are allowed to dictate how businesses are run. This brings efficiency.
This in turn encourages many young men and women to embrace entrepreneurship. There are a variety of businesses — small and medium — that have made many people wealthy in the last 75 years.
The second reason why the United States is wealthy is its friendly taxation system. Let not the headlines surrounding the recent tax policies of the Trump government fox you. The U.S. by far has one of the most business-friendly as well personal tax regimes in the world. In short: Taxes are lower than many countries and this allows people to have more disposable income while businesses can reinvest to further growth — the combination boosts national production, and hence wealth. For more on taxes, this article makes it extremely easy for you to understand why understanding your taxes matter.
The third reason, in my view, why the U.S. is so wealthy is because of the presence of a robust stock market. A stock market helps make it easy for companies to raise capital to invest in their businesses. The public in turn can buy shares in those companies. Earnings shares in companies, on an average, helps people to get wealthy. For more on how stock markets work, here is a well-written primer.
There are a many more reasons why the U.S. is wealthy — high quality education, less corruption, a strong judiciary system — among many. But the above three reasons, in my view, are the most compelling reasons behind America’s wealth in the last 25 years.
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