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Three Reasons the United States is Still an Economic Power

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The Atlantic's James Fallows, who has written extensively about China for many years, lays out three reasons why America hasn't lost all its economic kavorka yet.

Fallows says:

"We have a serious structural handicap. But we also have some offsetting advantages that, if properly understood, could open significant possibilities."

A summary:

1. The public and private research-university network, apart from producing an educated, high-end workforce and drawing talent from around the world, has been the incubator for most high-value technologies. U.S. universities are under intense economic pressure, but the gap between the best of them and those in the rest of the world is still enormous. Unless we thoughtlessly dissipate this asset, it should remain a significant wealth generator.

2. Because 95 percent of the world's population lives outside U.S. borders, the majority of the world's talent will also start out residing abroad. But immigration has brought in a disproportionate share of the nation's creative talent. Half of the members of the National Academy of Sciences are foreign-born. America benefits from attracting more than our "fair" share. China has never won a Nobel Prize in the sciences; the Chinese-born scientists who received prizes were honored for work they did overseas, largely in the United States.

3. The third U.S. structural advantage is our much-maligned legal and financial framework, which fosters the creation of new enterprises that can put discoveries to productive use. Like the United States of the mid-19th century, China of the early 21st century has taken a shortcut to development through lax intellectual-property laws that permit the copying of others' ideas. Many other countries have done so to a less flagrant extent. But that puts a low ceiling on a country's ability to develop its own high-value industries. I have interviewed Chinese entrepreneurs who plan to incorporate their companies in California's Silicon Valley for fear of intellectual-property theft if they were based in their own country.

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