American Opportunity

As mentioned in Monday's HX Daily, we have traveled through Eastern Europe for the last week or so.

We have had the opportunity to visit Hungary (Budapest), Croatia, Slovenia, and Slovakia. It has been a whirlwind tour and the first time I have done this type of trip since before COVID.

Traveling like this always makes me reflect. I was thinking about George Soros's journey, which we wrote about several times this week.

He was born in 1930 in Budapest and spent 17 years in Hungary – including his teen years during the height of World War II and the Nazi occupation. Remember that over 550,000 Jews died during this period.

The fact that he survived is amazing.

It is even more incredible that he went on to become one of the most famous and richest investors of all time.

What we were reflecting on is how his life story is uniquely AMERICAN.

There is no other country in the world that has produced so much wealth for individuals who come from hardship and nothing.

Two key elements of this history of American success are our unique combination of OPTIMISM and FAILURE.

Our readers have often heard us talk about optimism.

People who have difficult backgrounds—like Soros and me—and succeed are almost always optimists. Having grown up with a traumatic childhood, optimism is the best survival mechanism.

America is unique in that optimism is not only encouraged but rewarded. It is truly a place where you can believe in yourself and, with enough hard work and some luck, achieve incredible results.

That is not to say that there are no other countries where people who grow up with nothing go on to succeed. It is the magnitude that is different in America. Many more succeed, and the success can be much more significant.

This is directly correlated to the American culture of optimism. There is no other country where the “big ideas” actually have a chance to work out!

Another unique aspect of America that we reflected on was the concept of failure.

This is spoken about less but is vital to the American psyche.

We have built an economy and society that accepts and deals with failure.

In many other countries, they do not let enterprises fail and have broad social security and social safety nets. There is nothing wrong with either of these ideas; they produce great lifestyles for the populace.

These characterizations define much of Europe – especially over the last three decades.

The problem is that while not allowing failure to happen is a noble purpose, the economy can't evolve and grow.

This chart is difficult to read, but it shows the GDP per capita of individual states compared to the countries in Europe. Here is the chart…

The orange bars in the chart show the GDP per capita (in dollars) for every US state, and the green bars show the GPD per capita for every European country.

Only two European countries—Luxembourg and Ireland—are in the top 30. We suspect the Irish data may also benefit from the earnings of citizens living outside the country.

The EU average is only greater than TWO of the states – Idaho and Mississippi.

This data is not perfect, and its calculations involve many assumptions. However, it could also be argued that the large number of social services available freely in the EU make the real purchasing power and lifestyle of its citizens better than it appears here.

Though we have seen many versions of this data set, they are all similar.

TODAY – the average American is far out-earning the average European.

This doesn't mean Europe is bad. Again, its decision not to allow failure and build a broad social safety net creates a great lifestyle for its citizens.

However, we think it may not be sustainable over time. The American model—while more volatile—has a greater chance of sustainable prosperity.

Our acceptance of failure is a seldom discussed key to our success.

We think that this combination of OPTIMISM and FAILURE makes the American system uniquely successful.