Celebrating Aspiration

by | July 5, 2021

Americans celebrate a remarkable anniversary on July Fourth. Congress approved the Declaration of Independence that day in 1776.

The lasting importance of that document wasn’t that it detailed abuses by the British sovereign. Rebellions against tyrants were nothing new. Nor was it because its authors and signatories were representative of the populations of the 13 colonies. No women, Native Americans, or people of color signed.

Rather, the place of the Declaration in history was assured by its preamble: It is “self-evident” that “all men are created equal” and are “endowed by their Creator with certain unalienable rights” to “Life, Liberty, and the Pursuit of Happiness.”

Cynicism has merit. Many signatories were slave owners, and America’s original sin courses indelibly through our history. Yet the fallibility of the signers doesn’t diminish their intent, nor what they set in motion. The Declaration was, and remains, an aspirational statement.

Aspiration worked. The Declaration, the Constitution and its Bill of Rights, and the protections afforded individuals under a new nation’s rule of law unleashed the two great forces that shaped America, and the world, in the ensuing 245 years: democracy and markets.

The rule of law, rooted in the power of the ballot, created the institutional framework for self-governance as well as the parameters for property rights, capital accumulation, and human investment. The collective choices of individuals created durable community.

Progress was neither easy nor linear. From John Adams’ infamous sedition laws, the Confederacy, the genocide of Native Americans, the internment of Japanese Americans, to the storming of the Capitol on Jan. 6, 2021, U.S. history is replete with failure, shame, and worse. A more perfect union has at times been found wanting.

Yet America’s accomplishments are testimony to the founders’ faith in individual rights. American democracy informed and inspired liberal movements worldwide. U.S. military power ended tyranny in Europe and Japan. U.S. economic and financial assistance allowed the world to rebuild after 1945, unleashing the greatest global economic advance in human history. The U.S. won the Cold War, and in doing so contributed to the greatest antipoverty program in human history, namely the adoption of market-based economies across former communist countries, including China.

History, like our own lives, is messy. Accomplishment is accompanied by failure, achievement by moral outrage. Greatness isn’t found looking back, but in tackling what hasn’t worked and what wasn’t addressed. Americans today have reason to hope, cause to celebrate, and purpose to fulfill.

Much is written these days of America as a power in decline, soon to be overtaken economically by China, perhaps militarily and technologically as well. China has indeed lifted its citizens out of poverty at a remarkable rate since Deng Xiaoping initiated his reforms in the early 1980s. By mere fact that its population is more than four times larger than that of the U.S., its economy will soon become the largest in the world.

But size isn’t everything. U.S. income per head is nearly four times larger than China’s. Slowing trend growth and a declining working-age population suggest that China will have a hard time narrowing the gap in living standards.

Economists have long realized that living standards are a function of productivity, which depends on capital and innovation. China’s hybrid model of state-directed capitalism allows some resources to be allocated by markets, while others enjoy government-directed investment. That is surely an improvement over Mao Zedong’s command economy, but it remains fundamentally vulnerable to corruption and misallocation of resources based on favoritism and central planning, rather than prices and human ingenuity.

The most effective development and deployment of Covid-19 vaccines came from the West. From Galileo to Einstein, history demonstrates that fundamental advances in science and knowledge, which underpin the technologies and innovations that enable our living standards, are cultivated by free will, not directed thought.

China is but one challenge ahead. Climate change, biodiversity loss, equality of opportunity, and geopolitical conflict will make tremendous demands on Americans. A society that prizes the rights and contributions of the individual will have to find new ways to think and act collectively if it is to tackle fundamental challenges that cannot be solved by self-interest and free markets. This summer’s shocking heat is a visceral reminder that our children will suffer if we don’t effectively organize and sacrifice—across national borders—to reduce greenhouse-gas emissions.

Yet the aspiration that resides at the heart of U.S. history, embodied in the Declaration, represents the most solid foundation known to man to address such challenges. In ambition and accomplishment—just as in markets—selling America short is never a good idea. Debates may rage about inflation and market prices. But in the spirit of the Fourth, let’s celebrate our resolve, present at the birth of the nation, to realize our potential, to make right what is wrong, and to live up to our aspirations.

About the Author

Larry Hatheway

Larry Hatheway has over 25 years experience as an economist and multi-asset investment professional. He is co-founder, with Alexander Friedman, of Jackson Hole Economics, LLC, which offers commentary and analysis on the global economy, policy & politics, and their broad implications for capital markets. Prior to co-founding Jackson Hole Economics, LLC Larry worked at GAM Investments from 2015-2019 as Group Chief Economist and Global Head of Investment Solutions, where he was responsible for a team of 50 investment professionals managing over $10bn in assets. While at GAM, Larry authored numerous articles on the world economy, policy-making and multi-asset investment strategy. Larry was also the lead investment manager for various mandates, funds and an actively managed multi-asset index. Larry also served on the GAM Group Management Board, was Chairman of the GAM London Limited Board and served as member of the GAM Investment Management Limited Board. Larry was also Chairman of the GAM Diversity & Inclusion Committee. During his tenure at GAM, Larry was based in London, UK and Zurich, Switzerland. From 1992 until 2015 Larry worked at UBS Investment Bank as UBS Chief Economist (2005-2015), Head of Global Asset Allocation (2001-2012), Global Head of Fixed Income and Currency Strategy (1998-2001), Chief Economist, Asia (1995-1998) and Senior International Economist (1992-1995). During his tenure at UBS, Larry was also a standing member of the UBS Wealth Management Investment Committee. While at UBS, Larry worked in Zurich, Switzerland, London, UK (various occasions), Singapore and Stamford, CT. At both GAM Investments and UBS Investment Bank Larry was widely recognized for his appearances on Bloomberg TV, CNBC, the BBC, CNN and other media outlets. He frequently published articles and opinion pieces for Bloomberg, CNBC, Project Syndicate, and The Financial Times, among others. Before joining UBS in 1992, Larry held roles at the Federal Reserve (Board of Governors), Citibank and Manufacturers Hanover Trust. Larry Hatheway holds a PhD in Economics from the University of Texas, an MA in International Studies from the Johns Hopkins University, and a BA in History and German from Whitman College. Larry is married with four grown children and a loving Cairn Terrier, and resides in Wilson, WY.

Alex Friedman

Alex Friedman is the co-founder of Jackson Hole Economics, LLC, a private research organization which provides analysis on economics, politics, the environment and finance, and develops actionable ideas for how sustainable growth can be achieved. Friedman is a senior leader with two decades of experience growing and transforming organizations in the financial and non-profit industry. He was the CEO of GAM Investments in London and chairman of the firm’s executive board. Previously, he was the Global Chief Investment Officer of UBS Wealth Management in Zurich, chairman of the UBS global investment committee, and a member of the executive board of the private bank. Before moving to UBS, Alex Friedman served as the Chief Financial Officer of the Bill & Melinda Gates Foundation. He was a member of the foundation’s management committee, oversaw strategic planning, and managed a range of the day-to-day operating functions of the world’s largest philanthropic organization. Friedman also created the foundation’s program-related investments group, the largest impact investing philanthropic fund in the world. He started his career in corporate finance at Lazard. Friedman served as a White House Fellow in the Clinton administration and as an assistant to the U.S. Secretary of Defense. He is a member of the board of directors of Franklin Resources, Inc. (Franklin Templeton), a member of the Council on Foreign Relations, Chairman of the Advisory Board of Project Syndicate and a board member of the American Alpine Club. Friedman is a regular contributor to a range of newspapers and thought leadership groups and is also the author of Babu’s Bindi, and The Big Thing, both children’s books. He is an avid mountaineer and rock climber and led the first major climb to raise money for charity through an ascent of Mt. McKinley. Friedman holds a JD from Columbia Law School, where he was a Harlan Fiske Stone Scholar, an MBA from Columbia Business School, and a BA from Princeton University.

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