Long read: Never Bet Against America

By the time this hits your inbox, we may have heard more about the US-China trade deal as the leaders of two countries parley in Busan, South Korea. But the popular opinion for now is that China is winning the trade war as seen with the multiple rollbacks from Trump and most recently China flexing its might with export controls on rare earth minerals. We have featured a few pieces over the past few months corroborating the Chinese emergence as a competing power. However, lest we get carried away, here’s a piece reminding us about something Warren Buffett once famously said “Never Bet Against America”. In this blog, Tomas Pueyo reminds us of the inherent strengths that still make America a formidable super-power – mostly arising from its geography. Pueyo has written plenty about how geography determines history which you can access here. We feature a summary of this piece here, but the blog contains some interesting visuals which drive home the point more effectively.

Pueyo begins by setting the context for why the US is so rich?

“Some believe it’s due to factors like democracy, the rule of law, the US dollar, its strong military, entrepreneurial culture…

But what if these factors are threatened, as many believe they are now? Will the US then keep growing? Or will it fall due to mismanagement? Is China going to surpass it?

Fortunately for the US, it has the best geography in the world. This is not changing anytime soon, so its power and growth will likely continue in the coming decades.”

What about its geography makes the US so impregnable?

Besides the sheer size of it and the natural barriers from oceans and mountains that provide it the security cover, Pueyo makes the following points:

Much of it is thanks to what he calls the Crown Jewel of the Mississippi:

“The Mississippi Basin is the 4^th largest drainage basin in the world and occupies 40% of the contiguous 48 US states, touching 32 of the US’s 50 states. 11 US states directly take their name from it.

And it’s caused by the incredible funnel effect caused by the Sierra Nevada / Rockies to the west and the Appalachians to the east.

How is this so useful? Because it’s unbelievably fertile. This whole region is naturally well irrigated. It’s also super flat.

This makes the Mississippi Basin the world’s largest contiguous piece of farmland.

Because of this, the US is the 3^rd biggest producer of food worldwide, and the biggest exporter.”

It’s not just the fertile arable land; the Mississippi provides natural waterways so crucial for trade:

“This huge, flat river basin also has many navigable rivers. Together, they give the US more navigable internal waterways than the rest of the world combined. Here’s one awe-inspiring fact: The head of navigation of the Mississippi (the farthest you can navigate upstream) is Minneapolis, which is a brutal 3,000 km (~1,800 mi) inland.

This is extremely useful because, as many of you already know, moving goods over water is 10-30x cheaper than overland. As a reminder, halving transportation costs can increase trade by 16x!

…The vast majority of prime agricultural lands are within 200 km of a stretch of navigable river. Road and rail are still used for collection, but nearly omnipresent river ports allow for the entirety of the basin’s farmers to easily and cheaply ship their products to markets, not just in North America but all over the world.

Rivers are more useful than coastlines because:

He goes on to cite many other ways, the US draws its might from its geography before concluding:

“In a world that sees China climbing, and witnesses how the US shoots itself in the foot with stupid policies like tariffs, it’s easy to fear the US might be set aside as a have-been. But its geography makes it impossible: It will always be rich, and it will be impossible to physically threaten.

I would personally never bet against the US.”