"The chief business of the American people is business."
-- Calvin Coolidge
I've been investing in the stock market for over 30 years, and for much of this time I've owned shares in American companies. This lets me diversify away from Britain, but I also gain exposure to a more dynamic economy that isn't weighed down by a culture that increasingly seems to distrust, rather than encourage, trade and commerce.
At the heart of American society is the idea of American exceptionalism -- that America occupies a special place in the world -- and a "can-do" attitude, which holds that no problem is insurmountable. In contrast, Britain -- since the Second World War -- has developed a culture of entitlement, where some people see success as something to be punished.
America does technology much better
America's economy is much better at encouraging innovation, which means that it is home to a disproportionately large number of high-technology multinational corporations such as Apple and Microsoft.
In contrast, the only member of the FTSE 100 index that comes close to America's world-class technology giants is the Cambridge-based ARM Holdings, which designs the microprocessors that are used in most mobile phones.
Britain does, however, have a lot of small and medium-sized high-technology companies, in particular the engineering firms based in "Motorsport Valley" that dominate the global motorsport industry. But when it comes to growing above a certain size, something seems to get in the way.
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Britain's anti-business culture
Over the last decade Britain has become more hostile toward business, and while some of this is in response to the banking crisis, it has strong roots in two very different ideologies. One is the medieval attitude that only land is a proper source of wealth (and trade is improper) while the other comes from Marxist economics, which holds that profit is a surplus that is unfairly extracted from the workers and really belongs to "society."
The industrial revolution showed that things other than land could be sources of wealth and prosperity, while the collapse of the Soviet Union and China's rapid economic growth after it ditched communism have holed Marxist economics below the waterline. But these ideas still hold sway over many Britons, including some politicians and civil servants.
In contrast, America was founded by people who rejected feudalism, which is why its Constitution forbids titles of nobility, and Marxism never took root there. So America has consequently developed one of the most entrepreneurial pro-business cultures on the planet.
High unemployment reflects changes in the economy
It's often said that America's economy is doing poorly because unemployment remains stubbornly high. The problem with this theory is that domestic job creation nowadays isn't as closely correlated with prosperity as it used to be.
What has happened is that new technology allows companies to reduce their head count by substituting machines for workers (just as happened in the industrial revolution) and globalization lets them export many jobs to countries with lower labor costs. Furthermore, modern factories require far fewer workers and most of those are there only to load a machine, remove finished work, and call a skilled technician to fix the machine if something goes wrong.
A good example of this trend is Standard Motor Products
America's system of federal governance allows economic and social policies to be tested in one of the states. So bad policies will only harm one state and those that produce positive results can then be adopted elsewhere. In Britain, a bad policy tends to damage the entire country.
As to the claim that America's dysfunctional political system is damaging its economy, this is nothing new as America's politics has always been like this. The Founding Fathers designed a system that forced people to compromise and even though this often results in behavior that you'd never see in Britain, such as when Bill Clinton vetoed a bill in 1995 and shut down the federal government as a result, they've done pretty well during the last 236 years.
How to invest
Aside from directly buying shares in American companies, which is quite easy to do nowadays (and you won't get caught for stamp duty), there are a host of investment trusts and unit trusts that specialize in America, such as F&C US Smaller Companies
If you like the high-technology sector, you've probably already got a couple of American companies on your watch list. I avoid this sector as I find it to be too unpredictable, so I stick to companies with strong brands and businesses that aren't easily affected by technological change, such as Brown-Forman
If you invest in America, you might want to keep an eye on the performance of its largest freight railroad, Union Pacific Corporation
Last week, Union Pacific's share price hit an all-time high after it published its best-ever second-quarter results. So America is still doing something right, even if its politicians are squabbling over what that is and who should get the credit.
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Tony Luckett owns shares in Brown-Forman and Union Pacific, but he doesn't own shares in any of the other companies mentioned in this article. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, and Standard Motor Products. Motley Fool newsletter services have recommended creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.