The United States doesn't have a sustainable competitive advantage

Ecological metaphors and ideas frequently apply in economics. The colonization of the Americas by European explorers has a lot of parallels with the colonization of a new ecosystem by an invasive species. 

Invasive species are introduced when a plant or animal from one region is transplanted by humans, into a new ecosystem, and the invasive species then experiences a phenomenal rate of growth because native species are not adapted to compete with the foreign species. 

The newcomer grows at a rapid rate and moves quickly through the environment. At some point, a new balance is reached, but it looks remarkably different from the old one. Adapting quickly is hard for the native species, and the new ecology is dominated by the invaders. 

So in this instance, several hundred years ago, western humans are introduced to a whole new continent containing another human society of Native Americans with entirely different ways of life who are unable to compete with the new invaders, and the invaders experience a phenomenal rate of growth.

Combating invasive species is extraordinarily hard, because the checks and balances of the native ecosystem often don't seem to apply to the invaders. In both ecology, and the case of the Europeans, invasive species often aren’t “understood” or “recognized” by native species as competitors. Often, invasive species are just better at competing and more effective at what they do than the players in the current ecosystem. They are adaptable, grow faster, have special poisons, shade out weaker competition, are hard to remove, or are just in some way better at competing… the list goes on.  If they weren't, they wouldn't be invasive.

This kind of revolutionary growth by an innovator or stronger competitor happens in all sorts of other areas, too.

For example, in the world of business being the innovator of a new product or strategy lets a company enjoy an initial period of quick, uncontested growth before its strategies are copied. If you’re the first to develop a new product you will profit when everyone buys from you, but unless there is some kind of barrier in place you will soon be copied by others seeking the same profitable benefits. Companies that aren't able to sustain barriers around their business tend to quickly have their margins eroded by competitors copying and using the same strategies that the first business was using.

In sports, teams that come up with new strategies benefit initially as well, before other teams are able to adapt or adopt the same methods. 

For example, advanced statistics are now used in baseball to analyze players, a now well known practice called sabermetrics. This innovation started with a few key teams, and these teams were able to have some initial exceptional successes, noteably the Oakland A’s as described in the book Moneyball. Today in baseball teams almost all teams use sabermetrics to some degree. Since there is no cap on salaries, the biggest competitive advantage is the budget a team has available to pay players with. Having a sabermetrics staff in place is not much of an advantage - everyone else has one too.

In a league like the National Football League, where salary caps fix budgets equally for all teams, the enduring competitive advantages do have more to do with the quality of a team's organization - their coaching, player evaluation and development, salary negotiation, etc. - and with their geographical market.

Smaller market teams or teams in certain cities have notable disadvantages due to their ability to attract free agent talent. A lack of organizational quality often combines with these location effects to produce the more notable disparities in a league that is year to year one of the most balanced in sports.

You do see consistent strong teams like the Pittsburgh Steelers, New York Giants, or New England Patriots who have built somewhat more durable competitive advantages through organizational quality and culture, mostly you see most teams bouncing around from year to year in the standings while remaining competitive, and you see some small market teams with mediocre ownership and organizational quality who consistently struggle, like the Buffalo Bills and Oakland Raiders.

The United States doesn't have a sustainable competitive advantage:

From its very start in The New World, until after World War II, the history of the United States has been a history of growth defined by the United States as the beneficiary of a series of unique advantages.

But, is there any reason why the United States advantages can't be copied or will sustain? Why can't other countries do the same things we are doing to be successful? Are some of our early advantages as strong as they were starting out?

Limits to Growth

Going back to Ecology, there are limits to growth - populations are limited by the size of their environment. They will continue to get bigger, and as they grow into their environment, it becomes harder to expand at the same rate as there are simply less opportunities, of a lesser quality and more barriers and of a higher strength.

A balancing out is happening across the globe. The United States got an early start with a unique culture around the ideological foundations of capitalism.

Early American advantages:

• An entire continent to expand into full of unexploited natural resources
• A unique business culture of innovation, risk taking and entrepreneurship. Think of individuals like Ben Franklin, the kind of rational, hardworking culture Weber describes in "The Protestant Ethic", and generally the kind of risk takers who are bold enough to make the leap of an overseas voyage to colonize an unknown land.
• A political culture of freedom and opportunity made possible by the advantages of starting out in a new country. There was little competitive pressure between Americans. Americans competed against external forces to complete their "Manifest Destiny" and expand within the continent. 
• All things being equal, it seems easier to establish a strong, fair set of rules and governance starting out from scratch than to try to reform an existing corrupt system laden with individuals who all have vested interest in the status quo.
• Expertise with powerful new military and industrial technologies.
• Geographic isolation that left it in a powerful position after world wars.
• A powerful “brand name” desired, respected, feared and given the benefit of the doubt abroad.
• The use of the dollar as an international currency.

The advantages included new ways of thinking about running businesses that were rational and efficient based on early Protestant culture and risk taking culture of early explorers. Following from this, American corporations during the 19th and 20th century were some of the pioneers and innovators of many of the business practices, processes, technologies. strategies, accounting methods, and general models used by modern corporations in all countries today. 

But there is no reason this culture, set of business practices, methodologies, and overall setup cannot be copied by others, and likewise the unique brew of protestant, risk taking culture and minimalist governance is perhaps not as strong as when America was just starting out.

This balancing out of "setups" is slowly occurring across the globe in labor, education, and business.

Top engineers, technologists, scientists, factories, education systems, political systems, healthcare systems and so on are not in any way exclusively American. 

Sometimes it seems as though Americans feel they should be. Do we have a distinct competitive advantage here in terms of the quality of our labor and capital that is sustainable? How much of our growth has been the result of inertia, and the gravity of being an innovator?

There tends to be a regression to the mean effect with competitive advantages. 

For example, today's Oakland A's are no longer the exclusive beneficiaries of Sabermetrics and are back to being mostly an average team. Or take the example of any first moving company out there without clear barriers for competitors to enter their market like Groupon. 

Whenever the methods of success can be copied, extraordinary performances by people, teams, nations, civilizations or cities tend to be unsustainable. Competitors catch on, adapt, and begin using the same strategies to succeed, even adding their own twists and improvements. The set of advantages which have enabled the United States rise to international dominance are beginning to erode. America’s relative position in the world is being weakened, both by the deterioration of its own unique culture and processes which initially set it apart, and by strides made by the rest of the world to catch up.

American Values

American values like growth and individual freedom were formed in an era of rapid expansion and distant limits. These same values may be problematic in an era of slower expansion and more tangible limits, dealing with issues like environmental problems. Limits are more clearly in the picture now - to water supply, oil and other fossil resources we can extract from the ground, waste we are able to put into the environment or atmosphere without damaging it, topsoil for agricultural improvement, and even just general real estate space.

The response so far has often been to take on debt in any way necessary to sustain current growth rates, whether these debts are government, consumer, or even "ecological" debts that will be paid later in costs that will make it harder to conduct our business and act as a drag on future growth.

In the next several decades, the United States will be exposed by a loss of key economic advantages and less favorable tailwinds pushing behind it. Some of the new headwinds we'll be facing:

• fiscal challenges for government
• relative decline in power and influence over its peers
• an overextended and underfunded infrastructure in need of pruning and improvement
• detrimental emigration and immigration effects due to less favorable economic and political outlook
• perverse incentives for business and government leadership encouraging short term thinking and making these complex issues difficult to address
• success changes culture. Have we lost any of our edge?

From all of these factors, you will have long term difficulty in the United States of spurring new growth at the same rates historically.