Lauren Templeton and Scott Phillips, coauthors of Investing the Templeton Way, will provide their analysis on John Templeton’s Buena Vista speech on the economic vices and virtues in upcoming posts. Please consider entering our contest on this topic for a chance to win $500.
Despite these clear examples of economic vices, and the demonstrable role that U.S. government institutions play in their enactment, the bedrock of the U.S. economy remains virtuous. For this, we should be thankful. One of the most important driving forces behind the U.S. economy and its persistent success over the past one hundred years has been its creativity, which is the second economic virtue that Sir John lists in his speech. The U.S. economy is often associated with large firms with strong branding such as Wal-Mart, GE, McDonald’s, Coca-Cola and so on, but the reality is that small businesses, comprised of entrepreneurs, represent 99.7 percent of the nation’s employers, 50 percent of GDP, 97 percent of exporters, and on average are launched at an annual clip of 500,000 per year. The propensity for Americans to envision a better way of doing things, and then accepting the risk of the unknown (and hence possible failure and personal loss) remains one of their most important strengths. In this sense, as long as the U.S. government does not impede the ability of these individuals to act creatively, take risk, and start new businesses, the U.S. economy has been and should remain wealthy in this virtue.
Likewise, the U.S. economy ranks high in Sir John’s third economic virtue: charity. The U.S. has been and remains one of the most charitable societies ever known to humankind, as it has always expressed generosity to those in need. The simple truth is that the U.S. gives away approximately $300 billion per year in charitable donations, and as long as Americans can continue to pursue their dreams and build wealth, we should expect this behavior to continue. Most recently, this behavior can be clearly seen in the unmatched response by Americans to the recent earthquake devastation in Haiti.