Bullish on America: the United States needs to think more conceptually about how to use its economic advantage.

• Author: Merrill, Philip

The events of the last two years have conclusively shown that the United States has the most powerful and most operationally versatile military in world history. America is able to project devastating force around the globe in record time--and reaps many significant strategic and political benefits as a result.

While the United States has the right to be proud of its military capabilities, it is worth noting that the military power of the United States pales in comparison to its economic power.

The United States has an $11 trillion economy--almost three times larger than that of our nearest competitor, Japan. As a point of comparison, America's Cold War adversary, Russia, has a $350 billion economy (3.3 percent of America's). Put another way, Russia is equal to one Holland, and China is about three Hollands.

It is hard to exaggerate the size and growth of the U.S. economy when viewed from other countries. Brazil, for example, with 60 percent of America's population, has a GDP of around $500 billion. Fifteen or twenty years from now, U.S. GDP will go from $11 to $20 trillion, and one can only hope that Brazil will be striving toward $1 trillion.

And for the United States, the best is yet to come. It has shown an amazing capacity for productivity growth and economic reinvention. Within the normal business cycle, and savings, surplus, and deficit projections, the United Stales will continue to have explosive growth in the 21st century--just as it did over the last two centuries.

In 1962, the U.S. GDP, in today's dollars, was $586 billion. In just forty years, America has created more than $100 trillion in new net worth. This is a level of wealth creation without historic parallel. The Spanish control of Latin America, the Dutch trade with the East Indies, and the British Raj in India all look like marginal investments in comparison.

This leads to two core theses. First, the central fact of the 21st century is the enormous size of the U.S. economy compared to that of everyone else. Contrast this with the dominant political fact of the 20th century--the growth of huge military forces in the hands of totalitarian states that were willing to use them. This is a kind of tectonic shift that has been recognized more by other countries than by Americans. Americans realize they are rich and powerful but don't completely realize by how much.

One country that does understand is China, which has been concentrating its efforts on growing its economy...