by guest contributor Peter Fugiel, Ph.D.

Last month, a leading internationalist investment advisor, a top state government researcher, and a longtime analyst of local governments, held a panel discussion as guests of the Chicago Municipal Analysts Society (CMAS). They spoke about what the metrics of their various specialties seem to be indicating: America has yet to see its brightest years. Because when you look beyond the country’s misleading political fixations, the strangest things are happening.

Fifty-five percent of the American population lives in only ten states; 40 states are home to only ten percent of the country.

Investors are taking a second look at the United States. Because compared to former international favorites like Japan, China, and Europe, the U.S. is posting strong population growth. This increase is the result of both a higher birth rate as well as a remarkable immigration trend. The productivity that investors had already noticed about the American economy is now being matched by consistent long-term internal demand.

And if international investors like what they see when comparing the U.S. to other developed countries, they should not stop looking at our national population metrics only. They should consider what the state and local community analysts have been saying: the diversity of locational and economic choices is also a huge plus. They are what American decentralist government is all about.

It may have taken a while for Americans to learn how to use a three-level governmental system. But the system is working by now and it is producing the kind of policy diversity and different management styles that foreign investors might only dream. All in all, the favorable national demographics, when combined with the state policy diversity and the vastly differing local profiles, are a formula for future national achievement.

Economists: Drop in demand leads to deflation – not inflation

While some U.S. economists fret about the country’s deficits and the rise of inflation, the demand metrics for the various national markets indicate just the opposite. There is a drop off in global demand. Europe will be dropping in size without immigration. Japan has not grown in a decade. China’s policy on ending higher birth rates succeeded. Only Africa will continue to grow in this century. That, is, only Africa – and the United States. The U.S. Census just projected that the nation’s population will down to ’only’ 420 million in 2060. Now that is a profile in demand. One hundred million additional Americans in less than fifty years! There is plenty of room for more debt in the global economy; the stock markets seem to be saying so.

The most striking aspect of state-by-state differences is that many Americans move from one state to another every year to seek a job, to start a new business, or to find a lifestyle based on choice.

Private investors in the U.S. are offered unique state and local public sector choices

Since the United States federal system was first established, it has taken a lot of effort to learn to keep the national government and the states out of each other’s way. But by now, the two levels are pretty familiar with keeping to their respective roles. So by now, there is a whole range of state governments that are as diverse as they are competent in doing their higher level tasks. Foreign investors examining the competence and lure of the different states are, in effect, looking at Europe without the political disunity. In the U.S., state taxes are various, and tax deals can be substantial. The political squabbles are nothing like they are in Europe.

Immigration thrives where cultural diversity is welcome

Fifty-five percent of the American population lives in only ten states; 40 states are home to only ten percent of the country. Most immigrants arrive in the biggest states. The national strength of America’s growth is predicated on having a state system that can absorb large numbers of immigrants. The very diversity that makes for profoundly different state profiles can also be the lure to foreign populations in various states: Mexicans in Illinois, Asians in California, the Caribbean peoples to New York. Immigration does not have the cultural edge it does in most of the world’s countries.

Private investment and public choice give the U.S. an edge in economic growth

The very nature of successful investment is to have choices. But choice has almost always been associated with the private sector. The remarkable and modern thing about the United States is the existence of widespread public sector choice. Public sector choice enhances private sector choice. The states offer investors choices. Local communities offer investors and households choices. Combined, when all of this choice is considered, America has an economic edge that shows what constitutional liberty is all about.

Internal migration in America shows the importance of locational choice, especially self-governing locations

The most striking aspect of state-by-state differences is that many Americans move from one state to another every year to seek a job, to start a new business, or to find a lifestyle based on choice. What Americans have long known about American diversity, especially among communities, is you move to get a better deal. For example, no matter how many Americans have moved to metro areas, the key is simple. They have moved to communities smaller than 50,000 people in size. If the modernizing world is supposed to create only mega-cities, in the land of choice, citizens overwhelmingly choose governable smaller cities.

Communities have their best credit profiles when there is growth and favorable demographics

Over time, these communities are more or less “governable.” Some cities grow and never keep up with their long costs, such as budgetary balance and infrastructure. Other communities are blessed with competent leadership and their planning manages to produce financial and public works that are positive. And although research into the demographics of a place can predict how a town will act over time, nothing can affect results more than positive leadership can.

When businesses and households search for a community, they try to find out in what direction a community may be headed. And although a town that is still growing is a real positive, just like the percent of the town that is younger, leadership still makes the biggest difference. And like everything else under this American ’constitution of liberty,’ choice and effort are the twin keystones to progress and economic gain. And unlike during the dreary days of espousing free government through moral argument, the positive results can, in fact, be predicted by metrics, made clear by demographic analysis.

This analysis is a separate discussion from the ideas raised by the panel discussion held in Chicago. Panelists included Dick Hokenson, an analyst with ISI Global Demographics. Dick is based in Amsterdam. Peter Fugiel was a housing analyst for many years and is an American federalism expert. Richard Ciccarone is a managing director at McDonnell Investments and specializes in the American community sector. The panel was held as an event sponsored by the Chicago Municipal Analysts Society on November 21, 2013.

About the Author

Peter Fugiel, Ph.D., a housing and public finance consultant in Chicago, is a frequent contributor to His firm, PMN Community Services, provides research services to Chicago-area communities based on platform that combines real estate market analysis with municipal bond research.

PMN Community Services recently launched its public finance/housing research website, at

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