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The dominance of American companies, particularly in the technology sector, seems to have reached its peak. Giants like Apple, Amazon, Google, and Facebook have become household names and essential parts of modern life. However, capitalism’s fundamental principle of creative destruction—where new companies replace old ones—is under strain. Historically, every decade has witnessed significant churn among the top companies, but this trend has stalled in the last five years, with the same companies consolidating their dominance. This stagnation raises critical questions about the future trajectory of American capitalism and its global economic influence.

The Seeds of Decline: AI Investment and Fiscal Stimulus

American dominance in the tech sector has been fueled by two major factors: massive fiscal stimulus and unprecedented investments in artificial intelligence (AI). While AI holds transformative potential, the returns on these investments may not justify the costs. Excessive reliance on fiscal stimulus has also created vulnerabilities, exemplified by the U.S.’s average fiscal deficit of 8% of GDP over the past decade—an outlier compared to other developed and emerging economies.

This deficit, much higher than India’s or Europe’s, has enabled the U.S. to sustain growth artificially by printing dollars, leveraging its status as the world’s reserve currency. However, this strategy is unsustainable in the long term. As interest rates rise and global skepticism grows, the cracks in this system are becoming increasingly visible.

Debt Inefficiency: A Warning Sign

A particularly concerning trend is the inefficiency of U.S. public debt. A decade ago, $0.70 of debt could generate $1 of GDP growth. Today, it takes nearly $2 to achieve the same result, reflecting diminishing returns on debt-driven growth. No other major economy displays such inefficiency, signaling a deeper structural issue within the U.S. economy.

This reliance on debt extends to job creation, where government spending has become a critical driver. Government-created jobs now account for 22% of new jobs in the U.S., a stark contrast to 1% in 2010. This shift contradicts the U.S.’s free-market ethos and highlights the growing role of government in sustaining economic activity.

Welfare Dependence and the Changing Role of Government

Welfare programs have also expanded significantly. Over 50% of U.S. counties now rely heavily on government transfer payments, up from less than 25% two decades ago. While such measures provide short-term relief, they also point to a troubling dependency that undermines the principles of self-reliance and market-driven growth.

Addressing these issues poses significant challenges. Programs like Medicare and Social Security are politically sensitive and difficult to reform without facing public backlash. Even if leaders like Donald Trump or Elon Musk advocate cutting government spending, the immediate impact on growth could be severe, testing the political and economic resilience of the U.S.

The Road Ahead: America’s Less Exceptional Future

These factors collectively suggest that the U.S. may look less exceptional as it approaches 2025. While it remains a global economic powerhouse, its model of growth is increasingly reliant on unsustainable practices. The transition to a more balanced and efficient economic framework will require difficult choices, including reducing government spending and addressing the inefficiencies in public debt.

India’s Contrasting Path: Lessons in Capital Expenditure

In contrast, India presents a more promising picture. Over the last decade, India has shifted its focus from subsidies to capital expenditure, particularly in infrastructure development. This shift has laid a strong foundation for sustainable growth, positioning India as a rising economic power. The emphasis on long-term investments over short-term welfare measures offers valuable lessons for other economies, including the U.S.

Conclusion: A Global Shift in Economic Power

The American model of dominance, fueled by big tech and fiscal stimulus, is reaching its limits. As the U.S. grapples with these challenges, other economies like India are emerging as potential leaders by adopting more sustainable strategies. The coming years will test the resilience of the U.S. economy and its ability to adapt to a rapidly changing global landscape. For investors, policymakers, and citizens, this is a critical moment to reflect on the future of capitalism and the need for innovation and efficiency in economic governance.