Dear Friends,
It seems to me, the business culture of a country is to the economy, what climate is to an ecosystem. We all understand intuitively; a frigid arid tundra is not the place you will find a great diversity of flora and fauna. We also implicitly know that a warm wet rain forest will have a great deal of bio diversity. It follows then, where conditions are pleasant, there is more abundance and where conditions are unpleasant, there will be less diversity. The flora and fauna that does get by, in unfriendly conditions, will be clinging on by their toenails. This sets up the conditions, for the extinction of most of the life in these scarcely habitable regions… with only slight disturbances. If we take this logic and apply it to economics, we can understand why some countries have poorly working economies, while others have flourishing and diverse ones. The economy of a country has tremendous effect on the lives and standard of living of the people, this makes it important to understand, and this framework may help enlighten.
Economies exist outside of government. Even where there is no government, if there are people, there is an economy. Government is an elite group of people who have asserted that, since they have the backing of the people, they have the right to interfere with trade and other interpersonal action. This makes government an adjunct to the economy. Since the economy is functional outside of, and independent of… government. Yet, by this power to effect regulation, government sets much of the local business climate.
Government has the power to effect the local economic conditions. It can establish banking standards, that allow the more efficient utilization of money, it can establish weights and measure standards, to further facilitate trade and it can help ensure the populace is well educated, making the next generation qualified to compete in the marketplace of the economy. (Fight tooth and nail in the economic jungle). Along with these goods however, governments also, have thousands of bureaucrats, working diligently, writing thousands of pages of laws and regulations, many often have a corrupt civil service, demanding bribes and such, and governments too often overspend to push up their GDP, by feeding their businesses high fructose corn syrup. (Government Stimulus).
The more positive things governments do to their economies; the more lush their economic landscapes. It would be like making a local ecosystem warmer, say from USDA Zone 3 down to Zone 6. The environment is far more productive in a warmer climate just as a warmer business environment is more conductive of business growth. The more hostile to the free market government policies are; the less productive will be their economic landscape. Often to the point, as of North Korea, that government policies have rendered the local economic conditions, so dry and chilling to business, that no amount of land could feed the people. This would be like, removing all the rain from a piece of land and at the same time, perpetually chilling it to winter conditions. We understand the environmental argument but the economic argument seems so much harder to folks.
If we start thinking of economics, as we do ecology, we will have a better context to measure the economic policies of our governments. If someone proposes a policy that will chill the economic atmosphere, even if we feel it makes things more “fair,” we can now apply the new regulation to our environmental model of economics… and understand that it will in fact, make conditions less fair and less prosperous, by chilling the economic environment. If we do choose to follow that path however, we can apply our environmental model of economics, and know why the economy is failing. We wont have to blame some nebulous villain, as the fiend who destroyed our economy, we will know that it was us, by our actions, who are the fiends.
Sincerely,
John Pepin
