How to be a Wealthy Country Icon

January 1, 2015

3 Requirements for a Wealthy Country

According to Adam Smith, there are three basic factors needed to be a major economic power:

  • The people must have a good moral system
  • The people must not be stupid
  • The country must have access to the ocean

A fourth optional factor would be having natural resources.

Economic power is in the value that a society creates. This produced value is transmitted through exchange which is facilitated by morals.

  • If your employee steals from you, then you fire him – the produced value of society is reduced.
  • If your customer does not pay, then you never transact with him again, and value transmitted in society is reduced.

An important aspect of morality is the ability for obedience or subordination. The employees have to be obedient to their bosses so they can produce great things through their division of labour.

  • China’s success largely comes from their emperors’ ability instill obedience in its citizens to make great walls and cheap products.
  • Africa follows a tribal moral system leading to tribal war, so they don’t even produce value and are consistently poor.

Even if a society has a good moral system and can prosper by itself, it would not be an economic power if its people were stupid. Unlike animals which are satisfied with eating the same things, humans have progressive desires which change regularly.

The people have to be smart enough to adapt to such changes. The Aztecs were a prosperous tribe until the Spanish came and wiped them out simply because the Spanish could innovate to satisfy their desire for gold.

Once a country has both morals and intelligence to produce value, it needs access to oceans to transmit that value to the world.

  • The Swiss have factors #1 and #2, but is landlocked, so we have never heard of Swiss colonization.
  • Many African countries are landlocked and have few rivers and are therefore poor
  • The Arabs were not significant until the Prophet Mohammad gave them a moral system to rule their arbtirary egos. Afghanistan is also landlocked and so it has less chance to develop their morals and commerce

Taliban fighters