How do nations create wealth? Liberating people's minds, and rewarding effort and ambition, seem to be key factors. Coyote at Coyote Blog plays Adam Smith and offers this:
...here is Coyote's First Theorem of Wealth Creation, first expounded in this post on the zero-sum economics fallacy:
Groups of people create wealth faster in direct proportion to the degree that:
Their philosophical and intellectual culture values ordinary men (not just "the elite", however defined) questioning established beliefs and social patterns. This is as opposed to having a rigid orthodoxy which treats independent thinking as heresy.
Individuals, again not just the elite, have the ability through scholarship or entrepreneurship to pursue the implications of their ideas and retain the monetary and other rewards for themselves. This is as opposed to being locked into a rigid social and economic hierarchy that would prevent an individual from acting on a good idea.
China, for example, just by cracking open the spigot on #2, however inadequately, has gone from a country with mass starvation in three or four decades to one where the worry-warts of the world are scared of juvenile obesity. To a large extent, this theorem is really just a poor restatement of Julian Simon's work. Simon's key point was that the only relevant resource was the human mind, from which all wealth flows. All I have done is break this into two parts, saying that to create wealth a society has to value the individual's use of his mind and has to allow that individual free reign to pursue the products of his thinking.
It's a good succinct piece. Read the whole thing.
