If Nations were People

If Nations were People

The US is like an independently wealthy man who has such a variety of business and investment interests, that no single one can dominate his assets and energy. In other words, If one of his ventures fails, it does not affect him, as he has dozens of others. Thus, he has the freedom to listen to a variety of investment counselors and even crackpots who want to use his money for a business scheme. At times he is an entrepreneur for solid business models, at others, he is a failed venture capitalist. But, only rarely do multiple parts of his personal financial empire stumble at the same time. Even so, his business acuity is strong enough that even harsh times represent but small moments before he rebounds with renewed energy.

Almost every other country is very different. Some are wealthy, some are not wealthy. But even the wealthy ones have much less variety in their means, such that if their primary asset fails, so do they, at least for a significant time. No other nation is like a man who enjoys such financial freedom that they can do with their money precisely what they wish. 

For example, Russia's government receives almost 50 percent of its funding from energy exports. Russia is like the businessman who owns one large firm that represents half of his assets. He will spend much more time obsessing over that one firm than any of the myriad other sources of income he may have - perhaps disproportionately so, as his other assets may aggregate to be slightly more than his largest firm. Thus, Russia tightly controls the energy industry, much more so than the American people would ever allow the US government to meddle in a particular industry.

Germany is wealthy, but his assets are tied into a network of corporations that often suck his financial means away to fund projects that have apparently small or indirect impact on himself. At least, that's how he sees it. Those other corporations declare that he is the problem, that his businesses benefit disproportionately from the network and that the rules have been written to ensure his corporation's success, to the detriment of theirs'. And so, it is not really their fault that they constantly require his assistance. To fix this conundrum, the German businessman has recently tried to make a new deal with the Russian businessman. He wants to trade his capital for the Russian's energy. The business network that Germany is tied into does not like this new deal being made, as it will divert resources from the German's considerable assets to another corporation outside of their common network.

China is a like a man who sees his wealth very rapidly expanding, but whose business expenses rise equally as fast, such that he has very little actual profit. Thus, while people are impressed with his firm's growth (he, like the Russian man, has one primary asset), his own home and personal means have not increased proportionately. Consequently, he has recently been attempting to change his business model. His large firm has made its money for more than two decades by industrial manufacturing low on the value added chain. Now, he wants to increase the quality of his business's products. This is because he is beginning to have heavy competition from other small firms that can provide the same product, but cheaper. Unfortunately, he has primarily kept his own costs down by subsidizing his business with his personal finances. And, as mentioned, he has had few actual profits recently, so his personal finances are drying up and he can no longer afford to dip into his own pockets. Consequently, he will lose substantial business to his competitors if he can't shift his business model up the value added chain. An additional problem he has to deal with is that he has not been able to pay his employees as well as in the past. They are wanting more, and he is further hurting his own pockets by providing for them. If he can't get his model and costs under control, many of his employees may start to quit, which could force him to start from scratch, with less capital (though with his physical assets intact, and thus not at a complete loss).

The Japanese businessman went through what his nephew, the Chinese businessman is going through now. But, he went through it decades ago. He transitioned from a rapidly expanding business to a very large, but very stagnant one. It has neither grown nor lost profits in about two decades, but has sat at a plateau. Fortunately, the employees of his businesses have all enjoyed the perks and have had enough company loyalty that they have not jumped ship even in a lack of raises and additional benefits for nearly 20 years. But he is beginning to wonder if this will last. How long can his workers endure a stagnant lifestyle? 

Although these men all have considerable assets, many have liabilities. And they cannot simply shift their wealth at whim to do away with their problems. 

The US economic model is and has been driven primarily by ideas, rather than constraints beyond its control. Most other places do not have the option to let economic theory become reality. Instead, the economic realities of other nations generate their economic theories. Of course, that's a simplistic way of saying it. But there is a reason that the president of France, Francoise Hollande, has been following very similar policies concerning Germany, Libya and in dealing with the EU, as his predecessor Sarkozy. Hollande could hardly be different ideologically as Hollande. Yet, he finds that a competent leader has a fairly clear path to follow for his country. A competent businessman might innovate, but there are many things that he will do based on many outside factors that affect his business - things outside of his control. He may not always be able to do exactly what he wants.

At least, that's what I think when I read about the state of nations in the world today.