The Green Gap

In the Cold War, we feared a Missile Gap was a strategic weakness. Nowadays, we must awaken to the fact that the Green Gap is true strategic weakness: the nations whose economies will thrive in the coming years will not be those with the biggest factories, but those with the most sustainable, efficient, and ecological markets. What we require is a Strategic "Green Reserve" of ecological design to weather the coming changes that both climate and resource scarcity will force on the international economy.

Thursday, 2 February 2012

The Wise Prime Minister and the Economic Liberal

The wise Prime Minister called for her Economic advisors. Three men stepped forward: the Economic Liberal, the Neo Conservative, and the Trade Unionist. "Tell me," she said "how can we give our people more jobs?"

Her first advisor, the Liberal, stepped forward and said "we should open our borders to trade, and engage other nations in mutual free-trade agreements. We are a nation with many natural resources to export, and free trade with those who wish to buy our exports would increase sales. Sales increase revenues, and revenues allow companies to expand their workforce. An efficient market, that is the key."

The wise Prime Minister nodded, and said, "Yes, this makes sense. But what of those nations that do not wish to purchase our resources because they have resources of their own?"

"Ahh, then," smiled the liberal, "we will gain access to their markets with our mining and harvesting companies and produce more efficiently than the local corporations. Either way, unrestricted access to their market is beneficial. With barriers gone, the market gains efficiency. That means it's easier for companies to profit."

The wise Prime Minister nodded, "yes, companies profit, but when companies are able to profit efficiently, do they create jobs? I would say they do the opposite. If a company gains profit, it buys out its competitors, it buys back shares, extends its leverage, pays stock dividends, or rewards its executives. It doesn't create jobs."

"But jobs are created when companies can compete in efficient and unrestricted markets," protested the liberal, "When a company wants to expand operations in order to gain more profit, they must hire new people!"

"Sometimes," quipped the wise Prime Minister, "but more profit does not always mean expanded operations. In the rare times jobs are created, those jobs are created where they are most efficient - in efficient markets where the workforce costs less to maintain. Efficiency in a market does not mean more jobs, it simply means more corporate profits. More corporate profits does not mean more jobs, it means a corporation can acquire its competitors and eliminate redundancies. Efficiency is the opposite of more jobs: it is the ability to make more profit by paying less. The idea that efficient corporate profit adds to the welfare of our people is a myth. Corporate profits do not create jobs."

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