Economics 101

One of the first things that people do when the gap between the rich and the poor widens and unemployment rises is to take to the streets to demand a change of regime. Politics is governance, so it does play a role in the economic disparity within the country, but the main reasons behind unemployment may not be remedied as simply as changing the leadership. The rules of engagement, i.e. the laws and regulations, are important, however the forces of economics can have a greater impact on improving the lives of a country’s citizens. The forces of supply and demand can be manipulated, but only ever so slightly. We need to strive for less government and non-governmental organization involvement in economic activity in order to increase our chances of upward mobility or advancement as a society. We need a well-regulated free market system that has very few barriers to entry and a rabid intolerance for monopolies and/or corruption. The main role for governments, non-governmental organizations, philanthropic agencies, and unions is intervention, not involvement or participation. 

The government needs to be the referee, and not a player, in business within a country’s borders. The government should make the laws through its legislature, execute or enforce them through its executive branch, and then interpret them for the benefit of its people through the judiciary. Countries that have a low unemployment rate usually have a thriving private sector that employs at least 60 percent of the population, a well regulated free market environment, company headquarters within the country’s borders, and great capital allocation through the treasury, central banks, investment banks, and commercial banks. These countries tend to address the widening gap between the rich and the poor by creating more opportunities, not stifling the growth of those who are “ahead.” 

The gap between the rich and the poor cannot be addressed through the destruction of infrastructure that the poorest of the poor need. The rich have a tendency to leave when times get tough, so internal conflict only benefits those who want to assume power, not the ones that need the change. We need more rich people, not less, and we need them to invest in the local infrastructure and people. Rich people need to spend more money within the country in which they do business, vacation locally, sometimes, and send their children to local private schools. If the schools are not up to their standards, they need to improve the schools or homeschool their children. The alleviation of poverty is only achieved through more enterprise, not more charity or hand-outs. Philanthropy is there for those who cannot participate in the economy, but it is meant to be remedial, not an indefinite solution.

Non-governmental organizations and philanthropies should provide support for the government. They need to act as an assistant referee in order to ensure that the government is making the right laws and providing the right infrastructure projects for private contractors to bid for. The UN should not replace a government in the eyes of the people, let alone interfere in its governance, but level the playing field between the people and their government. Non-governmental organizations are not supposed to be competition for private enterprise, either. They are not supposed to provide goods and services that the local private sector should be able to provide. If the private sector lacks the necessary capacity, the non-governmental organization or philanthropic agency should provide the necessary short-term support. The World Food Programme, for example, needs not be competition for farmers once the rebuilding is in progress. The WFP should provide food for the citizens during the time when people can’t work; war or geopolitical conflict being the main cause of that, then move to get the farmers up and running to provide food and employment for the people. Since most hunger or extreme poverty results from geopolitical conflicts, preventing internal conflict should also be high on the agenda of the government, non-governmental organizations, philanthropies, and private industry. 

The unemployment rate cannot be improved through geopolitical conflict. If people want more jobs, they need to participate in free and fair trade. The wealth gap can be reduced when people see it as a skills gap. People living under the poverty line need to be provided with opportunities to better themselves, their families, and their communities. They need more capital investment in their local area and less business participation from government and big corporations. The role of the government, or leadership, should be to make sure that there are no monopolies or unfair business practices that stifle competition. People have always voted with their feet and their resources. When people do not like your product, service, or style of leadership, they can go somewhere else. The main problem with a more socialist or communist government or territory is that there are limited options for the people to choose from. The people do not have the power in this situation! The corporations and the government (which is a corporation that rarely goes out of business within itself) have all the power.  

Since the main power that people have in most jurisdictions is choice, a free and fair trade environment will provide them with the opportunities to exercise that power. The foundation of any society, which also happens to be the main catalyst for change, is economics, not politics. When the economic side of society is managed well, all other aspects of life can be built on top of that. Our culture or social aspects of our lives are like the software that we use once the hardware of economics has already been engineered. Politics is the governance of a country's resources, which are its people and the people’s activities. When people realize that a small government means less taxes, they will stop their dependance on the government and start creating enterprises that set out to accomplish their dreams in the service of others. Someone who starts a business benefits their customers, themselves, their community, and their government. 

Many might argue that capitalism is not good because of all the adverse effects caused by bad business practices. Some may make the case for socialism by pointing to the greed of employers who do not give their employees a fair exchange of resources for their time. The main problem with making the case for any system is when we ignore the people component. Capitalism has never been the problem, greedy people are the problem. In most cases where people complain about capitalism, they need to be complaining about business people engaged in unfair business practices, with the help of corrupt government officials and criminal elements. Highly or poorly regulated business environments are a breeding ground for terrorist organizations, criminal entities, and the black market as a whole. We need more people engaged in legitimate free market trade and not rig the game through over-regulation. We need to solve problems through letting the customers choose, instead of forcing people to comply through limited options. Anarchy only serves those who have the weapons to operate forcefully in that environment. Good people, who tend to be at the mercy of others, will not stand a chance in such environments.