Tune in to financial TV, read financial news, listen to financial radio and most of what you watch, read and hear is noise. Cable TV increased the number of channels from several to hundreds, and new media increased it from hundreds to tens of millions. More channels means more space, more space means more need for content, more need for content means more noise. But when one takes a step back and looks at the broad sweeps of economic and financial history, then speculations about whether this manager is in or out, or this company will beat or meet or miss expectations, or what will be in this month’s ISM or GDP revision all sort of fade away, and a bigger picture emerges.
And in this big picture, only three questions really matter to long-term national prosperity. Here’s the first:
How many people are there?
This is the demographic question, and unfortunately very few analysts have it in their models. It is seldom mentioned in commentary. Yes, once in a while in discussions about European and American public pension systems someone might mention some nebulous threat solvency bobbing around on some distant horizon. But people matter more than anything else, because people create wealth. Yes, there are ‘natural resources,’ but that phrase really is a misnomer. If they’re natural, they’re probably not resources; if they’re resources, they’re probably not natural. Other than air and sunshine, everything else in our environment needs to be transformed by us in order to become a resource. At the very least, the apple must be picked to become food. As an amateur apple grower, I can tell you that we are far from Eden: in order to get even a halfway decent apple a great deal of work is needed. As Steinbeck has said, we are indeed East of Eden.
But the moment we transform it, it is no longer nature, it is artifact. Even simple resources like water have to be toted. Many ‘natural resources’ were at one time anti-resources. Oil was a pollutant oozing in the streets of Cleveland, its stinking mass shoveled and carted away by workmen until a chemist told John D. Rockefeller that it could be turned into a valuable commodity. People do that sort of thing. And people manage to create huge sums of wealth even if they live on a rock sitting in the ocean in tiny prosperous city states like Hong Kong, Singapore and Taiwan with very little by way of natural resources, because they have something better: they have people, the unnatural resource.
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