Visiting foreign lands (Taiwan, Brazil, Korea), I have been interested by the way of life in all these places. I have come to see that all cultures have both their good points as well as bad; those points which are constructive with regard to producing wealth, as well as points which play a notable role in destroying wealth. For example, Taiwan is extremely flexible and informal in everything it does. Brazil is extremely warm towards people, and helpful in general, building up good connections with people. Korea is very hard-working, with it being common for young people to hold multiple jobs. The United States is creative and practical simultaneously. These characteristics fundamentally have a propensity towards enriching a nation. On the other hand, Brazil is full of corruption, with there always being two ways of doing things: the proper way and the way that gets things done using connections. Korea is full of drinkers and smokers, people in general not taking care of themselves. As for Taiwan, they have a general disregard for the law, and for respecting intellectual property. The United States is lazy. These hinder a nation's progress or prosperity.
This one thing has puzzled me; regarding the origins of a nation's wealth. After visiting these places, I have come to appreciate more what I have at home. In Brazil, cars and computers are a lot more expensive than in the United States. In Taiwan and Korea, housing is a lot more expensive than here. Of course, there are trade-offs as well. In the United States, organic food or good food seem to be rare and expensive. These shortcomings interested me, because I wondered why they were so, and why it seems that though people in other places such as Taiwan and Korea work so much harder than those in the United States, yet they do not have a higher standard of living than those in the United States, as I supposed that they should. With that in mind, I considered what are the fundamental factors which define a nation's wealth. I came up with three factors, which work together to determine a nation's wealth.
Resources - the quantity of valuable material present. The more resources are available, the more value is present. This factor was the traditional definition of wealth, throughout the history of Western Civilization, all the way until the end of Imperialism. The thought is simple: if a country has 10% more gold than another country, than that country is 10% wealthier.
Knowledge - knowledge comes in the form of technology. It is the ability to make do with less; to make what you have more valuable and useful, by using it in a different or improved way. Worthless sand have been converted into microprocessors which can help workers accomplish more with their time. Water from rivers have been used to generate electricity which power air conditioners, refrigerators, and indoors lighting to make hot places inhabitable, to preserve food longer, and to allow for the accomplishment of more things for a longer part of the day, in a safer manner. Finally, the internet, a repository of knowledge, as well as an entity created by knowledge, has created the means for the transfer of knowledge for solving problems in all fields. It is easy to see that knowledge can greatly enhance the resources a nation possesses, which results in overall greater wealth. Finally, knowledge does not only come in the form of technology, but also with free thinking, creativity, or simply wisdom or even ideas which keep corruption from spreading.
Energy - the process of making things requires energy. Without energy, it is useless how much resources or knowledge is present, because no conversion would take place which would generate wealth. However, knowledge also enhances energy, allowing the generation of more wealth using less energy.
These three factors are multiplied; each factor positively scales the other two factors.
With these three factors, I began to understand why things are the way they stand for all the different places I've been to. In particular, this explains why the United States remains as prosperous as it is, despite its otherwise fatal faults. Though the United States lacks energy in labor, it is blessed with a large amount of natural resources, and it also imports the energy that it requires. Positively, the knowledge present in this country is phenomenal. On the other hand, the other places I've been to lag behind in this particular factor, though they may (Brazil) or may not (Taiwan and Korea) have a large supply of resources naturally occurring. Taiwan and Korea make up for their lack of resources, which Brazil and the United States are blessed with, with hard work, supplying the manual energy required to minimize the overall gap. Yet, we can see clearly that it can only do so much, as in the case of Japan. Though its people are so incredibly productive, prices for resources remain high simply because the nation lacks them. This in turn, elevates the cost of living, in the form of inflation.
In this essay, I took a very different approach at analyzing wealth, or the factors of wealth. Though there are many ways of arguing for or against a nation's wealth, such as with a focus on politics, financial policy, economic policy, or culture, I wanted to explore what is fundamental in determining wealth. The cause of my considerations was when I realized that currency is floating, and does not determine the true cost of goods with regards to the opportunity cost, or time spent accumulating it.
Finally, in my consideration, the unit is in nations, because, though at present, we live in an increasingly interrelated and globally-connected world, all within one nation are governed by a common policy, and the debt of that nation is shared among all of its citizens, whether directly or indirectly.
Written on March 24, 2012