A common misunderstanding of what makes a country or jurisdiction economically successful is the belief that it relies primarily on an abundance of natural resources and money to invest; “It takes money to make money,” the saying goes.  The explosive economic prosperity generated by the United States of American (“USA”) is often attributed to the rich natural resources available to our founders.

 

One only has to consider that the natives of this land occupied it for centuries and did not come close to generating the economic success that this relatively new nation did in our first 200 years of existence.  They had access to the plentiful resources long before the first immigrants set foot here.  What made the difference?  The answer is knowledge.

 

Successful businesses rely on knowledge that gives birth to innovation and popular products and services.  A person or group of people with a knowledge base experiment until they come up with new way to meet the needs of their customers; they build a better mouse trap.

 

I remember attending a technology seminar in 1991, and a presenter told the large audience that in the near future, each of us would carry around phones with us and have individual phone numbers. How could this be?  I did not have a vision for it.  The cell phone has replaced land lines, long distance service, local telephone companies, answering machines, GPS devices and more.  The inventors that imagined the cell phone built on decades of previous knowledge bases, and envisioned what was possible and what people wanted.

 

The USA became the most prosperous nation in human history because of this explosion of knowledge and innovation, unleashed by unprecedented personal freedom, private property rights, and the belief that people are capable of governing themselves without a controlling central authority.  Totalitarian monarchs or emperors had ruled nations in all the years of human history prior, squelching freedom and economic prosperity.

 

Then why is the economic engine of this great nation slowing down?  Because of the erosion of freedom which suppresses knowledge and innovation.  We are gradually headed down the European road which has embraced a utopian vision of a risk-free society.  Entrepreneurs and innovators sometimes fail and people lose money.  Socialist nations try to take the risk out of the business cycle by tightening their grip on economic activity through regulation and fiscal and monetary policy, and the USA is following suit.  When businesses spend an enormous amount of time complying with regulation rather than innovating, the quest for knowledge is inhibited and business activity slows down.  This has the unintended consequence of impacting small businesses disproportionately. Large corporations have the resources to hire compliance experts and lawyers to help them understand complicated laws and defend themselves against regulatory overreach.

 

As a nation and a community, let us continue to invest in education and the knowledge base of our young people.  Let us drop this notion that a central government can create a utopia for all of its citizens.  Let us continue to give businesses the freedom to innovate and sometimes fail.  In the end, it will mean more prosperity for a broader spectrum of our people.