"There is no maxim in my opinion which is more liable to be misapplied, and which therefore needs elucidation than the current one that the interest of the majority is the political standard of right and wrong...." ~ James Madison
Voluntaryism, the Free Society and Economic Diversification
For the past month, I have been residing in Trinidad and Tobago in the West Indies , after deciding to take a break from the United Kingdom . Trinidad and Tobago has the largest per capita income of all Caribbean countries and benefits from reserves of fossil fuels, such as crude oil and natural gas. However, in the past few weeks, a number of companies in the energy sector have produced audits denoting that Trinidad and Tobago 's fossil fuel reserves will last for only 12 more years. The audits have caused concern since the economy of the country is heavily dependent upon its deposits of oil and gas. As a result, some political commentators have called for greater fossil fuel exploration and more emphasis on economic diversification.
I'm not a trained economist, but nonetheless I can see the advantage of economic diversification. An economy based on a variety of industries may better cope with constantly changing global economic circumstances. Imagine if an economy was predominantly based on agriculture. Such an industry initially may provide jobs for people and bring in revenue to a country, but what if a drought (or some other disaster) occurred, which severely curtailed the ability to grow crops? This hypothetical country would then risk economic ill-health as a result, since unemployment would rise and fewer people would be spending money on goods and services. In a stateless society, evidently there would not be any government controlling the economy. So how would the economy in a voluntaryist society handle changing economic conditions?
Finite resources, infinite desires
The basis of economics, as a study or science, is thus:
Resources on the Earth are finite and human desires are infinite. How then can we use the Earth's finite resources to satisfy infinite human desires?
It is true that the natural resources of the Earth are finite. It is also true that human desires are subjective and potentially limitless. In order to secure economic diversity, all that is necessary is to focus on the relative desires of individuals. In reality, little else is needed. I'm an amateur student of the Austrian School of economics. As such, I tend to base economic activity from the premise of human action, or methodological individualism. Economic activity really should be subject to individual needs and wants. By emphasising the unique desires of people, differing industries can emerge based upon such relative longings. In this sense, the law of supply and demand comes into play. If the demand for a specific good or service exists within a stateless society, then someone guided by self-interest will seek to meet it, since he can stand to make money by catering to consumer demands.
Regulations on business
I would presume that the regulations on business in Trinidad and Tobago , akin to other capitalist economies, are quite burdensome. It is these regulations that make doing business taxing and potentially deter people from becoming entrepreneurial. Satisfying the unique requirements of individuals would be far easier and simpler if all regulations on business were repealed and abolished.
Once the red tape is eliminated, business owners wouldn't have to jump through so many hoops, especially when it comes to establishing and running their business enterprises. One also shouldn't have to appeal to the state in order to do business. In effect, there should be nothing to halt any individual from literally starting a business in his own home or acquiring any shop front and attempting to make money. However, Trinidad hasn't escaped the plague of big government, which exists elsewhere in the world. Several weeks ago, Prime Minister and Finance Minister Patrick Manning presented a budget that was chock full of large government sentiments. Trinidad and Tobago has little hope of successfully diversifying its economy if the scope and size of its government continues to grow at a pace.
The government of Trinidad and Tobago has instituted a policy goal that by the year 2020, it will officially be classified as a First World country. Perhaps Mr. Manning believes that extra governmental spending would aid in bringing forth that vision. It must be stated that he would be wrong in thinking this. Economic development exists as a result of the free market, since government only acts as a parasite on the economy. Think about it for a second. The state does not create anything of its own merit. It finances itself by forcibly extracting money from hard working and productive members of society. This is in direct contrast to the free market, which creates revenue by producing goods and services tailored to the desires, needs and wants of the everyday man.
The benefits of a free market are evident to see. Countries like India and China are advancing economically because of the economic freedom enjoyed in each respective state. They are attracting business since companies recognise the increased simplicity in doing commerce in these areas. Over the past ten to fifteen years, countries of the G8 with more liberalised economies have been more successful than states with excessive regulations. The USA , Canada and the United Kingdom have experienced higher rates of economic growth and lower unemployment than countries such as Japan , France , Germany , Italy and Russia . Even the ruling classes in these states have realised that regulation isn't the way forward. In 2006, Angela Merkel was elected Chancellor of Germany with the remit of reforming the German economy away from the traditional social market model. Earlier this year, Nicolas Sarkozy became the French president with much the same charge.
If Trinidad is to realise its ambition of becoming a First World country by 2020, then Mr. Manning should be taking measures to liberalise the economy of Trinidad and Tobago . Such liberalisation would ensure that sufficient development can take place to ensure First World status, in addition to allowing the economy to healthily manage a possible loss of fossil fuel revenue. It is time that people outside the Western world started to recognise that government is not the answer.