A young man, long time acquaintance, talked about his recent 6-week Switzerland stay. He talked about the spotless cleanliness, the high-quality and near free public transportation, the harmonic social order, and the excellent welfare system. It is an exemplary government that others should learn from.
“It is a relatively small country,” I said. “What’s the secret that their citizens are so much more productive than other countries’?” My friend pondered, “It’s not their citizens are better. They are the bank of the world. So much money flows into Switzerland, so profitable.” “Oh, so it is like Alaskans getting money from the state,” I said. “The productivity is basically natural resources. For Switzerland, it is a WWII era strategy that is still paying off for the country. Handsomely!” He nodded. We both thought, “Can this be duplicated?”
Governments, big and small, wish to give citizens what they want: high-quality life-style and even better ones for their descendants. Other than Bhutan, GDP per capita seems strongly correlated to the “life-style” ask. Boosting GDP, therefore, becomes the goal. (It’s easier than distributing the wealth. Enter tickle-down theory.) History showed that productivity is fundamentally a function of natural resources, population, and geography. What can a country do? Most are stuck with these factors.
Government can also just print money and give citizens the illusion of better income. Many did just that. Printing money is government borrowing money from its own citizens. It is an illusion of wealth. That’s our own money from the future.
If you cannot afford it now, you won’t in the future. Boosting global competitiveness is the only way to improve general quality of life for the long-term. This is particularly true for smaller countries — Singapore, Korea, Taiwan, etc. — that rely more on global competitiveness to survive.
Learn from Greece.