In the City that I live (the Big Apple!) it seems that economics and finance reign supreme! Large number of people are employed in the financial sector and key investment decisions by them or the companies they serve are affected by the winds of the economy. Macroeconomic forces seem to be the main anchor of the outcomes of those decisions! You can screw up badly with your investment and business decisions and a good economy bails you out. Likewise, you can make the best moves possible but a macroeconomic crash takes down the entire house! This is not to say that your moves and decisions are irrelevant, they are not since we typically do not live in those extreme economic climates. Most of the time, we are living in low to mid single digit growing economies that rewards good decision makers and punishes the bad ones. However, it is clear that the good and bad economic times do not happen by accident.
Nations with higher wealth and economic prosperity have certain things in common. They’re usually free and democratic countries that allow for individual innovation and growth; there are property rights so when you work hard and create something, it can’t be taken from you by force!!; there is the rule of law and strong judiciary system that can settle disputes; most have strong public institutions that foster public health, education, infrastructure, and more; there is less of a gender gap in education and economic opportunities; and more. This is the foundation for countries with strong economies and within this foundation, certain policies have outsized influence on the short-, medium-, and long-term growth and prosperity of these countries. These are tax policies, public sector investment policies, regulation of industries, and more.
There is ongoing debates about these policies and entire Schools of Thought around low tax, low regulation vs. higher taxes and more regulations, and how much to invest in public education or public sector research and development. The winners of elections get to set those policies and the rest of us live through the consequences. It seems important for our collective futures to make the best policies possible. That can only be achieved by staying grounded in facts and making decisions informed by our collective learnings from those who have implemented similar policies. We can study how those policies impacted economic growth and inclusive prosperity. In this blog, we will examine economic issues and policies that make for a more prosperous society!