AboutWarren D. Miller, CFA, ASA, CPA Expertise My in-depth knowledge of economics is confined to three sub-disciplines: Austrian economics, industrial organization, and evolutionary economics. Other questions dealing with macroeconomics, the traditional neoclassical paradigm, labor economics, environmental economics, agricultural economics, health economics, and so on should go to those who have the appropriate expertise.
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Experience I work with Austrian economics (which is different in major respects from the traditional neoclassical model), industrial organization (which is about industry structure, conduct, and performance), and evolutionary economics (almost, but not quite, the economic analog of its biological counterpart) everyday in my work. I appraise closely-held businesses, provide exit-planning services, and offer high-level strategic analysis, advice, and clients to CEOs and owners of mid-sized businesses. Understanding, applying, and writing about these disciplines is an essential part of how I have made my living since 1993.
Organizations CFA Institute, Strategic Management Society, American Society of Appraisers, Institute of Management Accountants, Academy of Management, Culver Legion
Publications CFA Magazine, Strategic Finance, Valuation Strategies, Value Examiner, Journal of Advanced Property Economics, Harvard Business Review, American Fly Fisher, CFA Digest, CPA Expert, and Business Valuation Review, among others
Education/Credentials MBA - Oklahoma State (1991)
BBA - U. of Oklahoma (1975)
Chartered Financial Analyst designation (2006)
Accredited Senior Appraiser (2006)
Certified Management Accountant (1992)
Certified Public Accountant (1992)
The end of year Economics paper is approaching and in the past papers there is a question that recurs along the theme "Why are some countries rich and others poor?". I was wondering if you would be able to offer the elements you think should be included in an answer to this?
Many thanks,
Tobias
Answer Hi, Tobias--
Nice to hear from you again. I see that you're raising your usual short, simple, uncomplicated question. NOT! :-)
As you know, one could write a book on this one. Books have been written, of course. I can't write one here, but I'll give you some things to think about.
In the first place, there is a high positive correlation between a country's wealth (however one chooses to measure that) and that country's political and economic freedom. That's why totalitarian states are not wealthy states. China is trying to force a camel through the idea of a needle by maintaining a highly corrupt central government with almost no political freedom alongside an economic model that encourages economic freedom. I predict that, sooner or later, one will take out the other. I'm betting that economics wins. But it won't be pretty to watch.
Second, wealth arises from a vibrant private sector. Vibrancy, in turn, tends to be a function of (a) relatively low taxes (<25% of GDP), (b) employer flexibility to downsize in adverse economic times, (c) free markets characterized by heavy competition, and (d) lots of trade with other nations. Countries that have high taxes (e.g., France with 45% of GDP) have slow economic growth and high unemployment because the private sector doesn't have the money to invest in innovation. France also has laws which, in essence, prohibit layoffs. Small wonder that unemployment is high there!
Third, widespread wealth tends to occur in nations with strong legal institutions, protection for intellectual property (i.e., patents, copyrights, trademarks, etc.), and a healthy respect for property rights. To see what happens when those institutions are not present, take a look at Zimbabwe, North Korea, Cuba and most of the nations of Africa. Did you know that, when you fly over South Korea at night and look north towards Pyongyang, North Korea is almost completely dark? That's because the North Koreans are so poor that they have very little nighttime lights!
Finally, widespread wealth is found in countries that have top-flight systems of education--primary, secondary, and higher. It's tough to be innovative and productive when a nation's schools are lousy. It's no accident that U.S. colleges and universities are the best in the world.
Please click on this link to the Index of Economic Freedom: http://www.heritage.org/research/features/index/countries.cfm. I think you'll find all kinds of interesting information there. As they have been for many years, Hong Kong, Singapore, and Ireland are 1-2-3 at the top of the index.
Hope this is helpful. Please complete the 'rate the expert' e-mail you'll be getting shortly. That helps me do a better job of helping nice people like you.
