Hi Robert,



Respectfully, I think that some *do know* what is happening in the world economy today.



How would we know that? By the performance of their respective economies, and there can be no other metric that matters in this case.



The people leading booming economies know what they're doing, and those leading bust economies don't. Simple as that.



You can't argue with success, no matter how unorthodox the method or system. And orthodoxy is a relative term anyways, what is unorthodox today might well become tomorrow's orthodoxy.



You can't argue with Norway's success, they highly tax resource extraction (78% at the wellhead) yet there are no shortage of corporations wanting to extract petroleum (for one example) in Norway. Their people enjoy free university education and have the highest per capita income in the world -- consequently, the crime rate is incredibly low and productivity is high.



Value-added taxes are high too, and income taxes tend to be on the low side.



Norway also ranks in the Top 5 on the UN's Happiness Index and on the Social Progress Imperative's SPI.



And their unemployment rate usually hovers around 2.5%, although it did spike up to 7% for a few months, during the worst of the global financial crisis. Not to worry, it's already back down to historic levels.



Those are not indicators of a 'loser economy' -- yet people say it's all because of the North Sea oil revenue.



If that's true, why are some countries that have 10, 100, or even 10,000 times the oil resource of Norway (Norway's total petroleum resource is a small-to-mid-sized proved reserve, at best) not seeing the same success as Norway?



All of them are doing much worse.



Could it be that Norway is simply better stewards of their economy?



And what about nations that have zero or low natural resources?



Switzerland, Taiwan, Costa Rica, Sweden, Denmark, Germany, and others, have booming economies -- yet not a drop of petroleum reserves, and only tiny raw resource revenues.



The trick is, as they say, to spend less than you make.



Norwegians decided what kind of country they wanted, and then set the prices accordingly, in order to be able to afford that society. (When I say 'prices' -- I of course, mean 'taxation of resources' which is the 'price' the government sets on resource extraction, that allows it to fully fund the kind of society that Norwegian's want)



Having no real resource base, the Swiss decided what kind of country they wanted, and then chose ultra-high quality and ultra-high demand technological goods (Rolex, ABB, Swatch, Longines Wittnauer) and banking (of course) and worked the export economy model to its fullest. Again, taxation wasn't seen as an end in itself, it was seen as the price required to create the kind of society that the Swiss want. Taxation as a factor -- not as an end in itself, as is done in the U.S. and (less so) in Canada.



All of which means, that policymakers that know what they're doing, first ask the voters what kind of society they want, then they set the taxation rates accordingly.



In countries with a mid-sized resource base, this is easy to get right. (For good economic stewards, that is)



In countries without a resource base, an export-led economy seems to be the best route.



In countries with neither (yes, there are some) something else must be arranged. In Liechtenstein for example, they have the 'letterbox economy' which brings many billions of dollars into the economy. The Grand Cayman Islands are another example where the leaders asked the people what kind of society they wanted -- and then, created a 'tax haven' as a revenue generator.



For people who know what they're doing, running a successful economy is super easy and almost an autonomous, self-improving programme.



The results are there for all to see. But inexplicably, ideology (of all things!) blinds some from seeing the obvious.



Political leaders, economists, even members of the public, need to learn that *ideology* is nothing (but a tool to get us where we want to go, but if it doesn't get us to where we want to go, then that particular ideology is useless) and that *results* are everything.



Ideology is nothing, results are everything.



Always great to read your fine essays here at ProSyn, Robert!



As always, very best regards, JBS



