Democracy looks great on paper, until…


April 2, 2012
Vancouver, British Colombia, Canada

After a long trip up from Santiago and making stops in both Miami and Dallas, I arrived to Vancouver last night a bit tired… but excited for the the trip ahead. I’m leaving in just a few hours for a 2 1/2 week, 11-country tour that includes Hong Kong, Singapore, Laos, Malaysia, Thailand, and much more.

[By the way, I highly recommend the new Fairmont Pacific Rim if you find yourself in Vancouver.]

Aside from getting a lot of business done and inking a few deals that my partners and I have been working on, I’m excited to just be spending time in the region again. I enjoy strong, vibrant economies where optimism and opportunity dominate the scene– not chaos and negativity.

There are a lot of places around the world that fit this mold– their economies are healthy and people are legitimately confident about the future. From Estonia to Hong Kong to Andorra to Singapore, there are common elements in these countries that have greatly contributed to their success:

1) They’re small.
2) They have governments that generally stay out of the way.

An obscure 20th century economist named Leopold Kohr wrote extensively about these factors; my colleague Tim Price introduced me Kohr’s writing last year, and his 1957 book The Breakdown of Nations has proven quite prophetic.

In the book, Kohr extols the virtues of ‘smallness’ and indicates that most of the political challenges in the world– military over-extension, debt, poverty, bureaucratic stodginess, etc.– are caused by the unsustainable expansion of nations.

For Kohr, it is simply a matter of scale. Once a country becomes too large, any system of government will become oppressive.

Small countries, conversely, don’t have the resources to wage wars or build huge bureaucracies. They’re forced by circumstance to allow the market to work and the private sector to flourish.

Singapore and Hong Kong are great examples. They’re not waging wars, dropping bombs, or establishing far flung military bases. Both countries are devoid of any natural resources, and their only means of survival and success have been to step out of the way and let the market take over.

In a matter of decades, they have become two of the most prosperous nations on the planet, and remain among the healthiest today.

Conversely, the ‘big’ countries of today have assembled massive states which have spawned massive governments that require massive resources to administer… and quite oppressively I might add.

Democracy may look great on paper, but in modern practice of today’s ‘big countries’, it is a terrible perversion of the principles of liberty. Like Rome and the Ottoman Empire before, the individual now exists to support the state, not the other way around.

This is exactly what Kohr warned would become the ‘crisis of bigness’. Faced with economic challenges and a debilitating cost structure, big governments and bloated bureaucracies will only beget more bigness, more bloat… until the only possible outcome is collapse.

It reads like a playbook of exactly what’s happening today in the west. Already suffocating from too much debt, governments are going deeper and deeper into debt, and hiring more and more workers to administer ‘stimulus programs’ and an ever-expanding tax code.

To politicians, the solution is to expand the state and expand their authority. This is the exact opposite of what they should be doing… and as has happened numerous times throughout history, it may very well lead to an entire system reset.

About the author

Simon Black

About the author

James Hickman (aka Simon Black) is an international investor, entrepreneur, and founder of Sovereign Man. His free daily e-letter Notes from the Field is about using the experiences from his life and travels to help you achieve more freedom, make more money, keep more of it, and protect it all from bankrupt governments.

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