A piece of mind, “why can’t a nation grow?”
Since the time I arrived in the US, I have been amazed by the massive infrastructural and technological developments. With this, I am constantly thinking about how I might do the same for my home country, Ethiopia, and other underdeveloped nations. Today, I was discussing this with my American friend, and I came across an interesting revelation. The revelation may be incorrect and is definitely in need of more research, yet it is an interesting thought. Here it is.
Me: “Check this out, you may not understand this since you grew up here, but there is something about the city that dazzles me.”
Looking up at the tall buildings, massive highways, and rumbling streets, I wonder how they came to be.
“And I know this sounds a stupid observation, but let’s take a single building for instance, and think about the various components that have to go into it. For one, you need a blue-collar worker who is skilled in construction work. You will also need someone to make the cement, the nails, the rods, and the bolt. Do not even get me started with the chain of dependencies, even NPM will be humbled. (That’s some programming humor)”
I continued, “Even if we stop going further down these chains of dependencies and assume the constructor is capable of building the foundations, someone has to furnish it, someone has to layout the water and wastage system, someone entwines the electric the next thing you know you have 100’s of pieces involved.”
So I asked, “who is responsible then to pull everything together? Could it be the construction manager? or the insurance providers? other such groups? Even then you have the people who had the initiative and paid for all the processes. As a result, I turn my attention toward the owner/s who is responsible for the development of this beautiful city landscape, but even then I remember they were only responsible for one building. A nice city like the ones in the US is more than standalone silos; they are interconnected with power grids, sewage systems, transportation, and much more. So what is behind such a development?”
“My initial belief is that it is the result of multiple pieces/people working hard. If this is the conclusion, however, it begs the question: are people back home lazy? I believe that is far from the truth. The people back home work as hard, and have the same desires for growth and luxury: so what is missing?”, I asked again.
My friend: ”Well, it is not people working hard that results in this success. That is a very communist way of looking at it”
Me: “Ok Mr. Capitalist, I do not even see myself as a communist. But go on, tell me how.”
My friend: “The way I see it, it is the market that runs the system. It is not the government as you implied bringing every hard worker together, but rather the misaligned incentives of the market.”
When he said that, the economic saying “The market as the invisible hand” clicked in the back of my head.
He continued, “If more businesses are looking for office space, the high demand for tall buildings will result in investors putting money in the space, which will attract great minds to be better architects, and this idea of demand dictates growth compounds. So in this view, the construction manager keeps inventing efficient methods to maximize their profit and satisfy the growing demand from the investors to build taller and taller buildings, which will result in expensive private schools that breed smart minds to feed the creative demand of the construction firms and so on.”
Me: “Yo, that makes a lot of sense. I never thought about it this way. Wait I got to write this down before this new way of thinking overwrites my social mind :)”
Before this, I thought I understood the market as the invisible hand idea but never thought about it as the driving force behind development.
Me: “But wait, demand can not be enough. I am sure there is a demand for growth back home. Something else important is missing. Although businesses are demanding tall buildings, if there is no power supplied by the government, the demand can’t be satisfied — that chain of growth we saw earlier can’t be possible. This implies that the government plays a huge role in development.
My Friend: “I still see this as a result of the market. When there is a demand for multiple tall buildings that need to be connected, the different building owners will come to assemble a way to build a road, and for a government that will be transparent and capable of doing their common needs and what the market needs. A truly transparent government is then a result of the market’s demand.”
Me: “Hmm ok, but what do you think is the problem back home then?”
My friend: “I think the missing part is private ownership. From our previous conversation when we were going to X’s house, you told me that there is no land ownership(the previous conversation refers to a conversation we had about land ownership and agricultural development). The problem is when people lack a sense of ownership they lose incentives to satisfy demands. For instance, why would someone build a skyscraper on leased land.”
Me: “I am not sure if that is the main problem, however.”
We went into the restaurant, and I started typing before I forgot the rest. From then, our conversation took another branch.
In our conversation, we were not trying to analyze the actual historical development — like how agriculture was followed by industrialization and then by tech and so on — but instead what the underlying principles were for these changes and developments. We have found in agreement that demand creates development and when development goes from an individual level to a societal level it creates government. My friend believed that it is the lack of private ownership that is preventing such a market and the capitalist environment from being nurtured, but my view on the matter has been as follows. If greed and individual success are the default state of man and the government it creates has the initial purpose of serving societal demands how does it end up running other agendas. This has to be a result of multiple possible conditions including other human behaviors like the lust for power, and so on. This conflict of interest between the new agenda and the government’s initial purpose inhibits market growth, as well as development.
But what if man isn’t selfish? Can a capitalist market exist? What if the values a society holds can’t allow for a capitalist market to thrive? Are there other ways to grow? Is the recent development of China such a result? These interesting questions dance in the realms of philosophy, sociology, psychology, economics, history, and so much more. I can’t wait to learn more about each of them. Add your views to the conversation below.
