What separates a rich country from a poor one?
Yes, the rich have more money.
But money is just a claim on wealth. It is not real wealth. How do rich countries get more wealth?
Natural resources?
Nope.
Two of the richest countries — Japan and Switzerland — have few natural resources. And two of the world’s poorest countries — Venezuela and the Congo — have plenty of natural resources of all kinds.
Culture?
Nope.
Japan and Switzerland have very different cultures. So do Venezuela and the Congo.
Political institutions? Infrastructure? Educational systems?
All of those things make a difference but none explains it. Even in the same country — with the same infrastructure, educational system, and political and legal institutions available to everyone — you see vast differences in wealth.
In many US cities half the population lives more like residents of Venezuela or the Congo than like the Japanese or the Swiss.
And many African nations have taken the political models of the US, France or Britain and applied them almost word for word…but with greatly different results.
Learning system
Why?
All else being equal, a society that encourages win-win transactions over win-lose transactions will grow richer.
But here’s another way to look at it…
In a sense, everything is built from the same atoms. We all have the same basic matter at hand; it all depends on how we put it together.
A skyscraper is nothing more than various basic elements…assembled in a certain way. Poor tribesmen in the Amazon don’t know how to do it; rich people in New York, Tokyo, or Paris do.
The difference is ‘information’. And knowledge. They are what tells us how to build a nuclear power plant…or make ice cream.
Information is also critical to an economy. How many ice cream parlours do we need…how much steel should we produce…how do you make a hit TV show?
An economy is a learning system. The participants learn every day. Then, they apply the lessons…test further…and learn more.