"the clowns change, the show is the same. we all pay for the tickets, whether we like it or not."

some people are poor and some people are rich. there's nothing wrong with that. but why does it happen? is there an explanation? is there anything that can be done? we'll talk a bit about this. disclaimer: this is not a get-rich-in-five-easy-steps tutorial.

first, some natural history. in its infinite wisdom, nature has devised a straightforward rule to ensure evolution of the various species roaming the earth: survival of the fittest. back in the old days, if you were fast enough, strong enough, or clever enough, you stood a much better chance of surviving your weaker brothers and sisters, by not starving to death, or not getting killed - things like that. in turn, the fittest of each species had high chances of giving birth to similarly fit offspring. over long enough periods of time, species evolved and improved.

modern man does not have to be fit in any way to survive. society redistributes part of its wealth to ensure nondiscriminatory survival of everyone, including the weakest. today, a new type of competition has emerged in human society: instead of fighting for survival, man now competes for access to a larger portion of the limited resources society has to offer. yes, i'm talking about money here. in many ways, this struggle is similar to the survival of the fittest rule: the most able, intelligent, skilled and knowledgeable people get the best jobs or found the best companies, and get rich. that's the theory, and to some extent things really happen this way. but there are various external factors that distort this competition.

one of the most important factors that affects your being rich or poor is the general conditions your country provides. if you live in a country with an average monthly wage of $3000, you stand a good chance of making, well, $3000 a month - enough money for a decent living. you also have pretty good chances of using your skills and knowledge (if you have any) to make a more than average salary. that's nice. what happens if you live in a country where the average monthly salary is just $100? you stand a pretty good chance of making $100 per month, which is not really that much. if you work hard enough (and ignore other distorting factors such as corruption) you can make more than that. four times the average salary, which is not bad in terms of achievement, is still just $400.

even though wages can be 30 times lower in some countries than in others, prices do not usually follow the same pattern. in fact, there's a principle called purchase power parity, which says that the price for a certain product should be the same in every country of the earth. the reason behind this? if in one country a computer costs ten times less than in another country, then people in the first country would start selling a lot of computers to the second, for a hefty profit. in time, increased demand for computers in the first country and increased supply in the second would equalize prices.

so if you live in a poor country, you're in a losing position in the race for decent standards of living. now let's go on, and see what makes some countries poorer than others. we will start with the following point of view: the competition for world's limited resources is the large scale version of the competition among individuals for getting rich. basically, some countries make more money than others. when a certain country makes a lot of money, then every citizen of that country is better off, and makes a lot of money too. it's just common sense.

now, why do some countries make more money? the united states was just emerging as a nation several hundred years ago; japan and germany were crippled after the war; singapore was struggling as a third world country just several decades ago. why is the standard of living so high in these countries right now?

the answer is they can produce goods in larger quantities and of better quality than other countries. this is called productivity. if one worker in a certain country can produce 100 digital watches per hour, while a worker in another country produces just two digital watches per hour, who is going to make more money? it's all about productivity.

the guy producing 100 watches per hour is able to do that because his factory is more advanced and has better technology. this technology is there because there was enough money available to buy it. enough money available to train the worker to be more efficient. enough money available to research more advanced watch designs, that bring more money. these are all investments: in technology, people, research, and so on.

the wealth of a country determines its ability to invest and generate even more wealth. investing means not consuming some of the money you make, but saving it and using it to create conditions for higher consumption in the future. wealth is generated through investments. it's as easy as that.

you'd think that any sensible government would know this and would create the necessary conditions for investments. naturally, when you're the government, it's not easy to think about saving money and investments, when you have strikes, mass protests and other impending problems. but still. no one said it was easy.

how do you create suitable investment conditions, if you're the government? it's really very simple: 1. you invest government money, and 2. you create suitable conditions for private investments. the government's investments are in infrastructure: you invest money in roads, communications, energy systems, and so on. you also invest in the education system, since we live in an age where brain is the most important resource. you also invest in technology and research. one word keeps getting repeated here, and i'll say it one more time: the government should invest money. it should not consume money for subsidizing inefficient state-owned factories, for a poorly managed welfare system, or for increasing the number of government workers. and that's not to mention the useless consumption of resources due to corruption. so, those are government investments.

next, you create suitable conditions for private investments of local companies. you do this by devising a clever monetary policy. that means low interest rates, so that companies will borrow money from banks and invest in technology, training people and so on. you also devise a clever tax system, so that companies are able to invest their profits and are not crippled by high taxes. there is research which shows that if taxes are increased beyond a certain point, the amount of money the government gets actually decreases. so there is really no point in having extremely high taxes in the long run. you also devise a clever legal system, which is straightforward, fair, permissive and progressive. you also devise a clever administration and clever government institutions to run things smoothly. when doing this, you keep in mind that government institutions are established to help the people, not to help themselves. the conclusion to all of this? when you're the government, you have to come up with a lot of clever things.

so this is how you encourage local investments. next, you take necessary steps to encourage foreign investment as well. this is extremely useful, since it brings money, technology and skills to the country. it creates wealth. you accomplish this by doing all of the above. but there's more: you create stability. you do not change laws every two months; you do not arrest and fine people for exercising their freedom of speech; you really eradicate corruption; you have a fair, modern and efficient legal system. and still that is not enough. you have to convince foreign investors to come to your country. so you don't just wait, but go after them and tempt them instead.

so, that's how you do it. is it easy? no. is it impossible? no. it can be done. why could some countries do it, while others can't? there are a lot of reasons, but one stands out from the rest, as being essential: the quality of leaders. i like to make things easy, so i will not be vague about it. quality of leaders means two things: 1. leaders should be intelligent, skilled and knowledgeable, especially in economics and 2. leaders must have good intentions. is it that hard? furthermore, you don't need to have intelligent leaders with good intentions in power all the time. just take a look at politicians around the globe today: most of them are mediocre. the important thing is to have the right leaders at the right time, in order to create conditions for progress. this is what happened in the most advanced countries long ago. these countries don't even need bright leaders any longer. they can do well enough with mediocre people leading them, as long as they are not stupid enough to ruin the economy.

and now for a bit of focus: romania was in the process of developing necessary conditions for progress prior to 1945. certainly, world depression and the two world wars took their toll on romanian society, but the conditions were in place. what happened next? communists came into power and everything changed. instead of being created and multiplied for the benefit of the people, wealth was taken out of the country and given to "sister" countries. investments were made in all the wrong directions. the communist economy was as unnatural as asking lions in the jungle to share their prey with all the other animals, while starving in the process. for 45 years Romania degenerated while other countries advanced.

then came 1989, which created conditions for a fresh start. we hoped for progress. what were the ingredients for that? as seen above, just able leaders with good intentions. and now i ask you: did we get such leaders in any of the governments or parliaments we had since 1989? the answer is unfortunately no. all we had (and still have) are mediocre leaders, that don't know what to do to fix the economy and to improve standards of living. even if they did know, i doubt it they would actually take the necessary steps to do it, instead of taking care of their personal interests. so we have some sort of social gigo (garbage in / garbage out) process in motion here: we put mediocre leaders in power, so we get mediocre results out of them. naturally things will evolve. but progress that took other countries 5 or 10 years, might take romania 20 or, even 50 years.

we now have the reason for poverty: incapable leaders. but you knew that already, didn't you? so, how do we change this? i wish i could give you an easy answer to that. i wish i could say that your vote can change everything in 2004, when we have the next elections. but i can't. mediocrity reigns in all political parties. the clowns change, the show is the same. we all pay for the tickets, whether we like it or not.

there is a high degree of inertia in every political system, so change is difficult to implement. the only solution is to get a fresh batch of young, talented and dynamic politicians. where would they come from? two sources: from new parties, or from existing parties.

forming new parties would not work. staging a good show every four years and getting people's votes needs a lot of money and some history - any sort of history would do. these are ingredients a new party and new politicians do not have. unfortunately, emerging leaders in existing parties would not show up either. old timers that lead all parties will rarely admit their incompetence and move over for a younger and more intelligent generation to take their place. by the time old timers do move over (for biological reasons, if nothing else), the young and bright people in their parties have become old and corrupted themselves.

basically, we do not have any viable political option in romania right now. and there is absolutely no incentive and no chances of success for bright people to come into power. and that's the sad part. poverty and everything would be bearable if there was hope. do you have any hope left?

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