What’s Scarce Geopolitically: Stability, Ways to Get Ahead and Innovation

Conserving what is failing is not a path to stability. What’s in demand but scarce is valuable. This is one of those scale-invariant principles: businesses large and small want what’s scarce and in demand, because that’s what generates profits.
What’s abundant but not in demand is cheap. What’s scarce but not in demand is ignored. Capital, talent and profits flow to whatever is scarce and valued as an engine of wealth creation.
Geopolitically speaking, tangible assets have self-evident value: seas between your borders and potential enemies, a wealth of natural resources, and so on. But equally important are intangible assets: the human, social and symbolic capital of the people, culture and institutions of the nation.
What seems scarce in the world is not just a specific tangible asset or intangible form of capital, but a mix that provides stability, ways for average citizens to get ahead and fosters innovations that can quickly spread through the society and economy. We could say engines of wealth creation are scarce, but if the wealth isn’t distributed somewhat broadly, or the source of the wealth is not innovation but extraction of resources, any stability is temporary or illusory: resources run out, and wealth inequality fuels social and political instability.

This post was published at Charles Hugh Smith on SATURDAY, JULY 18, 2015.