Fundamentally, economics is all about this basic question: do you have money? When the operational geometry in focus is a nation, then the you in this question means the businesses and people of the nation and money means their net income (revenue - total expenses). The fundamentals of a nation's economy is a function of the strength of the net income of its businesses and people. Growth in net income generally indicates strong fundamentals. Basically, the elements of the fuel that drive the net income engine of a nation constitute the fundamentals of the nation's economy. These elements are as follows: (1)The calibre of the entrepreneurial spirit of the nation: the desire and ability to successfully commercialize innovative ideas. (2) The monetary and fiscal policies of the nation: the policies of the central Bank of the nation and the tax policies and regulatory environment stipulated by the government. (3) The labor force of the nation: the skill sets and wage structure of the labor market. Weakness in any or all of these elements dilutes the strength of the fundamentals of the nation's economy. When the nation in focus is the United States, element (1) is always strong. In other words, the spirit of innovation and entrepreneurship is intrinsic in the American psyche. |
| This fact is the single most important reason for the greatness of the American economy. So only elements (2) and (3) are available for analysis when there is a need to examine
the fundamentals of the United States economy. When we examine these elements in light of the current crisis in some subspaces of the financial sector of the economy, we observe the following: Those entrusted with the management of these financial subspaces were situationally nonadverse to wreckless investments and there was no regulatory stop valve to prevent or brake such wrecklessness. The Hands Off stance of government with respect to business operations is a good thing. However, this philosophy must not be confused with Indifference. Government must find a regulatory balance between unnecessary intrusion into the operational moves of corporations and the need to protect the people from the adversities of corporate wrecklessness, and shareholders must be responsible for ensuring that the corporations they own are prudently managed. |
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