Let us first start with commodities like gas and oil. Now in the economic world, these commodities market place cannot be explained in economic terms. Rather it is very important for us to understand the political aspects of the economy. This aspect has to be understood before one comes to understand the commodities like gas and oil. Political aspect of economy means how the commodity prices are driven by politics. For example, if politics is such that the country producing oil decides to increase the production, the price of oil would go up in the market place.
The political factors include how various nations interact with each other. Suppose for instance that the United States of America decides to increase the output of oil. Then in the market place, those nations which export more oil will have to raise their prices. And that is how the market forces the price of oil up.
Another aspect of the market is called demand and supply. Which means, when there is high demand of a commodity then the price of that commodity will drive the price up. The opposite happens when there is a low demand of that commodity. So, in this market, the price of the commodity drives up.
Nations politics also has a strong impact on the market. When there is a trade imbalance between two nations, it will definitely have an effect on the price of that nation’s commodity. For example, if two nations are trading with each other at a deficit of over 2% then there will be a constant pressure on the price of the goods. And this has a direct link with the political systems of the nations concerned.
Now, we come to my last topic, which is, how markets and nations politics play into my AP Calculus exam. Well, it is pretty simple to see. It is, when political systems fail to allocate capital efficiently, then the markets will be driven by them.
On the one hand, you have economic policies based on political realities, and the result is, overall economic welfare is bad. On the other hand, there are no political systems that I can see that will allocate capital in a way that makes economic welfare better. Markets, as they are, simply drive everything else around. For all of their faults (I won’t name any of them here), markets are a great force for good, and they make everything else around better – including myAP Calculus test!
In conclusion, I believe that nation’s politics and markets take my exam for me. And you should too. Why? Simply because markets drive everything else around.
And I would submit to you that, as far as human endeavors go, markets often drive things that are good, and bad things away. This also includes human politics, because markets drive politics. Markets often determine whether or not you are politically strong or weak, and they determine who gets what amount of money. Markets also typically determine how your kids will be treated, how you decide what you will spend your money on, and how much you yourself will invest.
So, I don’t believe in nations, because markets drive all of this. Markets seem to be trying to tell us, via economic policies, what we should do. That doesn’t make any sense to me. If markets are trying to tell us what to do, why should we listen?
Now then, if you really want to know how to allocate capital and create wealth, then you need to understand the concept of nations, before you attempt anything else. Nations are nothing more than political systems. Nations have their own currencies, their own central banks, and their own history. The best way to understand how to allocate capital and create wealth is to begin with a nation. That is how you get started.
