When small is beautiful

In another post, I pointed out that most of the world’s richest countries are small. But it’s also true that many small countries are quite poor. Furthermore, the US is in many respects the world’s most successful economy, and it is obviously quite large. So what’s the relationship between size and wealth?

You could do a “simple regression”, but I don’t believe that’s the right way to approach the problem. It seems likely that the relationship between country size and wealth depends on a variety of factors.

A recent post by Noah Smith got me thinking about this issue. He discussed the case of Native American entrepreneurship in Vancouver:

Vancouver, Canada shows us an example of how this can be done. Part of Vancouver’s downtown urban area is officially under the governance of the Squamish Nation, rather than the city itself. The Squamish Nation, realizing they could do whatever they wanted with that land, decided to build a giant high-rise housing development:

[I discussed that example in an earlier post.]

Smith also linked to a similar example in the US:

Tesla is ramping up efforts to open showrooms on tribal lands where it can sell directly to consumers, circumventing laws in states that bar vehicle manufacturers from also being retailers in favor of the dealership model.

Mohegan Sun, a casino and entertainment complex in Connecticut owned by the federally recognized Mohegan Tribe, announced this week that the California-based electric automaker will open a showroom with a sales and delivery center this fall on its sovereign property where the state’s law doesn’t apply.

What do these examples have in common?  The Indian nations are located in densely populated areas that are fairly affluent, but also highly regulated. 

When you look at a place like Africa, you see large countries that are poorly governed and poverty stricken (Nigeria, Congo), but also small countries that are poorly governed and poverty stricken (Equatorial Guinea and Gambia).  They are all located far from affluent markets to the north.  Even within the US and Canada, Indian nations located in remote areas tend to be relatively poor. You also see large countries that are located near rich places, but remain relatively poor.  Mexico is a good example.  

The “sweet spot” seems to be small independent areas that are located near big affluent markets.  Is this because Native Americans are particularly libertarian?  I doubt it.  Some indigenous communities have communal land ownership and a prohibition on alcohol.  Rather, I suspect that these areas have discovered a market niche.  They can profit by providing goods in high demand that are severely restricted by nearby local governments.

When you look around the world, you see many examples of wealthy enclaves that are located right next to bigger but more highly regulated markets.  For instance, Hong Kong and Macao are located right on the edge of Mainland China.  Luxembourg, Liechtenstein and Monaco are located right next to the big EU market.  Dubai is right next to larger but more regulated countries such as Saudi Arabia.  These tiny places have some of the highest per capita GDPs in the entire world.

If Tijuana were a tiny independent country, I suspect that by now it would have been far richer than it is.  When you look at the recent economic success of the Dominican Republic, and then recall pre-revolution Havana, it makes one sad to consider how much the Cubans missed out on.  In the late 1950s, Cuba was much richer than the DR, and is located far closer to Florida.)

Long time readers know that I’m pretty strongly opposed to some of the excesses of wokism (although I certainly oppose bigotry.)  But one woke initiative that I could get behind is just a few miles south of where I live.  There’s a 15-mile stretch of almost completely undeveloped land along the coast between Orange and San Diego counties.  Right now, the Marines use a portion of the land, but the military could easily be moved to a less desirable spot.  Perhaps we could make amends for our previous mistreatment of Indians by giving that land back to a Native American community.

Imagine the sort of walkable urbanism that developers could come up with on 15 miles of coastal southern California.  The San Onofre nuclear power plant could supply carbon free electricity, if it were recommissioned.  

I’m losing faith in the white man’s ability to make America great again by thinking big, but after seeing what the Squamish are doing in Vancouver, perhaps the Native Americans can restore America’s pioneer spirit. Here’s a picture of Miami Beach, to whet your appetite for the potential of Camp Pendleton:

Merry Christmas!

(0 COMMENTS)