On capital

A couple centuries ago, when the whole economy was mostly built around rural farms and cultivating fruits, vegetables and grain the power of the country was a factor of amount of land it controls. Countries with large populations were no good to live in because the land was scarce, the labor was abundant and who the hell knows what could happen if harvest is not going to be great this year?

At these times kings and despots were eager to capture and establish their control over as much land as possible, because land was an ultimate asset.

However, things have changed a little since that times. Yes, the land is still somewhat important. After all, the capitalism is all about putting together land labour and capital to produce goods and services that people need. At the same time, thanks to advancements in technology, small piece of land doesn’t necessarily mean you cannot do whole lot with right labour force and lot of capital. Land is now mostly not an asset, but a liability. You can hardly use a raw land, you have to put some infrastructure first, maintain it, provide people living on this land with energy, with food, with police with courts and everything of this sort + incentives not to leave this land in pursue of a better life.

What matters now is how much capital and labour is there available per square mile of land? The most affluent areas of the world are all very well capitalized and the population density is high. It is easier to provide people with everything when they all live in a compact area. It is easier to attract talent because all talent needs is to drive a few miles a day to office to work for a nice paycheck.

The problem with capital is that it is very sensitive to any type of shit. You don’t attract capital saying “this new loan helped us to avoid bankruptcy”, you don’t attract capital by igniting riots and you don’t attract capital by suddenly rolling into neighbor country on tanks and infantry.

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