Necessary Ingredients for National Competitiveness

National governments have an undeniable effect on the global competitiveness of the industries that take root in their countries. In the absence of a predictably stable legislative environment, industry cannot make the long-term gambles necessary to grow the economy.

Infrastructure investments of both the traditional and technological varieties will need to either be undertaken by the government itself or within a larger understanding of non-interference from the government in order to ensure that the underlying structure of the national economy is strong enough to support economic growth.

Without a financial environment that promotes private savings and domestic investment, no country's citizens will plow their resources back into the country. They will either spend everything they earn on short-lived consumer goods or send their resources abroad. While there is nothing wrong with international capital flows per se, any country that routinely sends its resources abroad is making a firm bet that someone else's economy is a better place to do business.

Education, particularly secondary and tertiary education, as well as lifelong training, is needed to provide businesses with a labor force that can take full advantage of technological progress.

Ultimately, each nation's citizens have a unique value system that each nation will seek to preserve. Paying attention to the fragile balance between economies of proximity and the wider globe in order to ensure wealth creation is absolutely critical.

Congestion Pricing Unpopular in NY

Newsday reports that small business groups are unhappy with Mayor Bloomberg's proposal to help the environment and increase the speed of transportation in New York by reducing congestion through "congestion pricing". Small business groups correctly view congestion pricing as a new tax on something that has always been free before. Ignoring for a moment the distributional effects on the poor who will effectively priced out of driving between 86th Street and downtown, congestion pricing is obviously capable of doing exactly what it was designed to do: reduce traffic.

The problem with most schemes for charging for road access is that new infrastructure needs to be built to differentiate between paying costumers and everyone else. Bloomberg apparently plans to avoid this hassle by using pre-existing infrastructure that already charges for bridge access.

Savvy investors should be on the lookout to buy a piece of infrastructure investments like toll roads. While the political nature of the situation in Manhattan makes it unlikely that a private company could buy all the public roads in Manhattan, the potential revenue stream looks unbelievably inviting.

Cities like London have already demonstrated that congestion pricing works to reduce traffic by forcing people to pay for a public good. And the people who are willing to pay more than $10 every day just to drive downtown are likely willing to pay $15 or even $20 in just a few years. Hedge funds and universities with large endowments like Harvard are the main players in infrastructure investments today, but if more cities follow New York's lead here in the United States, the market could really take off.