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“Is the arctic home to a small specialized economic design. That doesn t technically belong belong to any established nation on earth as it falls within international waters off the of greenland canada. Russia. Alaska and the like the north pole is an interesting economic case day though primarily because of the incredible economy.
It is home to the north pole is the center of a surprisingly large industrial center that produces consumer goods primarily for their enormous export market. The north pole has also been blessed by an abundance of fossil fuels particularly coal that it also exports to its more hostile trading partners. This is all great and well but we have seen manufacturing nations before on this channel. Although what makes the north pole s economy truly unique is the incredible seasonal nature of its industries and its enormous export market.
The north pole has no official trade agreements recognized with any other nation on earth. Which is normally something that seriously hinders. An economy s ability to grow normally nations have taxes for things imported into that country called tariffs. These are levied in an attempt to artificially raise the cost of foreign goods and make locally produced goods more competitive.
If you are a banana farmer in a major developed country like let s say australia you are going to have to pay your farmhands a very high minimum wage and your farmland will cost a lot and your supplies are going to be more expensive than let s say a banana farmer in in indonesia. This would mean that if you are charging ten dollars for a banana and making a slim profit. An indonesian farmer could import their bananas into australia charge five dollars for them completely undercutting. You and pushing you out of the business.
While still turning a profit. The government of australia in this instance would see this is a pretty bad outcome. Sure shoppers got a slightly cheaper banana. But banana farmers and harm hands and agricultural truckers are now all out of business.
So this is what they do they live a five dollar tariff on every banana entering australia and suddenly..
The local supplier is competitive again now this is fine for saving local industries. But these tariffs do limit trade amongst countries that could really benefit from it so trade agreements are formed australia will say to indonesia you can import your bananas and we won t tax you. But you have to import our iron ore without taxing us. This sounds like a good deal for both countries and this agreement is formed sure.
The australian farming industry suffers a little bit. But the mining industry more than makes up for this and overall both countries are better off for the agreement. Now. The north pole is a little weird in this sense.
Almost all the north pole s economy depends on international trade it exports in consumer goods and fossil fuels and import in dairy products and confectionary. But it has no trade agreements meaning. That conducting this business in any kind of competitive manner would be incredibly hard fortunately for the north pole. They have found an ingenious way around this whole problem.
What they do is call their exports gifts that are addressed to non tax pain in most nations on earth there are allowances for imports that are intended as gifts without being exchanged for currency. What this is intended to do is avoid a lot of unnecessary paperwork for people who are sending things to friends or family overseas. It doesn t seem sensible that you should have to pay an import tariff on a postcard. When you send it to your arty from europe.
And so there are concessions within reason for gifts similarly for the north pole s primary import market. The products are classed as religious offerings well this is a legitimate classification of their export business or if this is an example of the north pole skirting international trade laws and dozens of countries. It is not an argument that i want to get into in this video. But what it does do is beg.
Though how does the north pole generate revenue from these exports in limited press releases. The chairman and ceo of the north pole economic region nikolas claus insisted that the primary driver of their exports was foreign aid directed at the good children of the world skeptics have noted that if this was purely virtuous foreign aid. Then this would represent a foreign aid budget. Many times larger than even the most influential nation economies in the world.
The most generous country in terms of foreign aid in the world today is china which provided over 60 billion dollars worth of foreign aid to over 140 nations in 2018. Now these donations mainly took the form of development projects that would provide a boost to developing a country s economies. But would also serve to secure chinese influence in up and coming markets throughout the world so while on the surface it seems lovely and fluffy and charitable. There is real hardcore geopolitics influencing this philanthropy.
The north pole does not release national budget and so it s foreign aid budget is a little bit harder to determine. But it can be reverse engineered curiously. The north pole provides foreign aid. Almost exclusively towards children s initiatives and more specifically it is directed towards individual children that believe in the fundamental ideologies of the north pole and its leader.
This selective aid has caused controversy. But at the end of the day. It is their budget to do with what they please but this selectiveness does make it easy to estimate their budget there are. 22 billion in the world as of 2019 of which 12.
Billion. Recognized. There north pole and its leader. A gallup poll noted that the average child between over fifty countries receive gifts worth 70 us dollars.
What this would mean is that the north pole s foreign aid budget is roughly 84 billion..
Us. Dollars annually handily beating out china the second largest economy in the world the dairy and confectionary imports. It receives as offerings are not enough to support this spending and the country also has no sovereign bonds listed anywhere on any exchanges to fund this through debt on top of this its domestic consumer market is very small on account of a majority of its workforce been comprised of unpaid manufacturing interns which work under the north pole s employment for low fare scheme. So the question remains how does the north pole a relatively small economy afford to export these toys every year facebook is one of the world s largest.
Companies it generated revenues of over 50 58. Billion dollars in. 2018 while offering a majority of its. Services completely free for over 24.
Billion. Users. The reason that facebook was able to seemingly make money out of nothing was because of the way it commodifies its data. Facebook develops algorithms that will look at a selection of data points like your friends likes checking locations and posts to determine what kind of person you are it can then use this to improve its services.
Recommend you friends you may know show you content that you will find interesting. And most importantly deliver you advertisements that you will find engaging a targeted advertising campaign is far more effective than an indiscriminate one because companies can be sure that they are approaching the right audience in the right way to build the most possible interest and their products. Because of this companies are willing to pay a lot of money to access. This data now while facebook s data pays on user profiles is extremely impressive as a data source.
It is nothing on the scale of santa s list a repository of all known knowledge on the action of minors in the world. Its quality assurance. Protocols of simply checking the list twice probably leave a lot to be desired from a database management point of view. But is still a very powerful source of data now the north pole economic region insists that user data collected on santa s list is purely used to facilitate the services that the north pole provides to naughty or nice users.
And it is used to determine the allocation of consumer goods or natural resources..
But critics have noted that such a data source could produce the billions in revenue that the north pole. Seemingly lives on at the end of every year. The north pole special economic zone is truly an interesting case study in how one micro nation can both facilitate and live offered interactions with the nations that support it it is very hard to speculate about the future of the economy. It was obviously one of the first major industrialized zones in the world that has since been able to produce output from their workshops on a consistently huge scale.
But it is still subject to many loopholes and if major political figures are to be believed the very foundation of the north pole is under attack. So could this be another manufacturing economy destined for a great stagnation well no in reality. The north pole has a lot of things right. It is stable consistent.
Diverse and people have a lot of confidence in it for anybody who has watched this channel before we will know that this is what an economy needs to flourish. So it is very easy for the team at economics explained to say that we believe in the region and its leadership. We believe in the north pole and we believe in santa claus hi guys and a merry christmas or happy holidays to you all i hope you enjoy this latest video. If you did please consider liking and subscribing.
If you have any questions about this video that you would like to discuss with me directly or the community that we have over at the economics. Explained discord server. I will be answering questions for about an hour about 15 minutes after this video goes up the server has now reached over 3000. Members and there are always great economic discussions.
Happening amongst like minded and not so like minded people otherwise. I will be live streaming a q. A session on the second channel linked in the video. ” .
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