The Scarcest Resource in the World

by | Apr 3, 2023 | Blog

Disclaimer: The following article was written by an external author. The opinions expressed in it do not necessarily reflect the opinions of the Foundation or its members.

The world’s scarcest resource is not any material good, sophisticated technology or the most complex industry imaginable. The land on which we walk and where we build our houses, businesses, buildings, roads, and cities, is of course finite and therefore scarce, but there is no point in occupying a physical space in which you are prevented from producing, building, doing business or settling down in peace. For there to be human progress, we necessarily need to freely collaborate with each other. By doing that, we build wealth to grow as a society. Each individual is unique and scarce, and a set of individuals are capable of forming a society. But this is not enough if one’s ideas cannot lead to productive actions that contribute to the betterment of the world. The world’s scarcest resource is therefore the innovative capacity of people who are free. Let’s call it “human capital”.

Wealthier countries have more human capital, while poorer countries have less human capital. People in developed countries have higher productivity, better salaries, and better conditions of living. This has nothing to do with the size of countries, their language, natural resources, or weather conditions, but with the application of the rule of law, greater autonomy of individuals, and fair institutional governance. My country, Brazil, is huge in terms of territory, and also in terms of population, but on average, our human capital is low compared to many other countries, precisely because of the lack of the aforementioned conditions. The economic implications of this are enormous, where our ability to produce wealth is significantly hindered.

brazil in the future

“Brazil in the future where it has better rule of law, greater autonomy of individuals, and fairer institutional governance,” imagined by Midjourney AI

If human capital is the scarcest resource in the world, the best way we can increase it is to maximize the number of connections we have with other people. Cities where people can concentrate and live freely will then generate rapid improvements in governance, attract more investment, encourage entrepreneurship, and produce more skilled workers.

Such Free Cities can also solve the issue of the lack of or low-quality housing. With freer cities and decentralized urban planning, more attractive, practical, and affordable designs can emerge, alongside greater construction capacity that features rapid urbanization and higher population density, all in a shorter period of time.

Free Cities offer excellent conditions for development and are a great tool to provide people with the potential to build a higher quality of life. They allow us to be in the proximity of many diverse people, including the most capable, intelligent, hardworking, and enterprising people in society. These connections and greater concentration tend to intensify the ability of these individuals to work, study and solve problems, whether through entrepreneurship, political, or academic paths. In short, more human capital is produced.

a free city

“A Free City that offers excellent conditions for development and is a great tool to provide people with the potential to build a higher quality of life,” imagined by Midjourney AI

What we need to do is seek to create as much as possible the greatest number of such innovation and prosperity hubs all over the world. In my opinion, it makes more sense to admit that variety and inequality is natural in human affairs and relationships, and therefore, instead of trying to solve the problems of the whole world at once, it is enough to start with small and decentralized changes. If significant and powerful localized changes are put into practice, they can change the whole society. This can happen through the spread of good ideas and practices, but also through economic growth producing “wealth belts” around Free Cities. The freer the city, the greater the human capital of this region, and the more beneficial these “wealth belts” will be.

Free Cities bring much-needed individual autonomy that supersedes overbearing governments or archaic rules within existing cities. The positive effects of Free Cities can reach many people indirectly, even without ever enacting country-wide reforms. Having a clear understanding of how incentives work, we can say without a doubt that a few small beacons of freedom are enough to provide a breath of fresh air to large societies and countries. Human capital is an incredibly potent resource!

small beacons of freedom

“Small beacons of freedom which provide a breath of fresh air to large societies and countries,”  imagined by Midjourney AI

The Free Cities movement is still in its infancy. As we try to figure out how to make urban planning, construction, and living together as free as possible, only a handful of real-world projects might be created as a result, but their weight and local change will be enormous. Other people, including politicians and entrepreneurs, will observe those positive effects and understand that there is indeed a demand for good governance that needs to be met. This will create a new wave of projects and cities that will advance these ideas and implement them in practice. Bad concepts will fail and be discarded, and the best ones will win out in the free market of ideas over time.

Entrepreneurial activity is what moves the world, and what actually changes it and improves the human condition. We need enough freedom to the point where our ideas are not stopped by inefficient regulations and overbearing rulers. Connecting people through freer cities is the first step towards creating more human capital and scaling the prosperity of the whole society.