Failure of A country: The leader is a non-economist.

 If we have 2 country. 

First country is run by an economist Mr. Don from Savor and second country is run by a philosopher Mr. Andes from Mildova.

The settings of the country is in 1990. We will also set the country on ceteris paribus or all thing equal under normal circumstances.

However, they have different goals and leadership from 1990s.

Savor was run by Mr. Don an economist and Mildova was run by Mr. Andes a political activist. 

Mr. Don set the economy with right institutions, reducing cost of doing business, cheaper infrastructure, make life easier for the masses and business by lower utilities bill as well as cost of living and promoting free education. 

Mr. Andes on the other side, increase tax for the rich, increase cost of doing business and many type of taxes for the masses, while, promoting massive welfare program for his country and worldwide. He also increase the minimum pay for the poor without increase in productivity. He is of the opinion that it is a sin to be rich in his country. He has the concept of equality for all and be champion of the world. 

As a result, the productive and rich people move to Savor from Mildova and Mildova experiences brain drain and low productivity. Mr. Andes need to increase taxes from time to time to cover his burgeoning budget. 

In 20 years time, Savor GDP grows from 100 to 1000 while Mildova GDP grows from 100 to 150. The currency of Savor gets stronger while the currency of Mildova weaken. The rich all move to Savor from Mildova. Savor become a developed country while Mildova become a third world economy as the rich lived in Savor and the poor moved to Mildova as Mildova is a welfare state. 

Why? 

Because, there is a principal in economy that Mr. Andes does not understand, which is the invincible hands and multiplier effects in economy.

In economy, if we support productivity, productivity will give rise to multiplier effects and multiplier effects will activate the invisible hands that leads to better economy and living conditions for the masses. 

On the other hand, Mr. Andes concept of welfare society is good initially but this promote his society to be unproductive and depends on government handouts attracting those that loves welfare to his country. Making his country more and more unproductive as time goes by. 

In order to maintain his welfare state, he needs to increase his tax more and more on the productive segment of his country, making his people becoming unproductive and looking for welfare handouts and the productive ones will move elsewhere to country like Savor. Soon, his country suffer from negative growth and turned into socialist and eventually communist country as the poor will demand more and more welfare and the institutions in his country collapse. 

Political country will move through cycle of capitalist to socialist and communist before moving back to capitalist from time to time. 

There is a saying that a fish rot from his head and how true it is. You can see that many capitalist country become socialist and eventually communist because of welfare economy.

Therefore, there is no other way to developed a country, other than making it more productive with good institutions that promote fairness and equality for all with low debt that can be service by the people's income making it sustainable. 

While, income must be lower than productivity to make it competitive. 

I hope to be wrong as I believe that every country should have a good ruler and prosper with time. 

Moral of the story: Make sure that the debt of your country is less than the income of your citizens and their income is less than their productivity, so that the country will be able to growth with time. 

Productivity matter, 

Dr. Lion.