Essay - The Failure of Micronational Economies

A glaring economic problem that confronts many micronations is that of government spending exceeding capital generation by the private sector. Many young governments predict a vibrant private sector full of active businesses will generate enough capital to compensate for the massive amount of money dolled out every fiscal period.

Of course, any person whose been around micronations enough realizes that lack of motivation and almost no incentive makes micronational economies a place where only the die-hard, the really economically interested, or the naïve hang about.

A government usually looks at its starting one million dollars (we’ll call currency dollars just to simplify) with a wide grin and imagines what it can do with it.

Micronational budgets usually consist of a list of government organs and individuals to whom the government will be allotting money. Many times the nation will keep a bit of money held back for ‘safe-keeping’ or some such thing. Things progress and they then come to realize that most citizens have little if any involvement with the private sector. This is because most citizens have a source of income: the government.

In a typical micronation most citizens are employed by the government and therefore have no other time for finding and keeping another job, or they do not feel the need to be privately employed. This creates an economic nightmare. The government pays almost all of its citizens and then collects a portion of it back in taxes. In the real world government taxes take money from citizens who have collected it in the private sector.

However, in a micronation the government is just taking back less then or equal too (well, usually not equal to) what it already gave out. Of course, often this cycle of ‘bringing in less than was given out’ takes a while to bring a nation into debt. Often, by the time a nation should be in debt it has dissolved or been merged with another micronation, so it matter little. But the principle of the matter remains: most micronations are doomed to be thrust into debt because the government spends much more then it can ever dream of bringing in.

The only way to combat this looming economic quagmire is to have a population that is so large that most citizens cannot be employed by the government. However, there is still no guarantee that these unemployed citizens will find employment in the private sector since quite a few people find fake money far less attractive and far harder to earn than fake power. And, even if many citizens were involved with the microeconomy of a largish nation, substantial capital generation is unlikely (especially in a service based economy).

This cycle may only exist in service economies for in commodity economies it is possible for money to be produced via mining, I suppose. I will probably be corrected for this by someone wiser at a later date. The situation also raises a Catch-22 of sorts. We must accept that fact that most people are uninterested in being employed in a micronational business. Most micronationalists turn to the government for employment, for, as Mr. Siskind pointed out in ‘On the Psychology of Micronationalists’, any position of power is an ego boost. At this point a government must make a decision: Opt for a healthy economy and attempt to push citizens into the private sector where they may become bored and leave the nation or let most citizens have a government job and watch the nation gradually slide into debt.

Economics is one of the most complicated parts of micronationalism, for it provides constant challenges and presents and endless list of problems. In the end, most (if not all) microeconomies are a failure. Perhaps in the future a discovery will be made that allows microeconomies to thrive without constant spam attacks from the head of the economics department urging people to get involved.

- “Philip Locke”