My Coconut Theory (Updated)

In a tropical island, every one sleeps under a coconut tree assigned to him. He wakes up only when a coconut falls on his head once in a while. He eats the coconut and goes back to sleep. He is lazy due to the nice weather (no need to find shelter) and the nice resource (the coconut tree). He is happy and rich by his own standard. However, he is lazy, fat, and stupid due to the lack of any need to work, exercise, and think out of his ‘perfect’ environment.

The worst that happens to the natives is borrowing coconuts from other natives with the coconut tree as collateral or cut down the coconut tree to make a canoe without plans to replenish coconuts in the future. 

This is a simple theory. It can be used to explain how and why many countries are rich, poor, and continue to be so. Let’s check how this theory stacks up with countries.

It also explains why people migrate to places with lots of coconuts. It is demonstrated by Chinese during war time to South East Asia and the Irish moving to the US during potato famine.

U.S.A.

The U.S. is one of the richest countries due to its development,  highly educated citizens, hard-working immigrants and the huge natural resources per capita (i.e. having a lot of coconuts in my theory). The U.S. is declining as we spend more time enjoying our wealth (borrowing coconuts so he can eat more) rather than creating more wealth (i.e. not planting new coconut trees in my theory). 

The wealth is equivalent to the bountiful of coconut trees that were available originally and the many that were planted by our ancestors. There were fewer natives to consume the total number of coconuts, so there was a surplus of coconuts grown, eventually to be given away (as welfare and entitlements). Many of our citizens have no incentive to plant more coconut trees (work) when they have unlimited coconuts to them (generous welfare).

Because of WW2, most coconut trees in the world were destroyed while ours were isolated from the war. We were rich to ship our better coconuts to the rest of the world.

God gave us plenty of natural resources, good soil and climatic wealth (coconuts hidden under the land) and hopefully we continue to be wealthy. Unfortunately, we’re now consumers (of coconuts) instead of producers (planting new coconut trees).

Norway

Norway is the richest to its population group (3 millions) while Brunei is richest in its own population group. Norway is rich due to its rich resources and its intelligently governed wealth. I hate to compare any country to Norway as most likely we are comparing Apples to Melons.

From its long coast line Norway has rich off-shore oil fields and abundant fish exports which is second in the world-- only 6% of its export, after China but far, far #1 per capita wise. Because of the world's oil addiction and food dependence secures its income flow.

Peru has a long coast line, but it is not wealthy. My theory does not apply fully here, as there are always exceptions. It could be Norway’s educated citizens, close location to its trade partners and buying assets around the world (planting more coconut trees). The dividend payments allow Norway to prosper for decades. They have about 600 billion sovereign fund to be shared by 3 million citizens. Simple math!

Norway will be rich for centuries to come as they plant the coconut trees all over the world.

Iceland

Some smart guys suggested cutting down all the coconut trees (their financial asset) make canoes (more global banks) so they can earn a rich life by fishing (lending). The world blindly loans them with coconuts. When the fishing (no global market esp. after 2008) fails, their land is lost with no coconuts and no coconut trees left. Do not bet all the coconuts in one venture and always have an exit strategy.

Singapore and SE Asia

Singapore is rich due to its important location for the sea route for trade and commerce, as well as being the cultural intersection between the east and the west and its industrious citizens (most are Chinese). When the hard-working folks land on a land of coconuts (i.e. resources), they naturally become rich.

Mekong River is a good resource providing fishing, irrigation, transportation, and fertile land in the delta for SE Asia. Hence, SE Asia should be rich, and at the same time attracts hard-working immigrants from India and China to enhance their wealth. However, the river is being polluted by industries and the future is cloudy.

Japan

Japan has few natural resources. Its only resource is the educated and hard-working citizens. With a decreasing population and the policy not welcoming immigrants, Japan will face problems.

Haiti

Haiti used to have enough coconuts for its small population. French imported African slaves to the sugar cane plantation and changed the allocation of natural resources per capita. Coupled with frequent natural disasters and bad governance, Haiti becomes the poorest country in the world.

Haiti and many countries have their coconut trees destroyed by hurricanes from time to time. That’s why they’re always poor. So are some states in the US that suffer from periodic flooding and hurricanes.

UAE

When the west helped UAE to explore its oil resources (the hidden coconuts under the sand) about 50 years ago, UAE becomes one of the richest countries. She expands in different areas and it could be over-expanded. When the oil dries up in 100 or so years and/or the shale energy competes better, they could be in big trouble. [Update: the problem appears as of 1/2015.]

Russia

Russia is a country full of resources (coconuts). Its citizens become lazy having a good time under the ‘coconut’ tree. Chinese are just the opposite. That’s why the Russians hire the hard-working Chinese to tender farm in the border while they enjoy life with plenty of Vodka J.

The primary reason why USSR fell was the temporary low prices of their resources oil and timber (coconuts). Trying to be #1 was another reason. 

China

China has roughly 20% of the world population, but it has far less than 20% of the world resources (coconuts). For example, it has only 6% of the world land area. The situation was worsened in the last 300 years during the Opium Wars, and then semi colonization by the eight countries (led by Brits, the opium pushers). It bankrupted China by their colonial masters. It caused massive migration to escape from the land without coconuts. It was followed by WW2, war lord era and then the bad governance. Their bitter lessons ensure this generation and the next generation to work hard and be smart. When they do not have ‘coconut trees’ (the colonial masters cut most of them down), you have to work hard or die.

China ranks #2 in the economy. It is only important to its trading partners. Its own citizens care about their living standard which is about the middle in the rank of all countries.

Greece

Greece has its natural resources: tourism (coconut). Euro gives them unlimited borrowing. Olympics boosted their dumb ego. The result is bankruptcy.

Caribbean islands

Literally a lot of their coconuts are destroyed from the hurricanes every year. It makes them poor even they have a lot of coconuts (ample sunshine and beaches for tourists). Many set up tax shelters for rich folks and corporations. It is similar to earthquake-proned countries.

Hong Kong & Singapore

Both have good governance learned from Britain and are supported by hard-working Chinese. Hong Kong is rich due to its proximity to China and Singapore due to the sea port location between the East and the West. Coconuts are in many forms.

Ancient civilizations too

Greece, Iran, India, China and Italy are among the oldest civilizations. Most do not do well in today’s economy and many of their citizens have immigrated to other countries. My theory suggests that they have exhausted their coconuts (farm land and metals) throughout the long history. Hence, they have to migrate to lands with more coconuts. To illustrate, there is a huge discrepancy in natural resources (oil, metal and farm land) between China and the U.S., which has a relatively short history.

Corporations too

Microsoft was a tougher company with more innovations fifteen years ago than today. However, they are enjoying easy profitability of upgrades of Windows and Office (coconuts planted by their ancestors). For a long time, she only has one successful new product, the Xbox. Her managers are counting their bonuses instead of taking risk. The Coconut Theory works again.

Rich families too

It is very rare to have rich families that last over three generations. The first generation grows the wealth (planting coconuts), the second generation enjoys the wealth, and the third or fourth generation usually becomes poor due to the easy life.

Conclusion

So far, no one tells me that this theory has been ‘discovered’ by others. Shamelessly I claim it is mine. To me, it is just common sense.