CHAPTER 5
The Role of Governments AN
OPPRESSIVE GOVERNMENT IS MORE TO BE FEARED
THAN A TIGER.
— CONFUCIUS
that the world’s markets are overseen by governments, and even “free” markets are subject to considerable legislation. Ideally, those governments set policies based on what they believe will serve the greatest number of their people to the greatest extent. Trade and its regulation are a source of tax income for governments, which also recognize that physical security is tied very closely to economic security. Not only does a strong economy generate funds for military expenditures but it also, via international trade, creates a bond of codependency that strengthens every nation through alliance. It’s clear from history that trading partners often become military allies in times of trouble. It’s equally clear from history that economic benefits that can’t be won at the conference table are often decided on the battlefield. Marketeers must understand both the role of governments in trade and the motivation for that role.
MARKETEERS MUST UNDERSTAND
Sovereignty, Prestige and Security: Our Market, Our Rules The maintenance of national borders is the single-most-important element that separates international trade from domestic trade. Geography aside, no country applies the same level of restriction within its borders as it does when dealing with its neighbors. The ability to maintain, protect, and restrict entry across (or exit from) national borders isn’t merely symbolic; it’s a legal requirement of a nation’s sovereignty. Failure to do so leaves it open to claims that it’s not a country at all and is therefore subject to control by other parties. Some countries have very tight control of their borders (Russia, China), making them military and commercial checkpoints. Others (Canada, the United States) take a far less stringent approach to the movement of people and products across their borders. The former examples believe themselves to be in great danger from foreign intervention, while the latter exhibit an almost recklessly open approach to foreigners. The difference in approach has a great deal to do with each country’s view of their international prestige. Countries at the top of the economic heap tend to flaunt openness as a challenge to would be opponents. Lesser economies seek to protect every possible area of vulnerability by keeping foreign traders at bay. The formation of the European Union (EU) has essentially consolidated many smaller, weaker economies with a few strong nations to form a larger “country” with a new centralized government. This new entity has free-flowing internal state borders and a restricted periphery facing nonunion members. Beyond simply forming a trading bloc similar to NAFTA (Mexico, Canada, United States), the EU has formed an entirely new entity out of dozens of separate (and formerly
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