Wealth creation and politics are two closely related concepts. Governments and political leaders can influence the creation of wealth through their policies, as well as its distribution. Value creation also influences political systems and the agendas of parties. In politics and economics, one of the keystone debates is “what kinds of things should government do with respect to wealth creation?“.
Some believe that the government’s role should be limited in the economy and leave wealth creation to private enterprises; others disagree, believing it is for the good of prosperity both financially as well socio-economically.
Opponents of this view point out that government investment in areas like education, infrastructure and research can provide the soil for private-sector growth. Another related aspect of the relationship between politics and economic creation is that political systems have an impact on economic outcomes. Socialist or communist political systems, for instance, stress the reallocation of wealth and resources rather than individual enrichment.
Other systems like capitalist democracies, that emphasize the creation of wealth for individual members and whose resources are distributed according to market forces. The choice of political system, therefore has significant implications for how wealth is created and distributed within a society.
Public policy is very important in stimulating economic growth and wealth creation. Policies designed to provide a business-friendly climate, including low tax rates, deregulation and property right protection have been proven capable of promoting economic growth. Moreover, investment in infrastructure, education and research & development can also play a role.
How wealth is distributed in a society has great to do with governance. Countries with good governance tend to have wealth relatively evenly distributed, while countries with bad governance are more likely to see their money concentrated among the few. Uneven distribution of wealth can also be caused by corruption, lack of transparency or weak institutions in the midst of the impact of inflation.
Investing and wealth creation are affected by political stability. In countries where there is political instability, investors often fear losing their investments and are hesitant to invest and escape matrix. The opposite is true for countries with stable political environments, which attracts more investment leading to economic growth and prosperity.
Generally speaking, wealth creation is tied to political factors. To create an enabling environment for wealth creation, countries need to pursue policies conducive to economic growth and good governance, while maintaining political stability.