Note from the Editor: The following is an opinion piece which may not necessarily reflect the views of the Adammic Express.
Yesterday, I set up the Empire of Adammia’s first ever private investment fund, adding finance to the list of sectors which the Adammic economy now covers. It joins the media, software development, and wine-making industries in what I described, in my last opinion piece, as “the most successful economy in the MicroWiki community”. This seems like a bold claim, does it not? Last year, we reported a GDP of £118.95. Here’s how the numbers break down: Citizens contributed £56 through the Contributions Scheme, in which each of our 10 over-18 full citizens pays 50p per month to the Treasury. Wine made by my grandfather generated £17.18, a small coding job I did got me £24.57, and adverts on videos on my YouTube channel made £18.62. Physical copies of the Adammic Express made £2.10. My modesty has made me hesitant to make the claim of having created the most successful economy on MicroWiki, but try as I might, I have not been able to find an economy on the Wiki which compares to ours. Leylandiistan might have been a competitor had they stuck around long enough to develop further. Some economies, such as those of Juclandia, reportedly have a much higher GDP extending into the thousands or tens of thousands of pounds, but they don’t go into much detail about how they actually make that money, which has led me to believe that many such countries are counting macronational sources of income in their figures, which is a little misleading.
I would argue that any economic activity only counts as micronational economic activity if it could, in theory, be taxed by your government at a reasonable rate, and if it actually takes place on your territory. Otherwise it’s not really part of your economy at all, and is instead part of the macronational economy. I suppose a better claim would be that Adammia has the most successful verified economy on MicroWiki. We have verified our economy through the use of comprehensive, transparent accounting systems. All of our companies submit quarterly reports to the Imperial Companies Agency, giving us a full breakdown of the economy so that we can see exactly where the money is coming from.
I have noted the increase in interest, over the past year or two, in micronational economics with projects such as the SJEP and the MEG. Recently, the new “Glastieven Model” of economics correctly identified the faults in many of these earlier projects. Their focus was on finance, banks and stock markets, institutions which were useless without any proper businesses to invest in. The few businesses which did exist were extremely niche and offered no practical rate of return. As a result, these systems soon fell into inactivity. The Glastieven Model correctly pointed out that micronational economics is not the same as micronational politics, micronational diplomacy or micronational law. While those can exist as ends to themselves, micronational economics requires more incentives to get the ball rolling. This is because macronations offer much more lucrative opportunities to make money than micronations. People need to buy day-to-day goods such as food, and micronations usually offer nowhere near that level of income, so why would anybody bother if they could just get a macronational job instead, which actually pays the bills?
Whilst the Glastieven Model was initially on the right track, its aversion to working with the macronational economy let it down. It opted to artificially create supply and demand through the use of its own currency, something which I see as the wrong approach. I don’t see anything wrong with integrating your economy with the macronational economy. Surely all macronational economies are integrated into the global economy? Look at it this way: the very nature of micronations means that trade with the surrounding macronation is absolutely vital. Our populations are too small to provide a sustainable number of customers, and we don’t have the raw resources and the labour force necessary to build everything from scratch. Our approach is as follows:
Identify the resources you have available. For example, in Adammia, we have a pear tree, a plum tree, wine-making equipment, and computers which can be used for programming. What skills do your citizens have? In Adammia, I can code, and my grandfather can make wine. Then, offer incentives for people to set up companies which use these various resources. Wine production was already taking place here before Adammia was founded, so it wasn’t difficult to have the operation transformed into a micronational business. You shouldn’t count anything that cannot reasonably be taxed. You may not choose to impose taxes, but in my view, one of the main purposes of creating a micronational economy is to provide your government with extra income. It’s a more fun way of raising funds for your micronation without going after people’s macronational earnings, which is likely to fall flat on its face as people need those earnings for day-to-day living. You can impose a flat rate on citizens in such a manner, but it has to be at an extremely low level to avoid upsetting people – this is why the Adammic Contributions Scheme is only at 50p per month. The addition of tax revenue from our economy gave a significant boost to government income on top of the Contributions Scheme. When it comes to identifying potential sectors which could be capitalised on, it’s often good to investigate people’s hobbies. As I’ve said, most citizens won’t want to have their macronational job taxed. If they work from home, or own a farm, or something like that, then the economic activity is indeed taking place on your territory, but if all the income is coming from outside, and is all needed to spent on goods from outside, it can’t really be considered part of your economy. However, some people may have hobbies which involve making something; before Adammia came along, my main hobby was making YouTube videos, and my grandfather had been making wine for years. The government should be offering these potential CEOs a deal: we will help you monetise what you make, we will use our national infrastructure to connect you with potential customers, and we will do all the accounting for you. In return, we take X% of the profits as taxes, and you get to keep the rest. Citizens now have a way of making a little bit of money on the side doing something they enjoy, with support from your government. If you already have some money sitting in the Treasury, you could also provide your new companies with some extra start-up equity, giving your government a cut of the dividends on top of the tax revenue.
From then on, it’s pretty straightforward. The government will probably have to actively encourage the economy to get started at first, but hopefully your new companies will get settled into a routine. Of course, always be aware of macronational law – this is why Adammia can’t export its wine. It will often be necessary to sell products at a fraction of their market value in order to encourage customers. It’s highly likely that the value of your GDP will be much lower than the macronational market value of all your goods and services, but there’s not much which can be done about that. At the end of the day, it doesn’t matter too much, because this is only supplementary income derived from hobbies, rather than a full-time job. The government should always be looking to support the nation’s businesses. This may involve setting up the necessary infrastructure to trade with other micronations or macronational customers (I’ve always been sceptical of trade between micronations because the shipping costs tend to outweigh the value of the goods, rendering the transaction at best extremely inefficient, and at worst counter-productive, but PayPal is your friend here, and as long as you are offering a unique product, they will probably be willing to pay the shipping fees – this business model has worked well for the Lostislandic firm MicroFlag). If you are lucky enough to attract tourists to your nation, they can be an excellent way to make a bit of money for your companies.
A lot of the time, economic activity may be very slow – it’s not uncommon for companies in Adammia to return quarterly reports in which there are 0 sales. However, provided the government continues to provide encouragement, revenues will eventually add up, which is how Adammia gets its annual GDP figure hovering around the £120 mark. Throughout all this, we have deliberately avoided creating a currency. In our view, a currency which would have to be converted into GBP would only slow us down. It would make our companies less attractive to potential customers who would have to make the conversion, and it would make it more difficult for the companies to reinvest their earnings, because if no company exists in the nation to provide what they need (presumably, for example, your nation does not have a factory in it), they will have to import what they need from outside. We have also avoided the use of banks or stock markets. A micronational economy will likely only ever have a handful of companies at best, and maybe only one or two investors – a stock market simply cannot function under these conditions. Maybe if more countries followed our model, there would be enough companies and investors in the community to warrant an intermicronational stock exchange as has been attempted in the past. One of the main reasons why past stock exchanges failed was because the companies listed on them had no real value – they were too niche, and made earnings using currencies which could not be converted into macronational currencies. I cannot state how important it is that any micronational currency must be easily convertible into macronational currencies, because like it or not, we are reliant on the macronational economy if we want our companies to grow (which, of course is the point of a stock exchange – no point investing if you can’t expect a return on your investment). But fiscal policy is a debate for another day, and it’s not a debate I’m particularly interested in, because ultimately it isn’t what determines your nation’s wealth. If you want a micronational economy to work, it’s not finance and currency you should be focusing on – it’s industry and productivity.