The model of mercantilistic financial philosophy is that the entire consumption and product of the goods happens inside the country's borders. In modern terminology, the word "country" should replace by using the term, "economic area". So the money will circle inside the economic area. The limit of the economic area is the border of the national state or it can be the union of the countries.
The reason why the money flows outside the borders of the economic areas. is some goods are brought from there. There is always a need for raw materials that cannot produce in the economic area. When some goods are wanted to bring to economic area the bringer must pay the price. And the money travels to foreign areas.
Those goods might be raw materials, machines, or services. If in the foreign country is made the new machine that brings benefit for the state. The mercantilistic nation wants to buy it. That machine can be some new ship engine or jet fighter. That means the economic office can buy that machine from that country outside the economic area.
But the spare parts and other things require contracts. So maybe the economic office will bring the civil engineer from outside the economic border for making that machine. And in both cases, the money will travel outside the economic area. Of course, the salary for the engineer can be delayed. That means the country can deny paying for the service, but the stupid question is how many engineers will come to offer services for that kind of nation?
But mercantilism is still the thing that dominates things like the economic way of thinking. When the nations are pushing the customs border away and make the internal marketing areas they are offering the gigger area for mercantilism. The problem with the economy that rests on internal marketing is that there is always a loss of money. There are always goods that require outcoming raw materials. And when that raw material is brought outside the customs border.
The need is the large-scale investments in the economic area.
That means the level of currency is decreasing. In economics, the money or currency is the energy, that rotates the machine called economics. Even if the money just circles inside some area, there is always the loss of currency. The outcoming currency and investments are bringing the money to the cash of the economic area. The large-scale investments are bringing money for the companies that that are paying taxes for the government.
But the problem is that if the economic area felt hostile the company will move its headquarters to another country or economic area. That means the government loses the major part of the tax incoming that is coming from that company. And that makes economic planning difficult. If the personal consumption or people turns too low, that affects sales of the everyday goods.
That harms the areas that are employing many people. That thing decreases votes in the next elections. If the companies are paying high taxes, that means they are transferring their address outside the economic border. And that leaves the country without those tax incomings. The individual people cannot support the state economy enough. And the need is the great, large scale investments that can bring more money to the machine called state
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