The International Writers Magazine - Globalisation Part One
- An essay
GLOBAL ECONOMY PART I
A layman's guide to global finance
with, Im not an economist. I dont know the first thing about
extrapolating the percentages of the Gross Domestic Product to include
the inversion factor of a Central Banks base rate. I havent
a clue why Mr Greenspan didnt retire at 65 and become yet another
old age pensioner, nor who invented the phrase when the USA sneezes
the rest of the world catches pneumonia. I therefore consider
myself a normal John Doe who had some sort of a professional life, read
a few books, newspapers and magazines and by and large always tried
to figure our what makes the world go round. I do feel, however like
millions of other fellow humans on this planet that regardless of whether
we understand the reasons why, by God were all in this same economic
rat race. Thats why I thought Id have a stab at trying to
piece together in my own laymans language what I think of todays
global economic scenario and what is blatantly wrong or right but above
all, what could possible happen in the future.
Lets get some basics down. Three quarters of the population can
barely rub two sticks together to feed themselves. Thats right,
we have a few extravagantly rich and the rest are starving, from Nike
sneakers in France to shoeless kids in Rwanda. Then we have politicians
and multinationals, both are the masters and rulers of our destiny.
The former lay down the rules of the game either by force or democracy
for the latter to side step regardless and make bags of money. From
hence we move onto the base of subsistence, food and oil. Nobody, repeat
nobody could survive if they didnt at least have a bowl of rice,
or a stove to keep warm, and yet many are dying of starvation and freezing
to death in winter. Others couldnt care less as they stock up
with champagne and fill the tanks of their gas-guzzlers with that black
muck from the Middle East before their ski trip to the Alps. Unfortunately,
that has always been the way of the world and seems as if it is continuing
down the same path. But can it change? The key may lie in understanding
the evolution so far, and the rapid pace of todays globalisation.
When we talk about evolution we naturally refer to the advancement of
civilisation and technology over the past centuries. As man learned
more about his environment he also devised the tools to conquer it.
Education, science and communication moved from simple sign languages
and smoke signals to a plethora of academic and scientific achievements
and networks of global telecommunications. He learned to control and
elevate himself above his fellow animals. He also believed in the 'everafter'
and felt that a divine inspiration drove him forward in the name of
God. The trouble is that his religious differences have created eternal
wars. But there is one area that he didnt have control of and
that was pace. Todays goodies are in tomorrows history books.
This is why the future economy of the world is so unstable. It is going
too fast and is out of control for the normal life span of humanity.
We live longer but die shorter!
Man had created institutions to control financial developments. Two
fundamental ones were banks and stock markets. Most people understand
how they work, or do they? Originally, banks were invented
so that people who had a lot of money to spare could hand it over to
an intermediary for safekeeping and earn a little bit on
the side called interest. The bank in turn would dole out
most of it to those who needed money and would cash in (pardon the pun
again!) on it by charging a fee, also called interest.
The difference in the interest was the banks profit.
Everyone was happy. Then came evolution. Banks began to do far more
with money that just loan it out. They invested. They became national
and international businesses in their own right.
The other animals, stock markets, also emerged as a simple mechanism
for humans to help each other. If someone wanted to start a business
but had no cash, he would ask a group of friends to lend
him the money. In turn he would give them a share in the
business as well as a percentage of the profits should the venture develop.
If it grew, the owner and his lenders benefited. If it went under, well,
tough luck and lets have another go Joe!
However, they too decided to go national and international and before
long banks and stock markets were branching out in all directions to
the extent that the original concept disappeared. Banks are involved
in moving money around the world, manipulating governments and nations
whilst stock markets allow masses of companies to lure yours and my
odd shekels for their own kind of manipulation of the worlds economy.
What then does all this mean to the man on the street?
Consumerism! The west has learned to spend, thanks to banks and consume
(more than it needs) thanks to multinationals and is rapidly teaching
the rest of the world how to do it. Consumerism is also the key to rapid
evolution. Whereas the citizens of the developed world during the turn
of the nineteenth century cherished their earned possessions, todays
wealthy population cannot wait to get rid of what they have for the
new stuff on the market shelves. Be it cars, washing machines or diet
foods, multinationals spend a great deal of their time inventing new
products as fast as they can. Banks, specially governmental ones, are
also in on the game and just sit back and watch the cash come in and
out; manipulating the interest rates accordingly to make sure everyone
benefits, so they think!
The cliché statements of the poor are getting poorer
and the rich richer are right on track. Simple examples
of these extremes are the HIV/Aids epidemic in Africa. On the one hand
the poor are dying of the disease and cannot afford the medication,
whilst on the other, todays wealthy kids are swapping Game Boy
annihilation programs by the dozen. Condoms in some shantytowns of Latin
America are considered a luxury, the same as Viagra pills are in central
Portugal, if you get the gist! But back to the pace of evolution, what
is the real threat? Global Saturation.
Ive said it before and will say it again; our rich world is saturated
with consumer goods, whereas our poor ones are screaming for help. We
are going so fast that even our kids education is obsolete by
the time they obtain their degree. Start a factory today in Europe and
either the product is no longer needed within a decade or cheap labour
in another part of the world will shut it down and move it overseas.
A blockbusting film hits the top of the list, wins an Oscar and dies
three years later. Ive already written about my views on music!
But the real indicator is reflected in the original institutions. Bank
interest rates are so negligible in the West that they have killed the
original business and stock markets are just not growing because listed
companies are sprouting and dying far to rapidly for investors to keep
up. But wiat up, where is all this leading?
Without diverting this whole essay to the monumental political and ecological
mess that this planet is suffering from at the moment, the future survival
of our global economy depends on two things, the massive reduction of
world conflicts and the slowdown of indiscriminate wealth concentratged
on the few. Poor countries unalbe to do research and development and
or invest in education and industry will just grow poorer (or reach
that level where Sony or Ford relocate to build a factory there to exploit
their low wage infrastructure. Its the fable of the turtle and
the hare all over again!
© James Skinner January 2004.
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Part Two: Global Linkage here
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