When one either thinks about, examines or studies economics, the more one tends to arrive at the conclusion that it is basically an evolving theory. Or perhaps better said, as a continually evolving set of theories. Something that fits THAT MOMENT IN TIME. One is often left with the impression that some theories are, shall we say "tailored to fit a circumstance--or set of circumstances." An explanation as it were. Others again possibly seem to have been able to foretell future economic events. In other words events proved the validity of someone's economic theory. Thus some economic theories are proved or shown to be better than others. Or said another way, some were worse than others. Yet when all is said and done, nothing ever remains the same. Economic events unfold, both domestically as well as globally. Domestic events will act upon an individual country's economy. So too will global events impact upon one or more, or even all countries around the world. In other words, what may work at the moment, or may have worked well or reasonably well in the past, is no guarantee that it will work in the future. Future circumstances will dictate otherwise.

The evolving globalization in trade, and the continual globalization of the movement of capital funds around the world is already exerting tremendous pressure on individual economies. As this takes place, it affects domestic Stock Markets, domestic Banking, domestic currencies and domestic interest rates. In other words, no country is anymore the master of it's own destiny. When Financial Institutions or Conglomerates are able to shift massive funds in and out of countries at will, it bodes ill for the economic well-being of many countries. This movement of capital flows is not limited to these institutions only. Even individuals are today capable of moving Billions in a number of currencies in and out of institutions and in and out of countries. The buying and selling of currencies alone on a daily--24 hr. basis, affects not only the values of these currencies, but this activity makes a mockery of the perceived validity of Exchange Rates.

One of the activities taking place on Stock Markets continually amaze one. It is illegal to sell something you do not own. If one purports to be worth say "a million dollars " in order to create credibility or credit, it is regarded as an enactment of fraud in the eyes of the law. How can one legally sell something--or offer for sale something that one does not own or perhaps has possession of ? Yet it is deemed to be perfectly legal to sell shares that one is not the legal owner of at the time of the offer of sale. To " sell short!! " How does one "legalize fraud"? It seems possible to even insure or "hedge" investments not even held. To buy or sell "options" which in reality may either not exist, or be a tangible asset.

Let us for a moment examine the theory of lowering tax rates to induce consumer spending. There is no doubt at all that more money left in the pockets of citizens after tax, will indeed be available to be spent, thus creating sales, which in turn is expected to increase job creation. The expected increase in sales should indeed create more jobs, thus creating a larger tax base to replace the original lowering of the tax rate. Whether taxed at a lower rate, or abandoning certain taxes is let us say not material to our examination of this concept. We now enter the domain of "expectation." Perhaps of "probability." We will go a stage further and use the term 'possibilities" as well.

Before we start to surmise where this additional money will be spent, we should perhaps give thought to what use the original taxes were put. Was the government running budget deficits or were there excess funds to budget expenditures? Were there areas of constraint where say Education or Health or Social Services were under funded, while perhaps Military and other expenditures ( including excess "governing costs" ) were being given more than warranted attention. In other words, were taxes being wisely applied and spent. All these factors will have a bearing on the outcome of "tax diminution." Add to all these imponderables the time lapse between less tax coming in--and new taxes expected from new job creation.

Who can say where this expected extra available money will be spent--or how spent. It will have a vital bearing on the expected outcome of additional job creation. How much will go into "savings" or bank or institutional investment where little or no new jobs will be created. How much into Mutual Funds or directly into Stock Markets, where again there will be little or no job creation. What if into foreign Markets or overseas investment. The imponderable is endless. If we were to take this argument a stage further, and add in the concept of "Reaganomics" where not only are taxes lowered, but deficits are run in order to create " job activity," governments create jobs at the same time as massive government debt is created. In consequence of all this, as the increased debt has to be financed within budgets, less money is available and government resorts to maintaining expenditures by new debt creation.

There is as well another economic theory or concept. That of manipulating interest rates. Here again there is no doubt that lowering interest rates does create consumer spending and resultant job creation. But at what cost. Cheap money is the fastest and easiest way to create consumerism and job creation. Without a single doubt. But at what cost? One has yet to see cheap money wisely spent without the creation of additional debt. MASSIVE DEBT! The very fact that money is "so cheap", presages that there is an abundance available--easily available at shall we say "little cost." Here-in lies the seeds of problems to come. While the boom is on, it all seems fine. THIS IS FOREVER! Alas not! Nothing lasts forever. One day, for whatever reason, there is an economic slowdown. Even to the extent that government--in reality the Reserve Bank or Federal Bank engineers this slowdown to stop or slow down the possibility of inflation or inflationary pressures.

Having arrived at this stage--what now? Individuals will have long ago disposed of their tax savings and because of cheap and abundant money be possibly heavily in debt. Having now being called upon to repay or finance and repay these debts at interest rates way above the rate at which these were borrowed, find themselves in financial constraint. Sales plunge--as do company profits. At the same time companies who borrowed heavily in order to meet the extra demand and consequent job creation, have either their backs to the wall, and / or are additionally laying off workers. Stock Markets take a slide. One way! Share prices way down and peoples savings ravaged. What of the building boom. Office and apartment blocks built with cheap money. Large expenditures on new and larger homes. What a price to pay for low interest rates!

What is the point we are trying to make with all these scenarios. It is that economic theory only works to an extent. In some cases a larger extent--and in other cases to a lesser extent And sad to say--some not at all. Essentially one is invariably left with the opinion that most economic theory--is just that! THEORY!! Perhaps a concept that fits or will fit a certain circumstance or circumstances. However where these circumstances don't exist, some of these theories will not work. And finally where they are seen to work, they will do so for only a period of time. As times change so will economic theory have to change as well in order to be effective.

Let us shift our attention to global trade and global economics. There is an old saying which one thinks may aptly describe global trade and global economics. It goes as follows. " One man's meat--is another man's poison." Which says that what may be good for one--may not necessarily be good for someone else. Perhaps to be less harsh and more to the point, neither of these are EQUALLY GOOD to two or more parties. Some countries are getting more than their fair share of global trade, and decidedly a far greater share of the wealth that flows from global trade. When one speaks of the term " Global Economics" we think it correct and advisable not to refer to the generation of a country's domestic wealth. Not to the wealth created within it's own borders by it's own citizens. After all, what right has anyone to interfere with the domestic policies or affairs of another country. Please note that the word "policies" is used --and NOT the word INTERESTS. For when a country's "interests" impact on the WEALTH CREATION of other countries---it is decidedly of major importance to others.

The problem we are faced with in the concept of Global Trade, is the very act of GLOBALIZATION. The concept that says that by opening up the borders of all countries to the UNRESTRICTED FLOW of world goods will be of EQUAL BENEFIT to ALL!! It does not work that way! We wish it were so!!! One understands that the inter-action of doing business between two parties may eventually create a greater degree of wealth between the two. Fair enough! These two parties may possibly understand that the wealth creation may not be equal between them. But that is their decision! But when a GLOBAL AUTHORITY such as the WORLD TRADE ORGANIZATION lays down the rules it becomes " a different ball game!" A term comes to mind which one is loath to use, yet one at times feels that it is justifiable in certain circumstances. The term is, "a hidden agenda." When " a country " or a "government" has a hidden agenda in it's dealings between one or more countries, then we are decidedly not talking about, shall we say, "an equal opportunity." Decidedly not so! We are not referring to the people of a country, but to either certain government officials, companies or conglomerates, or other entities who have a vested interest in obtaining an unfair advantage over others in their dealings on an International stage.

Let us examine and remark on a few of these. For example the use of Import Tariffs and excise taxes on goods. There are several reasons why governments impose these, among which is the obvious reason that the country imposing these requires this as additional income. Another very important reason is to protect local industry who may not be in a position to compete with the price of imported goods. This factor by far exceeds the mere requirement of additional funds which may be required. Small countries have usually small industries. Quite apart from the fact that they may not be in a position to be competitive in price, is the more important factor which relates to the employment of the country's citizens. After all, local industry and business are the source from which government receives it's taxes. While it is of vital importance for smaller countries, or less economically powerful countries to export and earn the necessary foreign funds to pay for their imports, this may not be the case with others with whom they trade. For example, there are countries whose domestic markets absorb 65% to 70 % of their domestic output; whereas others may have to rely on 50% or more of their output to be exported. So the WORLD TRADE ORGANIZATION should have less onerous rules when determining what is "fair labor practice" and as well allow smaller and weaker countries to still impose import tariffs, while requiring their larger trading partners to lower or even dispose of entirely any and all import tariffs.

A similar dispensation should apply when they consider what is--and what is not "a subsidy." This is a sore point in trade relations when brought up for discussion and / or for a ruling by the World Trade Organization. Somehow subsidies are obviously "seen" when given by the smaller or weaker country, whereas they are not "seen" to be in evidence in the larger or stronger country. It often amazes one to see how effectively some countries can camouflage subsidies, while others are unable to do so.

The original ideals of the International Monetary Fund and the World Bank were very laudable. So too can one say it of "The United Nations." However today the U.N. is regarded as dysfunctional and in-effectual and by the same token the functions of the I.M.F. and the World Bank are shall we say, not as popular as they were originally. As this article is merely "philosophical thoughts on economics and economic theory," it is not for us to pass judgment or offer alternatives. At best it may turn out to be merely comment and at times a little advice as well. Having said that, we think it now time that the functions of the I.M.F. and the World Bank should be re-assessed. A lot of what they do today is either seen not to work, or to be at times even unfair in its rules and applications. At times even biased in its distribution of funds and the onerous and often ridiculous rules of enforcement. Perhaps ENOUGH SAID!!

Another aspect of world trade is the cross-values of world currencies. Imports have to be paid for, and thus there has to be a means of payment. Today's cross-values of currencies are NONSENSICAL. They bear no relation to "reality." Essentially, what is REALITY? There is not a single country that can today define the worth of its own currency. THAT'S REALITY!! No currency is today backed wholly by tangible assets. They are long off the Gold Standard. The nonsensical attitude that currencies find their own level of value if left to "market forces" is laughable--if not tragic. Perhaps the next rhetorical question should be: " What are market forces?" Where ONE PERSON can over-night buy and sell billions of "dollars" worth of a country's currency--and wreck its economy in the process--IS THAT MARKET FORCES?!! Where banks and financial institutions can hourly accomplish the same result--is that also "market forces?" What in the world has this to do with world trade. What has this to do with the NET WORTH of a currency. ANY CURRENCY! One has only to look at the havoc that is accomplished by the movement of vast funds overnight between one Stock Exchange and another International Exchange, to start wondering where all this is taking us. It is high time that another "Bretton Woods" is called for, to bring some sense into this chaotic situation. Even the mere domestic movement up or down of interest rates over-night alters world currency cross-reference values . This has to stop! And quickly so. Whether we re-monetize gold to wholly back currencies, or at least establish a common relationship percentage-wise to back all currencies equally, it had better be done sooner than later, before something dramatic "hit's the fan" world-wide.

In conclusion, global economic theory or a global economic strategy is not keeping pace with the global expansion of trade and the global movement of capital and capital structures. Or worse still, these economic constraints may not exist at all. The ever increasing power of Conglomerates being established world-wide without any International constraints being in place is to say-the-least a frightening prospect. One is left to imagining something along the following lines. An army of tin or lead soldiers being placed on an imaginary battlefield, awaiting someone's call, "let the battle begin!" Or perhaps it is to be a game of chess. "You can take my "Australia"-and I will take your" Switzerland". Are they talking of countries, or is it "Market Share."

One sees the imaginary hand of a "Kasparov" hovering in-decisively above the board as he says," let us get rid of the pawns; and see who gets China." Those words that one increasingly hears today such as, "It is not in our country's economic interests" or "in our country's sphere of influence or "within the basic concepts of our economic strategy," bear witness to what we may have to fear in the future. History has seen the rise and fall of many empires, it is perhaps now witnessing the rise of Economic Empires as it is presently unfolding.