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The Big Picture
Carrying this thought a stage further, the larger the picture the more that “detail” comes to light, as if viewed under magnification. There is perhaps one problem attached to this examination. Is it seen as a static picture frozen in time, or is it to be viewed as if it were seen on a cinema screen, continuously moving and evolving. The picture we see is as if it were depicted as a revolving globe, as “Planet Earth” viewed from outer space. Perhaps as seen by a camera situated on a satellite suspended in space, able to be magnified by the lens of the camera when required. It presents a sorry picture The camera focuses on Europe. The specific area covered is that of the present member countries of the European Union, and that of the intended ten additional countries soon to be given membership. We ponder its impact and its future in the global context. Will it have an international effect on the global economy, or will its effect be limited to the overall economy of its member states or merely to just several of its members. While we ponder these thoughts, our mind conjures up this scene We see the aftermath of a shipwreck. A mist hangs low over the water. As it rises we see six survivors in life jackets. To us they represent the original six members of the European Union. A little while later the mist thins out and four more swimmers are seen without life jackets. The four shout for assistance and are told to swim over and be supported by those in life Jackets. We hallucinate that these four represent the first additions to the Union. They are kept afloat by the six, yet the effect is a perception that the buoyancy of those life jackets has become just a little less effective. The mist begins to rise and another five survivors are seen without life jackets. They too are invited to join the group. However, there is now a problem as to how all these additional people are to be kept afloat. After discussion, it is decided that for a while those without jackets will “tread water” to give those with jackets a break, then each of the original six take turns in holding a survivor by each hand, but again the buoyancy is affected and while this is ongoing, calls are heard for assistance, and another ten survivors are seen. They slowly swim over and and request to join the fifteen. The problem now is how to cope with these additional survivors. A decision is made to pass those six life jackets around, on condition that whoever has one on supports two others while the balance tread water. Slowly and perceptibly it becomes apparent that all these survivors are becoming weaker as time goes by and they await rescue. The mist starts to descend on this scene. We ponder the outcome. Do they become ever weaker to the extend that some drift away, or do the original six demand their life jackets back and slowly swim away with the advice that those remaining tread water for as long as they can until rescue arrives. We realize that what we hallucinate is the economic survival and success of the proposed enlarged European Union It is a somber thought and a somber picture. The economic theory underlying this continued expansion is evidently that each economy will in turn support the others. Strength in numbers perhaps, in buying power to sustain the whole. The possible effect that unrestricted trade and open borders will result in the expansion and growing strength of each member’s economy Somehow, the thought arises that no thought was ever given, that this could end up in the weakening of the stronger economies as they support the weaker for a given length in time. Those swimmers and the life jackets keep intruding in our mind. Let us examine the original six. Germany was the economic engine that drove those six economies. When this was expanded to ten, with the German economy in top gear, and the support of the other original members, the economies of all its members was sustained. Then the expansion to fifteen. Imperceptibly there was a weakening of the whole and the strain on Germany was intolerable. A new Germany had arisen, encompassing East Germany into the economic conundrum. For a while everyone was “treading water” as the economic boom in the United States boosted the general growth of its trading partners and World economic expansion in trade resulted. At this stage “globalization” and “free trade” were the “buzz” words. The economic euphoria that existed maintained “the good times would last forever.” This was that time from the year 1990 to the year 2000. Ignored was the fact that the world’s second largest economy, that of Japan was faltering. All eyes were on the United States and Europe. While this was taking place, other factors as well were evolving. The Russian communist bloc abandoning the communist system at the same time that Russia itself split into numerous independent states. As a result the Balkans erupted into ethnic violence. Yugoslavia in turmoil and Czechoslovakia splitting into the Czech Republic and Slovenia. The war in Chechnya occupying Russia after a disastrous period spanning many years in Afghanistan. NATO was kept busy trying to keep the peace in Europe, while peacekeeping forces under the umbrella of the United Nations were busy containing mayhem in the African Continent. The Gulf War occupied the attention of the United States for a short period of time, yet came to an inconclusive end result. A busy time was being had by all. Towards the end of that period came the “Asian Meltdown” shattering the economies of South Korea, Thailand, Taiwan and Singapore. All of this was a prelude to the ‘Bubbles” that burst ---- shattering the dreams of countless millions of people locked into stock markets worldwide It took this to finally grab the attention of economists. We will return to this aspect when examining the overall global economy at a later stage. The Middle East spawned terrorist groups and Afghanistan became a haven for its chief architects. Africa was and still is in economic collapse, beset by constant tribal wars, famine and Aids. The World spins on its axis, and the satellite camera focuses on the North American continent. Here during the same period the North American Free Trade Association was born. First between Canada and the United States, to be followed by the addition of Mexico into the agreement. It made economic sense. One continent with common borders to the North as well as to the South. Along the Southern border within Mexico, American owned assembly plants manned by cheap non-unionized labour. An added bonus was the available supply of petroleum from Mexican oil fields. To the North a sophisticated and highly skilled labour force with a currency weaker than that of the U.S. dollar. An abundant supply of natural gas, oil from the tar sands, an excess of electrical power generation to be tapped and vast natural forests for timber requirement. All three economies expanded for mutual benefit. Here was “free trade” in action, to set as an example to the rest of the world. One would have thought that this was an ideal situation. Yet there has been a great deal of dissention. Forgotten is the fact that there is a great deal of difference to political thought and action as it is to economic thought and action. FREE TRADE it is in name only! The moment increased trade intruded on domestic production it resulted in political pressure being enacted by commerce and industry to impose tariffs and quotas. To this one has to add cheaper and abundant labour available in the Far East. The inherent weakness to the theory of “free trade” is that importers and exporters look for the cheapest markets for the supply of goods and services and cannot be confined by trade treaties which offer them a lesser benefit than can be found elsewhere. Recent actions bear this out. Disputes over the cost of steel rail, pork bellies, the supply and price of lumber and that of grains into the U.S. from Canada. In Mexico the closing of manufacturing plants in favour of new ones being opened in China and elsewhere in the Far East. The remarkable sustained growth of the American economy between 1990 and the year 2000 was fueled by technology. The shift from what was previously called the “electronic era “ seemed to have been un-noticed to a large extent by both Europe and Japan. While Japan had still clung to the export of electronic equipment, the “world” in the form of the United States of America and later that of Europe, had moved on. At this stage it is important to note that the cost of labour in Japan had risen above that of the United States. At the same time debt had increased to the point where it was 150% of G.D.P The final “nail in the coffin” to the Japanese economy, was the continual decline in interest rates engineered by The Bank of Japan until it went into negative territory, thus setting up deflation. Why has this been emphasized? Because a similar scenario is presently unfolding in the United States. While debt has not as yet reached the point where it exceeds the G.D.P. it is on that slippery path towards that situation. Deficit budget spending added to massive balance of payment deficits. Interest rates set by the Federal Reserve Bank at the time that this is being written (late June 2003) has been set at 1%. What is the state of the economy at this stage; over two million jobs recently lost. To this one has to add three years of no job creation for perhaps another two million young people who finished school and university education. Others have more than likely found temporary employment in replacing the jobs of retirees. Recent figures estimate the G.D.P as being in the region of $10 Trillion (and shrinking) and the National Debt as being in the region of $8.875 Trillion (and growing). Thus debt to G.D.P is 88.75% and growing. Massive financial losses on the stock markets and massive debt write-downs. As interest rates drop it creates new debt, not all of which goes into consumer purchasing. Some of this “cheap” money is once again being invested in share purchase, pushing prices back up again to unsustainable levels, and massive trade deficits occur as cheap goods flood in from the Far East, fuelled to a large extent by American owned plants situated in low cost labour countries. Thus is being born that as yet unrecognized “jobless economic recovery. What is lost to local economists is that the jobs have gone elsewhere! The economy of the United States is based on the following: Agricultural output. 2% Industrial output. 18% Services. 80% Exports. $725 Billion Imports. $1.150.Trillion We will remark on these figures when examining the Global Economy. It is impossible for an economy to recover, without the creation of domestic jobs. While the jobs are created elsewhere, domestic activity hides this fact to the extent that low interest rates are both futile and irrelevant. In actual fact it becomes a detrimental factor to a sustainable economy. It is an inexorable march towards deflation and the lessons of Japan have not been learnt. The camera moves South, and the South American continent comes into view. Years ago the countries of this continent were derisively referred to by Americans as “ The Banana Republics,” that was until those selfsame people got to become the owners of those banana plantations. Be that as it may, over the years the countries within that continent thrived and grew economically despite years of dictatorship and military rule. Before the discovery and exploitation of the Venezuelan oilfields, these countries economies were based primarily on agricultural output and the export of base minerals and semi-precious stones. Manufacturing plants were to a large extent foreign owned and the economies of these countries developed with a tremendous disparity of wealth between the small percentage of those who “had” and the millions of the poor who “had not.” Thirty-five years ago an economist in Brazil described his country as follows. “Brazil is a country of 130 million people of whom only 30 million are gainfully employed. Of these, only 7 million are paying taxes. How can 7 million people sustain a population of 130 million?” Overall this could have been said for any one of those South American countries. While it would have been logical for these countries to become major trading partners to each other being on one continent, they were all “in the same boat” financially for similar reasons. Thus their future lies in each of them gaining a greater share of foreign markets. That brings the focus onto “free trade” and “globalization.” While economics can at times be described as “putting theory into practice,” there are no guarantees that these theories can always work, or do work. The time has been reached to examine the Global Economy within a Global context. It is by no means “the best of times.” The World has been in recession for the last three years and that of Japan the second strongest economy, for twelve years. Germany which was the economic engine of Europe mired in debt due to absorbing East Germany and as well as possibly owed in the region of $40 Billion by Russia. The contemplated absorption of a further ten economies into the mix can weaken the whole economy of the European Union, just as well as it is hoped to strengthen it. The timing is possibly wrong as a recessionary phase is not the time to take on more responsibilities, especially so if the vast majority of these have weak economies. It may be a relevant factor to state that the present European Union budget expends 50% of its income in supporting agricultural subsidies, another 30% or more as the costs of administering its various political administrative bodies, leaving precious little to be shared by all its members for other purposes. While there is talk of reducing these subsidies in the future, we would think this to be exceedingly difficult to accomplish with 10 more new members requiring their share of those agricultural subsidies. One should possibly divide the World Economy into three parts of which Europe is one. The second is the North American continent, with the economic engine being the United States. The third would be the economies of the Far East, with the possibility that China may eventually be its economic engine. Japan, when its economy eventually recovers could possibly be classified as either being in the economic “sphere” of Europe, or that of the North American continent, for the reason that its wage cost factor precludes it from being within that of the Far East economies. The only other large continent that of Africa has been an “economic basket case” for years and one cannot see it playing any positive economic role for the next fifty years or more---if ever. The greatest problem facing the World is the pervasive debt issue. If there is a country where this does not apply, they have other economic problems. There was a time when companies thrived and expanded through the use of accumulated assets (cash). This has not been the case during the last worldwide economic boom that was primarily achieved by the massive accumulation of debt. Here we are faced with a conundrum, because without debt, the concept of interest rates becomes a nonsensical factor. Who would advance loans of whatever nature, without receiving a benefit in return. Prior to the Second World War. economies grew at a slow pace without the use of major debt instruments. Putting aside stock market investment by the public as a means to enhance wealth over the long term, companies expanded through the accumulation and use of generated profits, and only turned to debt instruments as a last resort. However after the war, it became customary to utilize debt as their primary objective. This fueled the tremendous economic expansion worldwide between the years 1990 to the year 2000. The World was so awash with investment capital, that the request for $5 or $10 Billion for one company to purchase another company was regarded as a minor request, and that of $40 / $50 or $60 Billion seemed not to “raise eyebrows.” Countries were rapidly increasing their debt load as the World Bank and the International Monetary Fund disbursed ever-larger loans, ostensibly to increase World trade. Stock markets boomed while the euphoria of instant wealth took hold. The end to all this was dramatic and catastrophic. Three years have gone by since it was recognized that the economies of the entire world was now in a recession. Little ---if anything has been done, other than that the Central Banks of the World’s major economies reducing interest rates on a continuing rate to encourage consumer spending. To say the least, there are either minor or invisible positive results that have been generated from this strategy. An end result has been the formation of more debt, specifically in the hands of the consumer who is least able to handle the increased debt load. Let us examine this situation for a moment. For those who lost their money on the stock market, cheap new debt availability provides them with the opportunity to recoup their losses, rather than expenditure elsewhere. That surely is an obvious thought, recently born out by stock market activity resulting in share price value increases unrelated to economic results The same can be said for the activities of both the World Bank and that of the International Monetary Fund. Their end results have been countries going into default on their international debts, apart from their inability to cope with their domestic debt. To say the least, IT IS A TOTAL DISASTER!! WHAT NOW!! To start with, it is a complicated situation. One has to deal with domestic as well as an international situation, possibly at the same time. Basically, to accomplish this, it requires both a political as well as an economic solution --- at the same time. A TALL ORDER! To say the least! There are two things lacking in the World today. The first is A WORLD STATESMAN with a GLOBAL VISION and the courage and the audacity to carry it out. The second is A WORLD ECONOMIST With a GLOBAL ECONOMIC PLAN and the wisdom and strength of purpose to influence the chief economists of other nations. We have The United Nations: We have GATT: We have The G7 (or is it really the G8). We have The World Bank ---and we have the International Monetary Fund. WE have the International Economic Forum. We have countless bodies that meet annually or bi-annually. They arrive with briefcases or suitcases full of words or ideas. They dispense platitudes and empty phrases, and depart with the words” see you next “year” at…” with little or nothing accomplished, other than promises unfulfilled. The United Nations, not “united.” All the other bodies in disarray. Nothing seems to work. The World is crying out for “change,” yet the World has already changed, perhaps never to be the same again. The year 2000 saw the close of one millennium and the start of the next. It was not in reality merely the change in a calendar date, but the start of a new era. Nothing will ever be “the same again.” It spawned a recession like no other. It spawned terrorism worldwide based on religious fanaticism and perhaps economic deprivation and/or ideologies unexplained. Europe and the United States at loggerheads with each other, both politically and economically. Free Trade and Globalization creating new rivalries and new enemies, with a growing stark division dividing the “haves” from the “have nots”. To put it bluntly, the words “free trade” should never have been utilized, and in its place the words “FAIR TRADE” should have been used; for that is what is required by all the World’s trading nations. Surely what is needed is both the opportunity to a reasonable and fair share of the export markets of all the agricultural, mineral and industrial products produced and exported by nations, at an equitable and stable price fair to all. This requires that exiting subsidies be completely done away with or dramatically lowered to defined levels equal and compatible to all participants. That the “quality “ of all products be distinctly defined, to the extent that the poorer nations are able to find acceptance of their products as a separate entity not in competition with that produced by the more sophisticated economies. In order for this to find acceptance, all major exported agricultural and mineral products should be listed at agreed stable prices to be reviewed every two years for possible adjustment up or down. As far as “Globalization” is concerned, it is this factor which is destined to forever change the New Millennium from the Last Millennium. How drastic and dramatic this shall be, depends on how we allow this to unfold. The global economy is like a ship becalmed in the doldrums. The sea like glass. The sails drooping listlessly from the masts. Occasionally a puff of wind stirs the sails and the ship moves a little in the water, then the wind drops and the ship once more still, except perhaps an indiscernible movement promoted by a slight current in the water. This presently is how the global economy is performing. Fits and starts without a discernable direction. All of this is “man made” and the solution can only come from the same source if only we knew how, where and when. To look for a solution, we have to examine the reasons why the global economy is in its present situation, and what the causes are which influence its change between the last millennium and the present one. It started midway through the boom period of the 1990’s. With the expanding global economy, the world’s major conglomerates were in an ever-increasing expansionary phase as well. Thus was born two important factors. The first being massive debt accumulation by these conglomerates borrowing $40 to $80 Billion or more apiece to “merge” with competitors in order to increase market share both domestically and globally. The second was their expansion of production, not locally; but to cheap labour economies overseas. The second factor is possibly more disastrous to the future of “globalization” and the global economy than the first. This above all else is why “things will never be the same again”! When a conglomerate expands its production overseas in preference to domestically, two things happen. The first is a lack of domestic job creation and the second is often job loss as part of the expanded production is re-introduced to the home market for extra profitability. This phenomena is quite apart from debt load and downsizing in a recessionary phase, as it is a common cause between conglomerates competing with each other for global market share. In other words it will be an ongoing factor through both the “good” and the “bad” times. From this will stem economic factors undreamed of by those economists who suffer from “tunnel Vision” and who do not discern the “BIG PICTURE. The shift from high cost production to low cost production economies requires the capital requirement for this to take place. Invariably this capital is not available to be borrowed from within those low cost economies and is consequently raised by the conglomerates in their home market and/or on the international markets. Thus the Western economies are sowing their own demise --- and at the same time paying for the privilege to do so. How naive can we be.? To this one should add the slow denuding of the possible supply of domestic investment capital required to sustain the domestic economy. What seems to be forgotten or ignored by everyone is that terribly important factor which is the basis for both the existence and survival of ALL DOMESTIC ECONOMIES. DOMESTIC JOB CREATION. !! The fact is that the domestically employed is at the same time the domestic consumer. Lose the domestic job, and the domestic consumer is lost. Not creating new jobs domestically means not creating new consumers, with the end result that the economy stagnates. There are economists who argue otherwise, pointing out that the expansion that took place within the European Union ended up with all members economies expanding and prospering. The statement is made that the shift of production from Germany, France and Great Britain to lower cost countries such as Italy, Spain, Portugal and Southern Ireland benefited all the economies of The Union. What was pointed out was that there was the added benefit of wage increases within the lower cost economies, strengthening the overall buying power of all their economies creating a bigger overall economy. This may very well have been the case---but what now? Or perhaps better said, “what next.” This is a “domestic picture” cast within the “global Picture.” While they trade among themselves, it masks what may lie beyond. If Europe were to generate an economy that could survive in isolation, without the need to import or export, then the economists who deny the detrimental effect of “free Trade” and “globalization” could very well be right. However the very concepts of so-called free trade and globalization defines that global trade by Europe has to exist, and it is this factor that will provide the fallacy of that theory that the continued economic expansion of the European Union can prosper. However the adage that “no country can live in isolation” holds as well for that of any economic union of two or more countries. Thus the fate of the European Union as a thriving economy is tied to the fate of the global economy. Economists are of the opinion that the expansion of the global economy will be built on the broadening of free trade and so-called globalization of trade. This then brings us to how trade is conducted and by whom it is conducted. It is possible that conglomerates numbering in the hundreds, scattered among the world’s trading nations, conduct a very large percentage of world trade. These are the companies who handle the bulk of the exported and imported goods of the world. These cover agricultural, mineral, industrial manufactured goods and services, and the supply of energy resources and the control of financial investment resources. Within the context of all these products and services they compete with each other for global market share. At this point we have to understand that these are not “countries” that are in competition, but companies. That is of course not forgetting that it may be with the assistance of and the blessing of any country’s government (politicians). It is this drive for market share that determines the fate of most of the individual economies of the world, as well as that of those who enter into trade agreements and economic unions. This competitive spirit is what will define the fate of the global economy over the next fifty years. These remarks require explanation. Let us for a moment go back to the remark where we defined that global trade encompassed three economic “spheres,” these being that of Europe, the North American continent and that of the Far East. Of these three, it is that of the Far East within which the fate of the global economic structure shall evolve and the fate of individual economies and to those who entered into various economic unions may or may not prosper. The battle for the global share of business has led these conglomerates into a steady increase in their economic output being located within the Far East. The low wage cost countries comprising most of the countries that belong to “ASEAN” Association of South East Asian Nations. The cheapest and biggest of these being that of Communist China. It is within these countries that these conglomerates are continuing to erect production plants, using the wealth of their home economies to destroy their own domestic job opportunities. Perhaps it is time to prove this assertion. Let us start with Japan. The BIG FIVE created the might of the Japanese economy. Those “Trading Houses” that controlled perhaps 90% of Japan’s imports and exports ----protected by their government. Alas it was those selfsame trading houses that could have eventually been responsible for its present economic demise. Then there is Korea and the “Chaibols” who built and controlled the economic might of their country with the blessing and the protection of its government. Thailand, Taiwan and Singapore had similar set-ups, added to the fact that Japan and the West were financially involved in the growth of these economies. When the bubble burst, it was referred to as “the Asian meltdown.” Now we turn our attention to the United States economy. During that period between the years 1990 and the year 2000 it was built on what was called “high tech.” Because the so-called “language” of the software was based on the English language, both the United State and a number of Western countries had an “edge” on that of those who did not speak this language. When it turned to the digital format its applications were still functioning with similar software whose origins were in the English language. For others, it meant tedious translations to copy into their home language, to the extent that the technological world bought American software for their technological applications. Yet while this was evolving, both the “hardware” and the “software” were being to an ever-increasing extent manufactured and “written” overseas. Hardware for their individual components or as an whole entity were being built outside of the United States, and a lot of the “software” was and is being written in India where there are millions of highly intelligent people, proficient in the English language, performing the selfsame functions at an eighth or tenth of the wages, salaries and benefits being paid to their American counterparts. At this stage we repeat the percentages that comprise the entire G.D.P. of the United States. They are as follows: Agricultural output. 2% Industrial Output. 18% Services. 80% Some comment on these figures is called for at this stage. The agricultural sector is highly mechanized, highly efficient and highly productive. To the extent that not only is the domestic market fully catered for, but there are additionally vast quantities available for export all over the world. Despite the base costs of production, including wages at all stages of the sowing, reaping, processing, packaging and marketing levels, American produce more than successfully competes with that produced by all the nations of the world, including those with even the very lowest wage costs. So other than in isolated cases, the United States has little to fear when it comes down to competitive prices and/or quality. Despite all of this, there are still major problems that continually arise, where the United States is “at loggerheads” with its trading partners over both their own exports, and that of products imported into their country. Genetically altered produce and products are barred from entry into other countries. In other cases this applies to organic as to inorganically grown foodstuffs. Or it could be livestock or poultry for other reasons. To the extent that even in the case of Canada, it’s by far their largest trading partner, there is a continual friction relating to the issue of possible subsidies being used for specific agricultural produce and products. These arguments exist with both Europe and Japan. But all of this is not our point. That 2% of the G.D.P to all intents and purposes, will never change dramatically, other than as a comparison to that of manufactured goods or services, should there ever be major changes to those two entities. It was merely said to illustrate the friction that exists between conglomerates that operate in the agricultural field as they fight for both domestic and foreign market share. What are of concern are the percentages that relate to industrial output and that of the service industry. Before the era of the “electronic age” and “High Tech,” the backbone and the wealth of the economy lay in the manufacturing sector. While it is well understood that the output of commodities change and result in new concepts driving an economy, the point is that whatever is new as an industry, is that it be the creator of jobs, and that these be domestically created. However this has not been what was happening in the recent past before “the bubble burst.” Conglomerates looking for cheaper labour, whether it is for competitive purpose on the domestic or the international markets, were creating these jobs elsewhere. To confound this issue, while existing jobs are being dispensed with domestically, they are either expanding existing overseas plants or building new facilities. WHAT PRICE PATRIOTISM !! This remark applies to all conglomerates no matter from where they originate. Economists with tunnel vision state that either new types of jobs will be created as “new technology” appears or that these jobs will be replaced by an expanding service industry. First of all this is “wishful thinking". If the present evolving high tech is being “siphoned off” to lower wage economies, what guarantee is there that anything new will not continue to go “elsewhere.” A similar situation will arise with a fairly large portion of the service industry, if the present situation is any guide to the future. Unless governments penalize their conglomerates, or offer them some sort of incentive to expand domestically as against movement to low labour cost economies, the “WEST” is doomed. Maybe not today, but within the next 50 years. To be more specific, Europe presently exists or prospers “by everyone taking in each other’s washing.” Essentially by taking on a further ten countries, all they are doing is creating a bigger laundry business. They are a part of “The West” and as such one day be not able to compete with the massive output of cheap goods and services flooding in from the Far East. The philosophy and the theory held by some economists, is that as the economies of low wage cost countries expand and prosper, so too do wages rise as a result, with the end result being an expanded market for Western products and services. While this may have some basis for “the theory”----what if they are wrong! It would end up being “too late for tears.” Perhaps no more than 15% of China’s 1.2 Billion population (180 million people) can afford to purchase products and services produced by the West. And even these may be limited in variety. What of the alternative, when those workers presently employed by foreign conglomerates, become highly trained and skilled and eventually move to NEW DOMESTIC CONGLOMERATES who then become competitors in both their own domestic market as well as that of the international market The economists who hold this theory would be well advised to check their theories out with Japan and perhaps the state of several industries even in Korea these days. The present unemployment rate in the United States is about 6.25%, which is the highest it has been in the past nine years, and that the average in Europe is presently 1.5 times higher than that of the United States. This is no time to be complacent and to indulge in fantasies. Economists talk of “ a jobless economic recovery.” Statistics are often misleading and the statement that the economies of the Western nations are experiencing “a jobless recovery” could be very misleading. Those finding jobs, perhaps to replace those going on retirement are more than likely part time jobs, not working a full 40 hour week with consequently a lower income resulting in a less robust consumer market. To this we might want to add that a high percentage of these jobs might be at minimum wage or thereabouts. We also might want to add the possibility of “under-employment” where three years of young people exiting schools and universities HAVE NEVER FOUND EMPLOYMENT! That is why we should forever “beware of statistics.” The end result of all these possibilities is a shrinking value economy having to support an expanding aging population living longer years in retirement on under funded pension requirement. The satellite camera moves into high magnification mode and centers on the western world. We see people scurrying about, unknowingly heading for an as yet unseen economic precipice. We ponder all these satellite pictures, looking for an explanation. Where is that sort-after world-renowned economist, the likes of Adam Smith, John Maynard Keynes, John Kenneth Galbraith, Robert Mundell and many similar others scattered around the world, rolled into that one person needed to bring consensus and guidance for the economic survival of the planet. Where is that world statesman needed to rally the leaders of the world’s nations to devise a new political and economic concept fair to all? The present situation cries out for these. Free Trade and Globalization as they are unfolding could lead to eventual economic warfare between East and West. Polarization as these various economic unions vie with each other for market share. Should it thus unfold, we see again the rise of tariff walls and import quotas as the high cost nations battle for survival, only dealing with each other and barring their markets to the high volume low cost nations. The poor countries left out in the cold to fend for themselves, or at best survive in some manner by trading with each other as best they can. QUO VADIS (Where do we go from here) (Or is it ---where in the hell are we going)
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The
underlying reason for writing this article is the result of much thought as to
how one sees the global economy in a global context. Too often either ones own
thoughts are focused on what is either happening to ones own economy, or that of
ones trading partners. At times it may perhaps be focused on ones competitors
within the global economy, but seldom do we examine the global economy as if it
were an entity within itself. Giving the article a name or heading is an easier
task, because in a previous article titled “choices” the subject matter was
alluded to as forming parts of a jigsaw, and when viewed as a whole it
represented a final picture. Yet subsequently, and in retrospect, if viewed
within the context of global economics, it is but a small cameo as a picture.
For this reason the present title “The Big Picture “ was chosen to represent
a global economic picture as interpreted by the writer