Globalization….Down but Not Out

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Intuitively, most everyone believes that growing markets and increasing purchasing power are good things. It is only natural that industries that produce maturing as well as new products need to look to new markets to optimize returns on investments made and fuel growth. Globalization is the potential engine to achieve those aims.

Globalization is a manifestation of the central economic process of “rent seeking” (seeking profits). However, that natural economic evolution is coming head-to-head with the natural human survival tendency of tribalism. Today, tribalism is known as populism or nationalism: us against them; our way is the best; others are a threat; zero sum mentality. Since the dawn of recorded history, tribalism and competition for resources has been one of the principal causes for war and hatred. But that’s a problem-solving solution we can’t afford anymore. To let that level of emotionality to get acquire of weapons of mass-destruction threatens the entire planet. It’s that simple and that serious. Yes, global warming and the environment are important but, in my opinion, those concerns are not even a close second to the threat that a regression to tribalism presents. If we can learn to trade with each other and benefit from relations with others  we can learn to solve the common problems that threaten our collective well-being and…perhaps our survival as a species.

The question being raised by globalization is: How to deal with those of us who- for whatever reasons- cannot contribute to or reap the benefits of a modern society in what that is becoming more complex and competitive every day? Do we take giant steps backward hoping what worked well in the past will solve the problems of the future? Apparently, in the case of Brexit and “Amexit,” an electoral majority (versus popular majority) feel that is now the way to go. However, I believe that even if we take steps backward it will only be temporary. It is in our nature to progress and nature demands that. Globalization will return; the next time with better planning and forethought.

Our leaders need to begin to talk more about the bigger picture and help develop values that build awareness of the fact that the more people that benefit and participate in an economy in all countries, the better it is for all of us. Advancing per-capita income means advancing standards of living and personal fulfillment. However, that “collective awareness” strikes at the heart of “rugged individualism” and the personal agenda.

Things are not distributed equally-The Pareto Principle and Murphy’s Law

Vilfredo Pareto and good ‘ole Murphy are the founders of two of our most commonly held theories of how the world works:

  • Murphy: Whatever can go wrong will go wrong…..usually at the worst possible time.
  • Pareto: Distribution is usually 80/20 and not the normal bell curve with balanced distribution on either side of the mean. For example:
  • 20% of the input creates 80% of the output
  • 20% of the workers produce 80% of the result
  • 20% of the customers create 80% of the revenue
  • 20% of the bugs cause 80% of the crashes
  • 20% of the features align with 80% of the usage
  • And on and on…

According to Wikipedia, Economist Vilfredo Pareto made observations about why 80% of the Italian economy was owned by 20% of the population. This anecdotal theorem has particular symbolic meaning in our modern societies; distribution of “the goods” just about everywhere is not equally distributed. It then begs the question: why should it be equally distributed? And this is the seeming intractable conundrum places us today.

One thing that makes today different from the past is the existence of weapons of mass destruction. All that is needed are a few disenfranchised or insane people to obliterate what they don’t like. Do you think a suicide bomber would care if they blew themselves up with a nuclear device or just enough C-4 to tear them and a few others into pieces? Isolated and angry people without hope are easily filled with irrational hate and unspeakable actions against the innocent masses. So, should we worry about a certain small segment of the population not being fairly treated or should we worry more about Armageddon? (I know this is hyperbole, but the way the world seems to be trending, it may not be.)

Socialism didn’t meet its promises mainly because of the human propensity for corruption and gaming the system. Will capitalism meet the same fate? You see, a successful economic system must be aligned with not only the physical needs but also the human psychological needs.

I know this type of philosophical discussion is not part of the normal public conversation. In fact, it is my experience that engaging in such a discussion only sends most participants reeling off into space and looking for a way out the conversation. But the threats and promises of globalization are forcing the issue and, in my opinion, it should be a topic for serious conversation at all levels. Indeed, our very survival may depend on its resolution. For example, one of our staff wrote a book about the concept of a “Fusion Economy” where citizens could choose a mix of economic models that best fit their lifestyles and aspirations. The implication is that we may need to develop a new economic model that takes into account much more than just the driving forces of profit and taxation.

 

Additional Reading

Globalization Backlash and the Winds of War

Quantum Physics and Creating the Future

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