Wednesday, November 24, 2010

Political Detour: The Economy

The following is actually an essay I recently wrote for a class. I think it has some good stuff in it, however, so I thought it would be a good one to post.

And The Winner Is…
                In the ongoing battle for global economic success, there are currently very few promising competitors. The post-Fordist economic model seems to have run its course, and no one knows what to do next. The current industrial state is not a sustainable economic course, and countries must adapt into either a self-sustaining entity, or a massive-scale cooperative world economy must emerge.
1: The Definition of Insanity                                              
                The response from the majority of civilized countries to the global recession is to attempt to let the current model “straighten itself out.” Governments are extremely hesitant to allow for large scale change where it seems to be the only logical response. The former system is flawed and broken, so instead of waiting to see if it recovers, why not learn a lesson from recent failures and build a better system?
                While humanity has always been at least slightly hesitant to change, when it comes to large-scale economic revolution, it is usually embraced due to the fact that it benefits everyone. See the examples of the Agricultural Revolution, the Industrial Revolution, the Transportation Revolution, the Information Revolution, and currently the early stages of what appears to be an Energy Revolution. When there are going to be obvious benefits to change, the general public will embrace the change, yet bureaucrats are still hesitant to reform.  They want to keep using the previous model of economy, because that’s where they have been successful.
                But, change is the only response. It always has been. Stagnation is what will kill the world economy.
                Insanity: trying the same thing again and again, expecting a different result.
2: A World Power
                One revolution that could take the place of the post-Fordist model is one of a truly global economy. With the whole developed world cooperating as a single entity, success is easier to achieve because of a pooling of resources.
                One of the major things killing advanced economies is the high taxing and tariffs on both imports and exports. With a global dissolving of these tariffs, resources would become readily available where they previously were not, and it would jump start innovation and entrepreneurship within all borders. It would encourage the sharing of products, resources, ideas and manpower between countries, and this would encourage cooperation on technological and scientific advances. The beginnings of this style of economy are starting to emerge within the European Union.
3: Every Man for Himself
                While a true world economy might be ideal, it is far from likely or practical. Luckily, the opposite would prove to be just as effective. Countries creating self-sufficient economies that provide both the supply and the demand would effectively pull individual economies out of the global recession and ahead of the rest of the world.
                Essentially, this idea is the exact opposite of the last. Putting high tariffs on imports, no tariffs on exports, and very high taxes on companies who outsource jobs to other countries would encourage growth of local micro-economies, and increase employment rates. This creates new markets within countries, such as the United States, that will utilize their natural resources that had previously been underused due to cheaper markets elsewhere. By creating an economy that is no longer dependent on other countries for its own success, it avoids many of the pitfalls that led to the current global recession.
4: Declining Life Support
                A final point that countries need to consider is the life span of industries. This ties in to the first section of the governments being overly attached to existing economic models. The same is also true of their dependence on certain industries.
                As evidenced by the US’s response to the initial banking collapse, governments’ have a tendency to hold on to and try and save industries and businesses that have clearly run their course. Governments need to take a cue from the practices of Japan and let the old businesses and systems die. At the same time, money and resources needs to be pumped into the burgeoning markets and technologies of tomorrow. Future assets and industries need to be recognized and supported, letting them grow and take their natural place in the cycle of boom and bust. The old guard needs to be allowed to die out to make room for the new models to improve upon and take their place.
5: Industrial Darwinism
                As evidenced through the governmental dependence on outdated economical systems and businesses, there is a huge resistance to change. However, just like dinosaurs must die out to make room for mammals, post-Fordist economies must die out to make room for a newer and more efficient predator. Whether it’s an isolationist and self-sufficient model or one of global cooperation, eventually a new system will emerge. It’s not because post-Fordism is any better or worse than what came before, but simply because that’s what always happens. Just like in Darwin’s Evolutionary Theory, economies—just like animals—will continue to change and improve. Because adapting is what they do.

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