The Global Economy -- It's Complicated

So today I wanted to share with you a birthday card I got last night when having dinner over at John's Aunt Mary's with the rest of the family.   (We're celebrating early this year, as people wanted to give me gifts before we headed out to Europe in a week or so...)  This was, by far, one of my favorite cards from the evening,...and I guess I'll just let the card speak for itself.

 

That just made my evening right there.

But on to today's world issues!

I've been meaning to get back to that Economic Forum in Davos that occurred a short while ago, as it's been poking at me from the inside of my brain for several days now.  So, while I may not have the most thorough understanding of global economics (or even local economics,) I was still able to take a few things away from watching the "Global Economic Outlook for 2014".

First, let me just say that I felt like I had just walked into a room where everyone was speaking a completely different language than I was.  That in and of itself made me worry that I might be taking on a project that is way over my head.  But even with that, I think there are a few things that stand out:

1.)  We have a global economy, but we don't have global economic policy; nor do we have any global regulatory options right now.  What this says to me is that, for the moment, we are going to have competing markets--which is good in some ways and not so good in others.  Competition means that there are winners and losers; it means that many under-developed countries and economically challenged counters are going to have to work hard in order to even get what they need.  But, competition also means that those who are innovative and can produce things more cheaply are going to win out over those who are not and can not.  This, sadly, does not always mean we get a better product.  Nor does it mean that those innovations are good for us (think pollution, industrial accidents, etc.)

2.)  We are still recovering, but we are finally seeing progress.  Unfortunately, there are a lot of factors that play a part in just how strong or weak that progress and recovery will be.  Technology has played a large role in our current job market problems, and while we are beginning to deal with those inherent problems, politics and education are slowing the recovery.  There are fewer unskilled jobs in the world, and therefore competition is going to be higher and wage growth lower.  Skilled labor requires education, and those who can afford it will see better economic futures.  Unfortunately, that continues to fuel wealth inequality.

3.)  Because the market is still volatile, economic growth through industry has been slow.  The uncertainty regarding the current economic policies has played an important part in this, but consumer spending has also been a problem.  You can see this play out in our current market woes of the past several days.  In short, companies are less willing to take risks, which means fewer jobs are created and fewer products are developed.  Consumer prices go up because of several factors (scarcity, higher manufacturing costs per item, etc.) and consumer spending goes down because of lack of income (jobs market, stagnating wages) and higher priced goods.  The central banks are trying to combat this and spur economic growth as well as stabilize inflation through various means--a lot of which I don't entirely understand.  I get the impression that most of it is an experiment of some sort based on past successes or a new idea on how economies work.  Essentially, they're still trying to learn how to control the ever-changing global market.  I wonder if that's anything like trying to juggle wrecking balls....

4.)  The idea of a global economy is still pretty new.  People are still trying to figure it all out, and there are new markets emerging as old ones disappear--or change due to innovation; and those changes are constant.  What I think this means is that if your own home market isn't stable, you're going to be in for some craziness over the next fifty to one hundred years while we try to figure this whole thing out.  I think there may be a lot of people who want to see global economic policy--to have a central, global economic authority.  I also think that every national economy is so different that creating something like that would be a nightmare.  We're seeing a bit of that nightmare happen right now in the United States where we have differing opinions on what is important based on where we live.  It's created some rather large divides between agricultural and industrial centers; the corporate culture and big business versus the small business and rural communities; and even poor communities and rich ones.  How can one economic policy seek to understand the intricacies of local needs?  And yet, if we're not working together, how can we hope to solve the economic problems that we each face?  How can we work together if our policies are simultaneously robbing us of the ability to do so?  And how do we determine what is and isn't fair for various economies to do--and what do we do if those various economies are hurting one another?  Better yet, how do we keep these various economies from hurting people in a global economy if we don't have an understanding of said global economy?


I don't know if global forums help us to solve problems; I'd like to think they do.  What I do know is that they open up the opportunity to share knowledge, exchange ideas, and learn more about the people with whom we share this world.  And I think that's important.  I may not understand everything that's going on there, and I may never be able to understand it; but I think that it's important for me to try--not because I see myself as a leader of our country any time in the future, but because I want to be able to know if the leaders I have the power to elect are actually interested in looking toward the future and if they've got an economic plan that utilizes the wealth of knowledge and expertise that was shown at that panel at the World Economic Forum.

To be honest with all of you, I have no idea what's best for the world in terms of economic stability.  I think the World Monetary Fund, Goldman Sachs, and other such organizations are kind of scary, really.  And I think our central banks are like this secret society of magicians who speak this arcane language that is only meant for the erudite and the privileged.  However, I think it is worth trying to understand if I want to be able to do what I believe is right--by which I mean, trying to help those in need, trying to better my life and the lives of those around me, and ensuring a better future for the people who come after me in this life.

And I think you should want that, too.