The Most Recent Developments in The Global Economy

With the coming of President Trump in power and with the Brexit, the world is coming to a point of excessive Nationalism, politicizing of Economic, widespread fear of ‘the others’, ‘the different’. The old smooth liberal order is becoming a thing of the past with its nice words, rising GDP, falling Unemployment indicators that by themselves did not include the majority of citizens in the US or other developed countries and even less in the developing world: elsewhere, rising inequality, debt, poverty, lack of business and employment all together bringing an widespread belligerence toward the normal people. Why the politicians have been applauding the ‘incredible’ economic growth and decreasing unemployment of a glorious globalization with IPhone, cheap computers, stores full with goods, professing prosperity; the many, if not the majority were actually out of the loop into a circle of everyday difficulties. In the US, UK, EU, Japan and  the developing world, maybe with the exception of China, Norway, UAE, and a few, the already succeeded economic, political structures have been out casting more and more individuals from the economic competition, calling them ‘left over’ the prosperous global marketplace.

What the current establishments do not understand is that the system does not work thus steering mass harm that is not just a collateral damage of the ‘left over’ by the globalization less educated or adaptable individuals, but a mass breakup of the global economies not being able to provide basic conditions for the many to exist normally: that brings excessiveness: nationalism, xenophobia, radicalization have become natural consequences under these conditions. To expect any natural developments that will change these developments under the trickle down orthodox economics is futile; to expect mass rising productivity, industrialization, countries balancing budgets by providing ‘adequate’ conditions for investment by cutting consumer, labor protection is inconsistent with the reality: the ongoing globalization, the rising productivity, technologies, the Internet, the large transnational corporations in manufacturing, finance, retail, wholesale, farming most definitely cannot and do not provide conditions for such muss industrialization and individual countries improvement. The developed countries are losing their middle class the developing with a few exceptions are not building such middle class: poverty, inequality, debt are the result of  such not working economics.

The European Union are the best example of how the orthodox economics is not working whatsoever!

The 2001 & 2007 Recessions were provoked by these new economic developments, too The severity particularly of 2007-9 Recession that affected the entire world economy in some ways, continued for long period, and could has not fully recover, or has recovered very weak could taken as a warning to how ineffective orthodox economics is to prevent, self-adjust, post-recover the destructive forces of the globalization and the rising productivity, of the exogenous forces in a economics of closed economies. The issues of such 21st Century economics has become so complex that by using the orthodox economics methodology is completely incomprehensive.

The 2001 & 2007 Recessions have additionally accelerated the processes prompted by the 21st Century the globalization and rising productivity to the point of unseen inequality, debt: national and private, poverty, global pollution. The increasingly high productional capacities by the transnationals, China, the fluent sales on the Internet the improving technologies, robotization reduce the industrial related employment that has always been in the foundations of the Capitalism so when these factors changed the trickle-down economics became irrelevant, not working; thus, the recessions of the Past that could had been self-adjusting have become extreme, not rulable, impossible to handle by using this orthodox philosophy. The world has changed for the last 20+ years to a point when the orthodox economic tools must have to evolve too. So, the Quantitative Easing, the Subsidies, the targeted Investment, the bailing outs, even the Social and Infrastructural expenses have become necessary market (to replace economic, economics and market (to replace an economy) tools to be used on a ‘as it comes; as it goes; approach. In the West these new market tools have been used under the pressures of an oncoming crush prevention; whereas, in China such innovative approach has been well developed and used resulting in the higher growth, market development not being so much affected by the recessions; even though, the Chinese political structures lacked the freedom and liberties of the West; the better market economics worked its ways to have China advanced to their competitors.

The Earth Environment issue has become a matter of life or dead to the entire world requiring immediate actions by all countries, but the poverty driven usage of old vehicles, fossil fuel heating, deforestation for heating or agricultural development, the improper garbage disposal have had replaced the industrial production pollution as man pollution: as the developed economies are taking measures to reduce such pollution why the developing, impoverished cannot change without alleviation of poverty, change of the entire system of economics.

So, all of the mentioned and much more was not brings the conclusions that a innovative, market oriented economics must be developed to accommodate all the new global developments to 1. save Earth from destruction by alleviating poverty, and through using environmentally friendly technologies, and 2, establish longer term market developments by using private entrepreneurialship and the power of the globalization and the rising productivity, and 3rd use human ingenuity to improve technologies, management, organization; all of these but by limiting governments economic involvement, saving and enhancing individual freedoms, democracy. And the question remains: is all of these possible, are there such systems to accommodate all very complex global developments?

To ignore the realities and continue using economics as usual has shown particularly in the EU the bastion of the orthodox economics the long lasting harmful consequences that finally brought rising extreme left or right parties, leaders: from Hungary, Poland, Italy, Romania to Brexit the economics has greatly underperformed with high unemployment, eroding middle class, social policies, business activities that brought rigid politicians, parties that are limiting personal freedoms, media, immigration, – the blooming nationalism, zelophobia, radicalization resulted of such weak economies, economics. When deleveraged to the inequality, debt the GDP elsewhere in the EU has shown inadequate approach that could not accelerate individual business involvement enough to employ the majority into productive environment. Instead, the political madling with individual, less developed countries politics has been used to ensure some stability, the continuation of the orthodox trickle down economics that policies obviously failed to prevent the mentioned Brexit, Hungary, etc. The biggest tragedy of the EU is the long term slow down that under the Capitalism spells Debt whereas the 3% Debt/Deficit Rule limits the ability of individual countries to wrestle such harmful developments; it has been more like ‘Catch 22’.

But such developments could be well traced in the United States bringing in power the extreme right in the entire government wings: from the White House, Lower and Higher Senate Chambers, to the Supreme Court that is the last ongoing development. And as in the EU, the US political turbulence can be well traced in the US economic developments: President Trump was elected by the ‘left over’, ‘deplorable’ unemployed, underemployed, not given business opportunities , normal life.

The only country, market, economy that avoided such melt down has been China; but it used ‘as it comes; as it goes’ approaches market economics more successfully than anyone else. It is wrong to think that China manipulated their currency and therefor succeeded; it is more complex a system of 21st Century flexible market economics that achieved such successes.Thus, to first, consider that somehow the trickle down orthodox economics has worked for China is jut not correct, because China used much more flexible market related economics: for example instead of maintaining General Equilibrium theories as all other Central Banks China used Parts Equilibriums theory along with targeting economic, market sectors by using lending, fiscal restrictions, initiatives to either slow down or give boost to targeted market sectors. China used State Owned Corporations to keep rising income, consumption, demand, too; that, approach use to bring inflation, shortages, underdevelopment in the past Communist Blocks now has helped taking out of poverty more than 600 Million Chinese, because the world of real economies has changed from pro Supply driven to a pro Demand or at least Equilibrium driven marketplace. What China has  shown to the world was that even an economy, market lacking freedoms, democratic freedoms if using properly economics it can succeed immensely. But also, if countries, economies, markets do not use proper market related economics the results could be meager, catastrophic, harmful not just to their or the global economy, marketplace but will have political consequences bringing back many years of liberalization, democracy, improvement.

Joshua Ioji Konov 2017


About Joshua Ioji Konov
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