CONSIDER THE FOLLOWING ITEMS
“Why can’t that work come home? Mr. Obama asked. …Mr. Jobs’s reply was unambiguous. ‘Those jobs aren’t coming back,’ he said, according to another dinner guest. … ‘We sell iPhones in over a hundred countries,’ a current Apple executive said. ‘We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.'”
Charles Duhigg and Keith Bradsher, How U.S. Lost Out on iPhone Work, New York Times, January 21, 2012.
“… we demonstrate that an individual country’s role in crisis spreading is not only dependent on its gross macroeconomic capacities, but also on its local and global connectivity profile in the context of the world economic network. … These results suggest that there can be a potential hidden cost in the ongoing globalization movement towards establishing less-constrained, trans-regional economic links between countries, by increasing the vulnerability of global economic system to extreme crises.”
Kyu-Min Lee, Jae-Suk Yang, Gunn Kim, Jaesung Lee, Kwang-Il Goh, In-mook Kim, Impact of the topology of global macroeconomic network on the spreading of economic crises, version 2, arXiv.org, April 2011.
“Open feedback mechanisms ensure a supply chain’s ability to respond to a changing environment, but, in the case of financial supply chains, feedback mechanisms can amplify shocks until the whole system blows up. The Lehman Brothers collapse triggered just such an explosion … Since a complex network comprises linkages between many sub-networks, individual inefficiencies or weaknesses can have an impact on the viability of the whole.”
Andrew Sheng, Global Finance’s Supply-Chain Revolution, Project Syndicate, January 5, 2012.
“Asian economies are exposed to China. Latin America is exposed to lower commodity prices (as both China and the advanced economies slow). Central and Eastern Europe are exposed to the eurozone. And turmoil in the Middle East is causing serious economic risks – both there and elsewhere …The US … faces considerable downside risks from the eurozone crisis.”
Nouriel Roubini, Fragile and Unbalanced in 2012, Project Syndicate, December 15, 2011.
“Undoubtedly politicians should do a much better job of explaining to their constituents’ that what happens beyond the borders of their country-or city has implications for what happens inside their homes. … Despite all these problems, we have no choice: we must make local politics more attuned to global imperatives and make global finance more responsive to local needs.
Moisés Naím, The Dangerous Cocktail of Global Money and Local Politics, Financial Times, November 18, 2011, published on Carnegie Endowment for International Peace website.
On paper it all sounds good: in a system of global free markets, nations, provinces, states, cities and corporations pit their resources and their people’s skills and smarts against each other. As unfettered competition sorts out comparative strengths and weaknesses, each competing economic unit finds its proper role in the world economy, makes its economic contribution efficiently, and earns its share of global wealth. And the winner is … everybody!
The reality is a global demolition derby of competing and overlapping national, transnational, sub-national, and corporate economic policy making that routinely litters the planet with the wreckage of businesses, communities, families and even whole nations.
Many of us get our images of global competition from the world of sports, but those images are disastrously mistaken. In the sports world participation is voluntary and competition is highly choreographed. The umbrella of rules under which teams and individual athletes face each other is comprehensive and well enforced. The wholeness of the game dominates the individual interests and actions of the competing teams and their players. As a result, certain teams and players seldom become permanent victors and the consequences of losing are relatively benign.
Teams and players do not bring their own rules to the field of competition; teams and athletes with big differences in competitive resources are not pitted against each other (heavyweight fighters are not pitted against welterweight fighters and minor league baseball teams are not pitted against major league teams); the ratio of referees to players is very high and referees have the power to ensure that the choreographed competition designed into the game is not destroyed by rule breakers; all players get paid whether they win or lose; competitive encounters don’t leave losing teams and players permanently broken and maimed.
This is not the case for competition in the world economy. Participation is not voluntary and competition is chaotic and brutal. A comprehensive umbrella of rules does not exist and the rules that do exist are not well enforced. Global social and economic goals cannot dominate the interests and actions of the thousands of governmental and private sector competitors. Certain competitors win and maintain dominance over all others for many decades; other competitors become chronic losers. The consequences of losing are often devastating and extremely long-term.
Competitors do bring their own rules to the global fields of competition. The more powerful governments and corporations create rules to serve their own interests, regardless of consequences for the good of the whole or consequences for the losers, and then impose them on the less powerful governments and corporations. Referees in the world economy are vastly outnumbered by competitors and they don’t have sufficient powers of enforcement to reign in rogue competitors.
For almost all the world’s peoples who count themselves as winners, or at least survivors, a consequence of this global demolition derby is chronic and frightening employment and income insecurity. For losing nations and communities the consequences are often profoundly devastating: high levels of infrastructure loss, permanently broken social institutions, widespread and chronic unemployment and impoverishment, and enormous losses of life to famines, wars, preventable disasters and curable diseases.
Almost certainly, the world’s people will be much better off if we actually do make global economic competition much more like competition in sports.