To our Podcasts

Why Economic Globalism is Doomed to Fail

We have a global economy, or so it seems, an economy which is measured in terms of profit, value of assets and investment. This seems to be a system that is here to stay, that needs some expanding but will eventually permeate everywhere. There’s some reasons why this won’t happen.

The global economy follows economic rules, and economic rules are flawed in several ways. First they assume a store of energy to do work can be accessed through the creation of credit. This is the case today with fossil fuels offered on a global market, but will that last. Another flaw is that resources are not monitored in the economy, what is available is traded, what is not is not thought about. Resource depletion is the biggest problem of ‘economic thinking’.

Why do we adhere to the basic economic ideas? Because fossil fuels are available, because resources are not completely depleted and because it gives traders a dominant position, and this dominant position is consolidated constantly against opposing forces.

The main way to consolidate a cominant position for traders is to separate the consumer and the origin of the product. The ‘consumer’ as a role for a person to play is in itself a total fabrication and result of economic thinking getting its way. When thinking about globalization the question becomes : Can everyone be a consumer. Clearly not on the same level, because the current system makes use of slave labour from sweatshops in India to inmates in the USA. People doing fine manipulation to turn raw materials into products being payed poverty wages or below make some of the major companies possible, for instance Apple.

To create producers and consumers logistics is essential, and for logistics fossil fuels are essential, still, because they are nearly free. Maersk, one of the big shipping companies has its own oil rigs, so it ships countainers around the world for the cost of the consession, which it can pay in oil, so when it uses its own oil it can ship for free. Thus enables trade and the dominant position of traders.

These factors, the fossil and resource factors, have always driving globalization. The fuels allowed shipping from India, China to the US,. The cheap labour (by people who where more producers than consumers, unemancipated etc.) Created an implicit dominant position that at times had to be defended by force. The western realm, so countries in the West, where more or less playing a game who could grab the most resources for its people, which translated into wealth.

This game now seems to be running into problems, because India and China are developing their own consumer populations, they are asserting their desire to have a wealthy society and they are less and less impressed with the West. The history books shows how for instance the UK has exploited India and China in the past, and the spread of this awareness creates scepticism against trade agreements, foreign exploitation of for instance coal reserves.

India is canceling trade agreements with serveral countries because it finds they are based on the game, how clever can you be to buy a big Indian mobile operator and then avoid $2,5 taxes by running the deal through Cayman islands. That’s fun if you are competing in Europe, but not if it means you take a lot of wealth from India, not anymore. India is just to powerfull to accept that kind of treatment.

Similarly a few years back Russia took its wheat off the global market, because it had a bad season or because of the tensions ove Crimea. A bad harvest in Russia can and has caused political unrest in Egypt. This type of destabilization is likely to become more frequent as the world loses production due to climiate change (which because of water vapour effects can lead to 3.5 times the temp changes than averag in some places).

The advantage remains with the West if it controls the currency in which most fossil fuels are sold. This is changing, and this in turn is the cause of struggle between the US, Russia, China. Why? Because if all the oil in the world is sold in dollars the US never runs out of oil. It can always print dollars and buy more. Countries that don’t have dollars and can’t trade (because they can’t produce because they don’t have the fuel), can’t access the oil.

New blocks are changing the petro dollar dominance, and another factor also plays a role, namely renewables. Solar and Wind are energy sources nobody owns to start with, so a city or country (like Costa Rica or Denmark) that can produce 100% of what it need does not need dollars or other currencies to by fossil fuels anymore. This in turn weakens the Western grip on globally available resources. Economics, being uniquely fossil fuel based (as it assumes the availability of stored energy when it extends credit out of thin air) is doomed to fail. The replacement will a situation where oil trade and thus the trade of all kinds of products in return is much reduced.

Another factor reducing the need for global trade is automation. Foxconn is replacing many of its depressed underpayed workers with robots in the next years. Then the question becomes “Why in China?”. Robots can be put in the middle of the desert or on the South Pole, maybe the North of Russia becomes a nice spot when it becomes ice free all year round. Who cares? Automation is more likely to pull production of many goods back close to consumers, as it saves a lot of cost. Then if you live in a country with a lot of renewable resources you are in luck. Many consumer goods can be made practically anywhere if labour cost and fuel cost become unimportant.

The sad fact is that if a country is unable to protect its resources today, and if renewable based automated production of what people need is delayed because of fossil fuel economic forces, the weak countries will still see all its forest destroyed, burned for palm oil plantations, countries will be exporting wheat while its own population is starving. Some Asian countries are about to feel the burn of economic progress under US domination, it seems lately any country without the ability to defend itself is turned into an extra state of the US (Costa Rica, Venzuela, Holland). Traders rule, financial markets rule, and fossil fuels are the forced diet.

As more become aware of this unequal playing field, between the suits with laws of the WTO, CETA, TTP etc, and the unprotected, frankly unaware population of less developed countries these countries will muscle up and make ready for war. China has done so with success, The US granted it the right to use oil and coal to grow, now it seems stronger than the US. The balance of power and the lack of war depends on sharing of real economic growth, trade dependencies, which certainly are a factor that makes peace more attractive than war.

But fossil fuel use and its effects are going to put come countries in more precarious positions, and this may eventually lead to a breakdown in these relationships. The question is whether we should keep going until the system breaks down or we should set a new goal that we know will land us safely down the line. The game should be survival of our species, not competitive access to weakly defended resources. The game should not be global domination of anyone, but the reduction of the need to trade globally in things that are of existential importance (like food).

Striving towards global independence, allowing cultural identity to remain (not US exported Disney MGM monoculture), rebasing all industry on renewables (which will eliminate a sizable part of it), maximizing life by planting trees, repurposing land. Being real honest about the military balance and the desire to leave each other be instead of taking a threatening posture or forcing deals. Introducing renewables and automation to assist in this process. Perhaps using a rule based or automated system to predict the outcomes of actions taken for all countries and the planet as a whole, so that it is visible what the effect of decisions will be, and an ad hoc alliance of forces of different countries will always enforce that decision.

We have a class of gamesmen (and women) who have a magic wand called ininite credit, ruling Wall street, who divide and conquer and put countries like Venezuela in a position where it has to export its oil and can’t keep its people fed. The class is obsolete because a unipolar world is no longer affordable. The cubs they once played with have become wolfs and packs. The world that was that simple is disappearing as we speak.

Better focus on the new ‘order’ and find ways to create the cooperation and independence that it needs, in terms of energy and production, resource protection and legal disentanglement. Because long term it is the best option for all except the few who are now at the craps table. They are risk takers and will risk everything to keep going.

To move in the right direction renewables and storage are key. Because they create ownerless production capacity, they are a trade independent source of wealth and power. This also means blocking any introduction of non renewable or non sustainable activity, because they create new dependencies. Also countries should form blocks to prevent the introduction of wrong and unsustainable practices. This is hard because especially poor countries are highly sensitive to corruption (not forgetting to mention that anti globalist get killed or put in jail as well). A good sign is when the trade and need for fossil fuels is reduced, when the culture is not foreign and when in spite of those things wealth, health and  happiness increase.





Leave a Reply

Your email address will not be published. Required fields are marked *