Thursday, February 6, 2014

The World Economy through Laymen Eyes

This post is going to have to do very little with paintball, but it was spurred on by my rambling thoughts due to recent events by paintball manufactures closing North American plants and expanding in Asian markets.  The problem is not a paintball specific problem though, hence why the post is not so much about paintball but about economies in general.  I’d like to also add that these are the views from someone with no economic schooling or any real large scale business or commerce experience.

The way I see it, the crux of the problem is that world has much more labour than it needs.  We have become so efficient at making “stuff”, through the use of technology and relatively cheap energy sources, that we can produce much more “stuff” than we need, or at least that the people who can afford to buy the “stuff” need.

Manufacturers have seen this coming for a long time.  So they started to look at the world outside of the societies that could afford “stuff”.  As yet, there is a still a large part of the world that is “developing”.  In these areas are plenty of people who do not have as much “stuff” yet, but who want “stuff”.  Unfortunately, many of them don’t have enough money to buy the stuff.  But as those regions develop, the people who live in those regions will acquire more income and thereby be able to buy more stuff, in turn keeping the economy going.

But to develop those regions and put money in the hands of the citizens that live there, the economy has to move there.  So the “stuff” that used to be made in America and Canada, and Europe and consumed in those places with the surplus sent to other places in the world, is more and more being made in those developing areas.  The relatively cheap labour can make the “stuff” cheaper meaning that the citizens of those regions (who now have jobs) can afford to purchase them.  You can almost compare those developing areas to America and Europe coming out of the dark ages and into the industrial revolution.  We too worked for very little at one time, and as we acquired more “stuff”, we became stronger as a society.  The workforce started to demand more compensation, so they could buy even more “stuff”.  That was the start of inflation.

The developing areas of the world will also end up having inflation because their labour will as well one day demand more compensation so they can buy more “stuff”.  But this will take time.  It may be 100 years before these developing areas have as much “stuff” as we do and are on an even playing field.  Not everyone will develop at the same time or at the same rate.  Manufacturing will continue to shift to areas that are the most impoverished.  But in the end, the net result will be that eventually, many years from now, everyone on the planet will have a more or less equal standard of living (except those who own the factories of course).

As the standard of living rises in the developing areas, the standard of living will fall in the previously developed areas.  The already developed areas have labour prices that can’t compete with the less developed areas.  This is what is currently happening with manufacturing moving to Asia, out of North America and Europe.  The factory owners feel they have no choice but to pull up roots and move.  Either move or die.

All this will take another century or two.  But in the end, as we humans become even more efficient at making “stuff”, we will all have more stuff than we need, but we will have more and more unemployment.  Technology will mean we will need less and less manual labour and if people have more stuff than they need, our factories will be laying idle and more and more people will be unemployed.  This is the end game for “capitalism”.  That is the way it will play out over the next few hundred years, at least the way I see it.

What does this mean?  First of all, I don’t think there is much that is going to stop this natural progression.  But somewhere along the line, there will most likely be a rebellion (did we possibly see a first glimpse of it during “Occupy Wall Street?).  As America and Europe’s citizens lose the standard of living they have been accustomed to; as we increase the number of unemployed because of the shift of manufacturing to developing areas; the citizens will rebel.  I don’t know what form that rebellion will take, but more than likely, in the end, capitalism will be ousted and socialism, of some form, will take it’s place.

The human race will go in one of two directions.  Either we will become a more social society, meaning we learn to share the much more than needed amount of “stuff” we have, or we fight one another to physically, or militarily, try to dominate one another.  If I were a betting man, I would put my money on the latter happening.  Most likely we will either destroy the human species (possibly the whole planet) or destroy enough of our society and human kind, so that those left will have plenty of work rebuilding so they reacquire “stuff”.  Rinse, and repeat.

It's a shame really when you think about it logically.  If we as a species have developed technology to the point where we can produce more "stuff" than everyone needs, wouldn't it make sense if we could all work a little less, share, and enjoy the "stuff", rather than fighting and killing ourselves off.  I have a feeling that in the end, it will be difficult to take the "animal" out of "homo sapiens".

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