NCFP Opinion | What Economics Really Is

NCFP Opinion | What Economics Really IsNCFP Opinion – What Economics Really Is

I have a view of economics that perhaps a lot of people would disagree with. It’s based on one simple fact: for one person to get rich, a lot of others have to get poorer (i.e. the one sells goods, the others buy them). That concept applies whether you look at tradesmen, the Mafia, companies, countries, continents, or a planet. And power of course is related to riches.

There is only one way that a person, country etc becomes powerful: it first has to become rich. It becomes rich through commercial superiority; when it becomes rich, it can buy military power; then it is a position to strong-arm others, and thus become even richer. That’s why WW1 started: Germany firstly grew commercial strength, then on the back of that, military strength: it was eclipsing its neighbours – us, the French, and Austria-Hungary, all in decline. Wars start for commercial reasons first and foremost, because without money, you can’t be strong militarily (though N Korea is an exception – only its own people have become impoverished for its leaders to become rich and strong militarily).

If you look at the 17th – 19th centuries, we became rich on the back of trade, then militarily strong – as did France and Spain. We became rich by selling our goods to our empire – a captive audience – as well as getting cheap raw materials from the empire. As soon as we started to decline in the late 19th century, our military power declined too, and the empire soon sensed our weakening, asserted itself and sought its freedom, making us even weaker. But the world was a simple place up to the late 20th century; one nation sold goods to others. Raw materials were easily bought from less developed nations, made into value-added products, and sold on. That has now changed dramatically.

Since 1990, a group of individuals have become each as rich as countries; many have also become strong militarily (take Abramovich with his submarines, private army, and super-yachts); their strength has been used purely for their own enrichment and power – indeed, behaving as we did a couple of centuries ago. But also, ownership of raw materials has become seen as a source of power: China, for instance owns 98% of the world’s neodymium, used in traction motor magnets, and they won’t let anyone else have any, only the finished product. China was a major market; now we are its market. The balance of power has changed utterly.

The balance of power is no longer predictable, because individuals move their interests around, making and breaking weaker countries; and all the while becoming richer while millions of others become poorer – and other countries become poorer. They manipulate the world’s economy to suit themselves, along with the rising powers of India, China, Russia and Brazil, for example. They will move mountains to maintain their position, and they are unassailable, because if you apply the first principle, they can never be the “many becoming poorer for someone richer to gain riches”, unlike countries. The rising powers will get more powerful too, because they are breaking the power of the traditional rich countries; and as we are seeing this week, China is strengthening its military too. So is Russia – again. So is India. And so are other SE Asian states. And then there is Islam….oil rich Islam.

There are, as I see it, two big issues: who owns natural resources (metals, energy, other raw materials together with the means to make them into products) and who owns food production. Those could both cause conflict in the future; but the conflict won’t be like WW1 or WW2. It may be either invasion (as Ukraine) or commercial – squeeze out the competition. The world’s poor won’t be able to revolt in any meaningful way, because the rich individuals and rich countries will hold all the money and military might, and total population surveillance. The world’s poor may well become just a pool of slave labour – it’s certainly heading that way; India, for instance, has a large pool of virtual slave labour already working in coal mines and brickworks.

Remember, for one to get rich, many must get poorer. With globalisation, there’s nowhere else to go; this planet can’t get rich by selling goods to other planets. So the world’s poor will continue to get poorer whether in industrialised countries or underdeveloped ones; the Old World getting poorer as the Third World enriches itself; and everyone in the countries where they operate, as the super rich supra-national oligarchs get rich.

Unlike some people, I don’t believe that the current trend will lead to a global economic meltdown, because the world’s economy is no longer of a structure where that is likely in the sense that happened in 1929 for instance. And World Wars like 20th century wars also probably won’t happen. In the 19th century, it was said that no country could start a war unless the Rothschilds financed it (commercial!!); now it would be the super rich who finance it. The future is a much scarier place, IMHO, because it is so changed from what went before, and because we are marching/sleepwalking into the unknown.

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