The Upside to a Downside Economy

Could the current economic crisis generate, on its own, a truly higher living standard for the world overall? And a more peaceful and productive world as well?

And could the reliable and repeatable laws of need, supply and profitable exchange be harnessed to stimulate a better and more stable world?

There is early evidence that a new kind of economy could emerge – and that it could make life brighter everywhere.

Here’s how:

Because of the speeded-up information flow, much of the world is coming to believe a fact that was not always accepted and certainly not universally. That fact is that most of the world economy is so closely integrated that it moves rapidly in sync, lock-stepped one to another -- and fast.

The world has clearly seen how swift a credit crunch in the U.S. can affect housing prices inLondon or net export prices from India. How migration from the Chinese farms can influence prices in Wal Mart in the U.S. or oil prices in Canada and food prices almost everywhere. And eventually jobs in most places.

This newly-dramatized interdependence of national economic systems could be used to reduce political differences as well as to generate a new level of profitable international activity and mutual synergies. All of this is driven, not by altruistic intent, but by hard economic reality and necessity. (The toughest master, but the most certain). The end result could be a new and special economic closeness that would stimulate the affected economies to produce a better living standard for all, and likewise reduce wasteful political tensions.

A most recent example: Taiwan and mainland China, after 65 years of dangerous conflict, now being pulled close to each other by economic needs and desires that over ride their political differences (producing even a timely gift of Pandas).

A reduction in nation-to-nation strife eventually could reduce the funds earmarked for mutual defense, those funds, redirected to pursuits that improve the lives of humans everywhere. (DoesCosta Rica have a better life than its Central American neighbors because its only known military is a big local police force?) Is it therefore possible that the new awareness of mutual economic dependence could be harnessed and do for human kind what the world hoped could be accomplished by the United Nations 60 some years ago? The major difference is that the UN was motivated by good intentions while the interdependence of nations is driven by the hard facts and the laws of economics that are mostly motivated by ingrained human behavior as opposed to intentions, however well-meaning. One accepted way to better understand history is to follow the real motivations of the forces behind the past events as opposed to the publicized or popular motivations cited at that time to justify the actions taken.

Therefore it may turn out that the tough rules and laws of economics could do for the world living standards and peace what the UN was chartered to do at the outset. After all nations shouldn’t pick political wars with their best customers or their necessary suppliers or even with nations whose bonds reside in their treasuries or bank accounts of their citizen-owners of major business and income producers.

In fact that should be the goal of fixing the current world economy; indeed it would be a very low tuition to pay.

The remaining question is this: How or who can provide the encouragement and discipline to let the new awareness of economic inter-dependence lead us to a new happier world? It’s a big job and the stakes are high.