Tag Archives: economics

New era

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What’s happening now might be the biggest change in global politics that has ever happened outside of weapons of war being used. The shift in finance, the collapse of friendly trade, the forming of new trade alliances, and the political and economic alliances that are currently in the works could not have happened in the last 100 years without missiles or guns being fired.

Yet here we are. Empires fall. New superpowers emerge.

The question now is, can this happen while remaining a political and economic battle, and not one that requires force, might, death, and destruction?

I hope so. I want to believe so.

Ever since I read ‘The World is Flat’ about 20 years ago, I could see that the path forward was going to be about economic strength being based on countries focussing on their competitive advantages. I could see that protectionist policies, tariffs, and isolation would be the demise of even the greatest economies. And that the future powerhouses would be those that have natural resources that the entire world would need.

We are approaching a new era, and the countries that will prosper are the ones who recognize their strengths and are ready to negotiate the way they share those strengths with the rest of the world. Let’s hope we can have peace to go along with our prosperity. The looming question is, can we enter this new era without violence? Can we be a civilized race? Or are we just warring monkeys who happen to wear clothing and buy expensive accessories?

How gullible are we?

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“… it is entirely possible that future generations will look back, from the vantage point of a more sophisticated theory, and wonder how we could have been so gullible.”

— Closing sentence of Introduction to Quantum Mechanics by David J. Griffiths.

I came across this quote today and it made me wonder just how gullible we are as a species? Not just because we don’t understand quantum mechanics, not just because we don’t understand the gap between Newtonian Physics and Special Relativity, but for so many more simple and less profound reasons.

We fight over imaginary lines we call borders. We spend a considerable amount of our existence working for money… pieces of paper that only have value because we believe it has value, while our governments (we also make up silly rules for) print that money in mass volumes to keep our economies afloat.

We break into tribes based on heritage, relative strength, socioeconomics, and even skin colour. And we spend a tremendous amount of the global economy to create weapons to protect ourselves and also threaten ‘those who are not like us’.

We fight over false Gods. Why do I say false Gods? Because there are literally thousands of them, and even the largest, Christianity, doesn’t agree with who gets into heaven. So the vast majority of believers are believers in the wrong religion or wrong sect. Yet hate, discrimination, and wars are all byproducts of people of faith fighting people of different faiths, very often ‘in the name of their God’.

Human beings are playing the game of life with imaginary boundaries, imaginary political structures, imaginary currencies, and imaginary Gods. We are gullible. We are blinded by unimportant things, and in 100 years humankind will look upon us like we were as backwards as we perceive cultures and societies that did barbaric and stupid things 100’s of years ago.

Trade Neighbours

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As we watch a trade war unfold with the USA imposing tariffs on goods from Canada, Mexico, and China, the people that will struggle the most are those that can least afford it. But make no mistake, the cost of living is going up for everyone. This will anger people, and it’s already showing up.

One of my favourite sports stories comes from a Toronto Maple Leaf versus the Nashville Predators hockey game back in November 2014. During the American National Anthem the sound system faltered and the Canadian fans finished singing the US anthem. Slightly over a decade later, I just saw a video clip from tonight’s game, where the Vancouver Canucks fans boo’d during the US anthem (they did cheer for the singer when the anthem was done).

I’m not an economist, and while I know we are going to see a hike in prices, I really don’t know what these US tariffs are going to mean long term? I don’t know how countries will retaliate? I don’t know what can get us back to trade normalcy?

But I want to live in a country where we have mutual respect for our (cooperative) neighbours. I want to be in a country where we finish an anthem of our neighbours rather than boo it. And I want to believe that we can find a way back there. I’m just not convinced the politicians in power will get us there any time soon.

For now the metaphorical gloves have come off, and petty fights have begun. Sure it’s just the booing of a national anthem right now, but that’s likely just the start of the anger, hate, and even vitriol to come. I just hope that the leaders taking us down this route will remember what it means to be good neighbours, and some time soon we’ll get back to being fans of each other… Neighbours in geography, geopolitics, friendly sports competition, and yes, even trade.

Unsustainable and increasing inequality

Here is page 7 of an OXFAM report, Inequity Kills:

What’s not necessarily well known is that the Forbes and Bloomberg ‘Top 10 Richest’ lists never includes some of the richest and wealthiest families which have accumulated wealth above and beyond anyone on these lists… there is a lot more extreme wealth than these lists suggest.

Add to this the first two sentences in the report’s summary:

“A new billionaire has been created every 26 hours since the pandemic began. 6 The world’s 10 richest men have doubled their fortunes, while over 160 million people are projected to have been pushed into poverty.”

This kind of lopsided wealth distribution simply can’t be sustained. And yet in the hardest times of the pandemic, when many low wage people couldn’t work, prices and inflation skyrocketed while corporations that produce oil, and sell groceries, reported their greatest profits in years. They also returned their largest dividends to stock holders… most of whom are already very rich and can afford to hold a significant amount of stocks. We’ve all heard the saying, ‘The rich get richer while the poor get poorer,’ and it seems that this is more true now than it ever has.

I stumbled onto this report after reading this article on NPR, “Move over, Jeff Bezos. India’s richest man is now wealthier than the Amazon founder“. The Billionaire club used to be almost exclusively a Saudi and USA thing, other than old family wealth, but now it’s a global phenomenon. Everywhere in the world there are small groups of people accumulating wealth in significant size, while there are populations in significant size that are dropping below the poverty line. This simply isn’t sustainable. That said, I don’t see anything upsetting this trend in the near future. Further, I’m at a loss to think of how this will change in the coming years?

At what point does a society with a few people owning more than half of the global wealth become unproductive for the wealthy? The abject poor can’t by the products the rich manufacture. The suffering middle class with less-than-ever disposable income, and more-than-ever accumulated debt soon won’t be able to help either. So what breaks? How does this self-correct?

I certainly don’t have any answers.

Five to Eight Percent

When I think about the modern company with shareholders, I can’t help but think that this system is designed to undermine ethical and environmental progress. There are companies laying off workers right now while providing shareholders huge dividends and returns. The system is flawed. These returns help drive the company stock price up at the expense of ethically growing the company… instead of helping workers keep their job and keep their wages fair in comparison to what shareholders get

What if companies promised shareholders a maximum of a 5%-8% return? Any company profits beyond that are invested back into the company, towards employees, and/or towards environmental or community initiatives. If this were the case, companies would still have the same commitment to meet shareholders targets, but those targets wouldn’t be based on greed. Instead they would be focussed on doing the most good.

I’m not an economist and don’t know all the ins and outs of how this would work? I don’t know what the magic return percentage should be? But I do know that the current model is based on greed and unsustainable growth. If companies capped shareholder returns at a safe investment amount, and promised to do good with what would have been more returns, I think there would still be a market for the stocks… And these companies could help make the world a better place.

Economic mysteries

I don’t pretend to understand economics, but I’m beyond confused about what’s going on in the world? Countries are printing money like mad, but inflation is in check and so are interest rates.

It’s a seller’s market in real estate and price wars are happening. Family members got over asking price for a condo just north of Toronto. A friend of mine just got $100,000 over asking for a townhouse in Vancouver without inspection/conditions.

I understand why companies like Microsoft and Amazon have highly valued stocks, they have truly benefited from remote working/learning and lockdowns, but why is the whole stock market doing well, while retail companies and restaurants are laying off staff and imploding?

I’ve just tried a couple times to explain these patterns, but deleted each attempt. They are pure speculation on my part.

My fear? An eroding middle class and a world divided between the have’s and the have nots. Is this how it starts? It’s shocking how many people live paycheque to paycheque, and I’m not sure those numbers are getting better? Is this upside down and inflated economy going to last? And if it doesn’t, how will this effect the poor? The middle class?

I hope someone is paying attention and looking to the future, because I don’t think I’m the only one that sees this as a big, puzzling mystery.