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Re "The menace of globalization" ... for the Poor?



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Vamsi wrote: 

My point is precisely the same.  May be you can do some justice to
Modern Economics by utilizing the time domain as in other disciplines.
Many disciplines such as Physics, etc. "become" undeterministic as
"time" resolution increases.  For example, Quantum Mechanics which is
really Statistical  Mechanics.

Particularly, I am concerned about the fact that time plays no role in
any
mathematical formula that has been presented in Economics.  For example,

>>>> 

Well, I am not an economist either, and fancy two non economists talking about
economic modeling. Perhaps the economists here can correct my mistakes. 

I'm exporting themes from information systems modeling onto economic
modeling... The time dimension is very important in modeling economic systems.
Because, the behavior of a system is not only dependent on its behavioral
context like buying power, resources, etc., but is also a function of
behavioral history. The behavioral history is the prevalent culture and ethos
prevalent in the society, which has garnered its present characteristics by a
long behavioral history. 

What present day globalization does is to strongly interconnect societies that
have been isolated from each other for centuries. Note that, there is nothing
"good" or "bad" about this interconnection itself. Globalization --
retrospectively speaking -- is an inevitable fact of history. We were *always*
a globalized world; but the *degree* to which disparate systems were
interconnected and the nature of interconnection were different. 

Earlier, interconnection was hierarchical in nature -- usually the only
interaction between say India and Congo, for example was restricted to
governmental interactions or diplomatic interactions. And very few common
citizen interactions. The huge cost of long distance communication brought
about this hierarchical nature of interaction. 

As a result, inter-society economics also came to be hierarchical in nature.
Each system had its own currency, its own dynamics, and its own internal
buying power; largely cut off from the other systems. 

However, present day globalization has reached such a stage that, physical
proximity is no longer a requirement for conducting economic transactions --
even between individuals. Two people sitting next to each other in an internet
cafe, for example, may be transacting (even economically) with two separate
parts of the world! 

Such levels of globalization upsets the conventional notion of international
monetary trade. Consider a hypothetical situation: every citizen of India is
sitting in his/her room with a computer and internet connectivity, writing
code for a billion customers all over the world! Such a thing has a
theoritical possibility today; although not practically feasible to sustain
for more than a day. 

Earlier, a free economic system inside a country which was largely demand
driven. The economics strove to unearth demands of the system and meet them.
While present day globalization is popularly touted as a global free market;
it is far from the truth. Disparities in buying power, the working culture,
and a lot of other factors go into determining exchange rates between
currencies which make entire systems have a strictly lower buying power than
other systems. And assuming that every player seeks to obtain larger buying
power; economic value never flows into these systems at the lower strata. 

And such a thing is even more probable today because it is relatively easy to
connect across systems individually; but horrenduosly difficult to
collectively raise the exchange rate or the collective buying power of the
system. 

"The poor get poorer..." was dismissed in capitalist systems by saying that
the poor were lazy and didn't contribute, and hence deserved their poverty.
However, the present day poor becoming poorer has nothing to do with their
being lazy. Just try to lead the lazy life of a road labourer in India...
Economic discrepancies are so glaring and so prevalent, the poor are more
likely victims of economic policies gone wrong. 

Normally, only governments are blamed for the poverty that exists in their
country. However with present levels of globalization, economic equations can
get so skewed that even with free markets, opportunities don't get created in
systems that are lower in the buying power strata, simply because economics
moves towards maximizing buying power. 

Sure, earlier we had a government controlled economy, which was bad for the
system. But now even the government cannot do much in the face of these global
forces (or can it? that's the question!). As a result, some of the players
start asking for a reversal into government controlled "safe" economics; and
others start portraying all government officials and bureaucrats as corrupt,
bloated, etc. and hold them as villains to be bashed for every problem. 

How do we make the economic dynamics demand driven?? 

Srinath 





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