Economic Clout Across The Ages

We are pelted everyday with news from around the world regarding the economies of foreign nations and the impact of those economies on our own US economy.  There is no question that the revolution in communications through the use of computers and the physical transport of goods has made the connection of individual economies more dependent on one another than every before.   There are so many ways they measure these various economies that sometimes it is useful to go back to fundamentals to determine who really has a strong economy even considering such interdependence.

Many often cite the use of computers and the internet as the driving engines of the globalization of trade and commerce.  There is no question that there is truth in those assertions.  Those factors have made it not only quicker but easier and more reliable to trade goods across the seas or borders.   Inventory control, production control, manufacturing processes and even marketing and advertising have all been greatly impacted by the computer.

The influence of the computer though would have been quite limited if not for the simultaneous revolution on the transportation systems in the last three decades or so.  So much of that revolution is never seen by us or even noticed because we have so little personal contact with it.  We sit down and use our computers everyday and log on to the internet; we are involved with them and have a sense of their importance.  But of equal importance or the vast fleet of new trucks on the highways around the world; the use of the new super tankers and the supercargo ships.  Those ships still carry a huge portion of all the goods and commodities of the world. Even the manufactured products come in those ships.  Those umbrellas or bikes built in China weren’t flown here, they came by ship.  Even the railroad systems have upgraded substantially in the last few decades with all kinds of specialized cars.  All the information in the world doesn’t do you much good unless you can make progress where the rubber meets the road and move things with that knowledge. 

With all that knowledge and movement of goods we are told that we are connected to China and the other major economies of the world.  That is true but we are often farther advised that we couldn’t survive without them.  That it would be devastation on an epic scale if those commercial bonds were severed through trade wars or outright war.   How strong would our economy really be if all international trade was terminated due to international conflicts or trade wars?   Believe me, there are people in the Pentagon and the CIA who think about these things.   What if nations had to mostly look within for their prosperity who would have the most sustainable economy?  That is the best measure for a nation state to examine regarding its long-term viability.

The ones who would suffer the most are pretty obvious.  Those places that are completely dependent on foreign trade or foreign sources for their economy would falter immediately.  Japan would grind to a halt; remember Japan started WWII with the US and Britain primarily to assure petroleum supplies.  It has few natural resources.  Likewise a country like Singapore would atrophy.  Without the constant flow of goods around the world with its merchant-trader status it would have no source of revenue.  Great Britain has very limited natural resources and even lacks the ability to feed its own people other than a bare subsistence diet without imports.  It would have to join with European nations to survive.

Europe likely would operate as one for economic purposes at of necessity, not necessarily love for one another.  All of Europe has resources to feed itself and even supply basic power needs but it would hurt badly.  Without trade India is just a large place on the map with a billion hungry people.  It would quickly sink as it lacks even basic power supplies for its people.

The Arabs and the Middle Eastern countries would likewise not fare well.  They have enormous supplies of oil but nothing else to offer.  If the world was in a lockdown mode and they couldn’t sell their oil what would they do?  They wouldn’t find any buyers for their sand.   They will be wealthy only as long as they can pump oil and sell it.  Israel would fare a bit better but not much.  Their economy is certainly more diversified and they know how to feed themselves.

China would stumble very badly.  They do have coal and could have power and some other natural resources and could feed their people.  But the standard of living would be very subdued and there would be no chance for any growth.   Without world markets they would have a market that could barely keep they people from rioting in the streets and they might not even be able to achieve that. 

Russia and the US would fare the best in an economic Dr. Strangelove scenario.  We both have ample resources for production and for power supplies.  We have the coal, iron, oil and huge swaths of land for agriculture.  The US would stand head and shoulders above everyone else because of our power supplies and manufacturing base and a population that can sustain our economy.  It wouldn’t be a walk in the part by any means but compared to everyone else we would be the King Midas of the world.  We are far and away the most self-sustaining economy in the world.  No one else is even close.   So when China or others bark too much about trade wars they might want to walk through their own analysis of how that would work for them.

“A word fitly spoken is like apples of gold in the setting of silver.” Proverbs


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Filed under business, Economics, Foreign Affairs, Politics

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