It's my personal belief that no one be left behind. Economics is
quite a lengthy subject, at times even grads at uni may not even
touch on it but focus on their core subjects instead. Thus many
laymen may be slightly confused, and not sure which book to even
focus on to understand what's really going on.
To comprehend global economics, you will have to start at the
very basics of how economics came about.
1. The role of economics began when mankind became civilised and
started to live in communities, went into farming and animal
husbandry instead of living in caves and jungles as hunters.
2. The land provided food in abundance, more than a farmer could
eat, thus they sold their excess harvests to others, for not
all farmers grew the same crop - some are wheat, some are grapes to
make wine, some are veggies, some are fruits, etc. From here
trade was formed.
3. They not only sold to their own communities, they sold to
other communities as well. The beginning years were barter trade, a
pound of apples for a pound of wheat.
4. However, as these farmers were living in a community
with agreed upon laws, they had their headmen or
chiefs. The barter prices were largely left to them to
decide within communities and beyond, so that none may lose out, as
there will be issues of supply and demand based on good or bad
harvests due to weather, earthquakes, wars, etc.
5. As civilisations grew, so did wealth of communities as
there were plenty of Earth's resources to meet growing
educated needs, such as gold, tin, rubber, etc.
6. The wealth of nations depended largely on the amount of gold
each have, for gold does not rust or fade over time, unlike crops
or other ferrous metals. It was precious. Many of these chiefs
traded crops for gold instead of barter trade, and use gold to
purchase other needs.
The chiefs created coins based on the value of gold they
have in their treasuries, in exchange for the crops their farmers
brought in to their trading centres. Such coinage can be used
to make other purchases the farmer needs within
their own community.
Ancient China used not only coins but pieces of written
promissory notes as well. As it was difficult and dangerous to
carry gold around the country, they used such promissory notes (
the beginnings of dollar notes ) for trade with others, promising
the sellers an amount in gold that can be collected at any time at
a certain place such as their bankers in specific towns. These
notes can also be used by the seller to exchange for other goods
with other sellers up to the value of the note.
It was believed that Marco Polo brought back such 'dollar' notes
concepts to Europe after he visited Kublai Khan in China.
And from there, our present monetary system remained as it is -
every dollar printed must be backed by gold or the amount of wealth
valued. To print more dollar notes would be to devalue the
currency, eg $1 = 1 ounce of gold, accepted by all
international traders. To print 1 additional dollar yourself as a
chief would mean your dollar is now worth only 50cts (1 ounce
of gold divided by 2 dollar notes)
7. By the 70s, the gold standard was dropped by mutual
agreement. Instead the US dollar was the standard of international
trade, as US is the wealthiest and most stable country in the
world, where anyone can encash his promissory note (US dollar) for
gold, but no one does it for it is crazy to carry gold around. That
note can and is recognised by every country.
Instead of gold, other nations hoarded US dollars
or bonds instead. The amount a nation has is the value of
its wealth, backed and held in faith that US will pay and can most
certainly pay. It's raw resources alone is staggering.
8. With the monetary system based on US dollar
trade squared away, the issue now would be - what is the
global economy?
a. At its basic level, it simply means trade - the life source
of the world - is now in the hands of MNCs instead of traditional
govts who only regulates. MNCs provide jobs, manufacture and sell
products anytime, anywhere globally with no borders for
profits.
In the past, it had been govts who protected their own
industries but with free trade, MNCs owes no allegience to any govt
except to themselves, free to move into any country to create jobs
and prosper, and contribute to the betterment of societies
with their wealth creation, instead of olden days of inefficient
and unproductive nationalistic protectionism.
Societies also prospers by the higher productive levels of
competitive economic activities, generating higher tax returns for
social spending.
9. The next issue TS might want to know is - what's in it for
me, the common layman, with the global economy or
globalisation.
PS: It is quite lengthy, I apologise. I had to keep it simple so
that more may understand, and I do not claim my perceptions are
correct. If there are any errors, it is mine, but I hope that I may
have pique TS's or others' interest to go to the libraries to find
out more. Globalisation is here to stay and best everyone
understand it so that none gets left behind bewildered.
