Friday, January 27, 2012

Current Global Economic Issues - The Good, the Bad and the Ugly of Having a Global Economy

Globalization

In order to get a better understanding of the current global economic issues that have led to the current global recession we have to look at the history and the overall impacts of these trends on our economic health.

Many critics have stepped out to say that globalization has made the poor poorer and the rich richer. Actually there is compelling evidence that this is, in fact the case. Take for example the U.S. economy right now. While the middle class is quickly disappearing, there are more billionaires in this country than ever before. Some call it "recession" but in truth it is simply a transfer of wealth.

History

A global economy has been around for thousands of years.. People have been traveling by sea to trade goods as early as they were able. In the Middle Ages, traders would travel along the Silk Road connecting China and Europe.

During the late 18th century, the Industrial Revolution brought with it faster production machines and steam powered boats. Production and delivery could be done much faster than ever before.

After the 1980s, however, globalization really picked up speed. Legislation such as NAFTA (North American Free Trade Agreement) and the formation of the WTO (World Trade Organization) really solidified a global economy. For the first time in history, the entire world's economy is under the control of one system.

Globalization

Globalization allows nations to produce what they do best. If a country can cheaply manufacture steel, another country can purchase that steel and concentrate on other markets that are better suited for that country.

One of the major downsides to globalization in this country has been jobs loss. So many corporations have taken advantage of the tax incentives (yes, our government pays them to outsource) as well as the significantly cheaper labor. Other less fortunate countries pay a much higher prices however. In South Africa, for example, a certain cola company that I will not name here has gone in and taken corporate control of their clean drinking water. African children drink more of the soda than water...because the soda is significantly less expensive.

Moving Forward

So there are both economic and ethical problems associated with globalization and most believe it is a direct result of our current global economic issues. The best thing we can all do is to educate ourselves and encourage others to do the same. Only through knowledge can we truly become empowered.

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