Written by Rafeed Redwan (Ideal School and College, Dhaka)
Just a century ago, the economy of a region constituted whatever the locals could come up with and the handful of items elite merchants considered worth a spot on their voyage. Now, the Economy is just about the biggest example of Globalization one might conjure up. Something as measly as one’s breakfast platter could contain wheat from India, beef from Argentina, bananas from Indonesia, and juice from Italy, all of which were delivered to the local shops within the week. The sheer scale of our economic endeavors would leave the experts from hundred years ago speechless. However, with this huge machine we call the “global economy”, there are some caveats.
The economy today would be best compared to a collection of huge and tiny rocks all in tandem with each other, perfectly balanced. However, if even the smallest rock is moved, the whole thing turns into an ugly landside. Since so much of our dealings are now globalized, the smallest little quirks or inconsistencies bring the world to a halt. That indicates we are paying for events and contingencies that we don’t even know exists. From massive political decisions such as sanctions and war to a tiny shipping error in Panama that never even reaches social media, everything affects our economy and consequently our life, more than we know.
Right now, Russia is wreaking havoc on their neighbor Ukraine, however, 5,417 kilometers away, Germany is facing astronomical consequences. In the past, the only way to face the effects of the war was to be directly involved in it, but that is not the case anymore as the economy of the whole world is connected, and countries such as Germany have issued economic sanctions against Russia. The sanctions then caused the Russian Ruble to crumble down, effectively putting their economy and funding of the war in jeopardy. But in retaliation, Russia cut off the Natural Gas supply of Germany, making it difficult for them to survive the winter without repercussions. All these events are the dawn of a new warfare called “Economic Warfare”, where countries bring down one another without firing a single bullet. But not only big decisions, but also small and minuscule events cause the world to rethink its management of the economy. One such incident occurred in 2021 when a ship managed to jam itself in the Suez Canal and caused the entire world plenty of headaches. The ship blocked the major shipping lane between Europe and Asia for only a few days, the entire world felt the effect of this minor incident. When the economy became globalized, that meant supply chains between vast distances had to be intertwined, so as to say, a car cannot start production in Europe because a bolt failed to arrive from China in time. That is why, when the Suez Canal was blocked, it meant that the entire world would the getting their materials later than expected, causing a disruption in the supply chain. All in all, the Suez Canal incident caused billions of dollars in losses all across the globe. Another thorn in the flesh would be the monopoly of a few regions over the production of nearly all the goods in the world. Currently, China holds a monumental amount of production and supply for nearly everything in the entire world. China’s cheap labor, over just a few decades, allowed it to become the manufacturer of everything for the world. This monopoly hands them incredible leverage over all the nations, which is certainly concerning. It was allowed to happen to allow the rapid growth of our globalized economy, the very thing, China can now hold hostage against the rest of the world in case of conflict. A huge part of our mammoth globalized economy is, of course, fossil fuels and minerals. Gas and Petrol prices have literally dictated the fate of entire nations and companies, going from broke to riches. However, this dependence on fossil fuels only adds to the fragility of our Economy. When the electricity goes out in our homes, we replace the power with generators or batteries, but the biggest machine in the world, the economy, is running on the power and mercy of fossil fuels, meaning when the fuel runs out, there likely won’t be anything to replace it. So the economy of the entire world is now at the beck and call of fossil fuels and more importantly, the people who control the fossil fuel. A similar story could also be told about the reserve of minerals. The entire world, in a bid to combat climate change, is moving toward electricity and batteries. Batteries are composed of Lithium metal, making the regions with lithium availability an economic hotspot. The supply of lithium determines the business of the biggest sector of the economy, tech, which means the individuals and nations with access to lithium and other earth metals, hold an unfair advantage over the fate of the collective global economy. These dangerous monopolies leave the Economy of the world in an incredibly volatile position and puts a great deal of pressure to be perfect in our decision-making because if we don’t, the entire world could suffer.
Putting the aforementioned situations into the limelight through words, it can be clearly understood the reason for which, famous author and businessman, Robert Kiyosaki, said,” Our global economy is much more fragile than many of us realize.” We reap the reward of our globalized economy, but often fail to realize that, even though we have built one the most impressive systems in history, it is still as brittle and easy to crumble as any other thing we have built.