Friday, May 30, 2014

A New World Order

I have been telling some of my friends and peers recently that the new world order is taking place and the power, influence and control of the world that US exerts would be distributed, rightly so, to other rising powers (parts) of the world in the next few decades. US has enjoyed the influence since world war 2 and with the acceptance of dollar as international trade currency, kick-started the dollar craze across the world. The dollar craze led to many economical changes, good and bad, across the world and none so spectacular than the valuation of the US dollar for all these years. This high valuation of dollar led to the rapid rise of the US economy since the world war 2 and gave US extra-ordinary leverage across the world, economically and politically. While the use of dollar as international currency had some minuscule disadvantages for the US in resulting in rising cost of living due to appreciation of dollar, the economical advantage led US to strengthen an already powerful army it possessed during the world war 2 days to insane levels of military might as of today.

Things are beginning to change now. The rise of China as economic powerhouse with it's dogged determination and discipline has resulted in early signs of the shift in world order - one super power to multiple powers. Alongside china, India, Russia, Brazil and South Africa, popularly known as BRICS, are also exhibiting greater economic progress and in some cases, much better management of economic and social indicators than US, which allowed market economics the free-hand. While there is nothing wrong in market economics as it's objectives are to maximize the Societal surplus ( Consumer surplus + Producer surplus), sometimes, very conspicuously as well, it has led to situations only where producer surplus is maximized. As societal surplus is just summation of consumer and producer surplus, it doesn't effectively capture whose surplus is maximized as long as societal surplus is greater. However, that is not the right way to go about it coz if Consumer's (common people) surplus is zero and Producer's (Corporations, in general, business) surplus is 100, it leads to lopsided growth. 

I had deviated from topic of changing world order to talk little bit about the economics concepts I studied recently coz I see the change in world order in this spectrum as well - excessive producer surplus to more equal consumer and producer surplus. I know very little of economics but I believe that when in doubt, always implement policies that maximizes Consumer surplus first, then look at producer surplus. Again, this is not to say the policies being implemented in the rising powers or the rest of the world is much better at maximizing the consumer surplus (Or) the US and some other market based western economies are solely focused on market based principles only - far from it. However, such a change is required and will result in new world order that is equal as well. Equality or the lack of it in the world is a different topic that I will write about in future.

A very good speech by President Obama and his pragmatic foreign policy outline which takes in to account the developments of the world:

Good articles that prompted me to write this blog: