Abstract
Throughout our world we have various cultures and socioeconomic societies. Because of the prominence of the United States, many countries look to us for how to run their own countries. While the way our economic system has incredible benefits, it also has some serious drawbacks that can negatively affect not only the citizens of the country, but our environment as a whole. We’ve also seen over the last few decades how specialization has started to develop, and how interdependency between companies/countries has allowed for economies to succeed. Not only has specialization been brought about, but because of how technology has exponentially grown, we are able to see how digital currency and assets are becoming a part of our daily lives.
Western Socioeconomic Systems
When looking at the world from an overhead view, typically most of the attention goes towards the western world, primarily the United States of America. This can have it’s pros to look at how the markets are run in this area, but it also has numerous drawbacks as to how the “western world” society functions. One of the first topics that come to mind when speaking about this part of the world is Income Inequality, which has been a huge topic over the last few years since “inequality has not been this in the US since the Great Depression” (Malinen). In addition to this, the market economy as a whole can find itself harmed just by the fact that we honor and look up to those who typically have the most money in their pockets, which can really hurt a market economy.
The reason most people look to the United States as a global powerhouse in terms of economy is because of how wealthy the country is, typically given to the fact of the automotive and technological firms, which are located in this country. The US also has the highest GDP of 18.57 trillion dollars giving it the world’s largest economy (Kiprop). So when we look at the US’ economy, what are some of the benefits? Right away, we can say that we have sufficient amount of goods. Because of the nature of supply and demand, our capitalistic economy is able to figure out exactly what our country wants, and supply that demand- assuming that the right amount of money is behind it. For consumers, it really benefits us because we can know that when we are buying something, it is made of extremely high quality materials. Otherwise, consumers will forget about that product and move to a competitor. This is how competition is made, and creates an effective price tag for all goods, keeping products closer to the free market price. When looking at how it creates the world more sustainable, it actually ends up creating less surplus and shortages of products because of how we track how much interest customers have in a product. Companies typically keep track of this information and are able to follow this data to give suppliers a good idea of what they need to purchase.
Drawbacks of the Western Economy and Culture
While we are able to see initial benefits from this type of society, it also creates some serious backlash on the economy. It reflects extremely negatively on how the society views those who are considered “winners” in the market. For example, some people could be flying around in private jets, driving luxury vehicles, or wearing fancy clothes. On the other hand, we also have those who are starving, homeless, and just an economy that focuses on self-interests. There are currently mixed battles between whether it should be a capitalistic society, or whether we should have the government play a huge role in redistributing resources taken from taxes. Both sides of the “coin” can have their pros and cons, which is why many economies are currently functioning as what are called mixed economies, “an economic system combining private enterprise (i.e. privately owned business like State Farm or Samsung) and public enterprise (i.e. University of Michigan, public schools, and USPS)” (Dictionary). One of the biggest issues we’ve encountered with the market economy, and we are experiencing this on a global level is how the market is hurting the environment. This type of economy has caused “oil spills (Exxon Mobile) and dumping of toxic waste materials” (Lombardo). It’s kind of scary how we are allowing our world to continue on this path when we are hurting the lives of future generations for not increasing sustainability practices.
Over the last few decades we’ve seen how global corporations are able to impact the world both in positive ways, but also negative. Yes, they bring employment, but they essentially run the world. By paying lobbyists, they can basically create laws and rules how they please. It’s unfortunate, but this is what creates a massive barrier to “advancing a transition to democracy, peace, justice, sustainability, and a living economy” (Korten). There’s nothing inherently wrong with lobbying, but Congress relies on the money flow from lobbyists to help with their political careers, that they end up becoming lenient on laws, and pass them to keep lobbyists happy, as opposed to the American people (Represent). This is a scary truth to our society, and just goes to show how much money influences opinions and those who are in power. Going forward, it will probably be best for not only the American’s money, but for citizens of the country to limit the amount of lobbying being done in Congress.
Interdependency of Nations
As the world has grown in population, technology has increasingly developed, allowing countries to interact with each other through trade and actually rely on each other to succeed. We’ve seen this lead to more peace in the world because they are less likely to end up going to war. As organizations begin to globalize, this phenomenon actually happens naturally creating stronger connections between different countries. For example, with Wal-Mart they rely on manufacturers and numerous companies from around the world to create goods to sell in their stores. Both companies in the relationship rely on each other in order to succeed. The biggest benefit to interdependency is the division of labor. By creating specialists in various fields on a global level, it creates massive amounts of expertise in various positions, allowing for more interdependence, eventually building a massive trading network.
Banking the Unbanked
One of the biggest issues we’ve seen occur over the last few years is the issue with inflation, or hyperinflation in many 3rd world countries. In some of these nations, many individuals don’t even have access to banks. According to the World Bank’s Global Financial Inclusion database, there are nearly two billion people around the world who don’t have any access to a bank account through a financial institution (Hodgson). By limiting this massive amount of people to having control over their money, it’s actually keeping people, mainly women, from wanting to participate in society and help the economy. About 55% of the unbanked people around the world are women. This is actually pretty crazy to think about considering many of us Americans are living pretty dainty, luxurious lives compared to many.
An interesting topic that has been brought up over the last few years is how basically anyone can become their own bank using the technology that has recently been developed. If you have a phone, or wireless device that can connect to the internet, you can essentially create your own bank, and have control of all your money! This phenomenon has been brought about through digital currency (i.e. Bitcoin or Ethereum), enabling anyone in the world to become part of an interdependent economy. For many, they have seen this technology and have begun to take advantage of it- primarily in countries who don’t really have a central bank or their primary currency is constantly losing value. This is occurring in countries like Sudan, Venezuela, and even Mexico (though their inflation isn’t nearly as troublesome). By giving some of these citizens the power to control their money and be able to essentially pay for goods and services, it creates a much more healthy cash flow, even though this cash isn’t per se physical. In addition to that, it’s interesting to see how, even in the United States, people suffer from underbanking! “According to the FDIC, 20.1% of all U.S. households are underbanked, indicating that they have a bank account, but elect to use services such as check cashing, money transfers, payday loans, and pawn shops as alternative forms of banking and credit” (Hydrogen). These stats are incredibly shocking! So, with these issues, how can a global economy occur? Well, for starters, the issues with Bitcoin and Ethereum right now as a digital payment is their scalability. When there are a massive amount of transactions occurring at the same time, the confirmation time can take a while! There are numerous projects who are looking to solve some of these transfers, which we call micro-transactions. A project who has put together the pieces to solve this ongoing issue is Hydrogen, with a platform that they call “Tide”. What does this mean for individuals? It means that people will be able to not only use debit and credit point of sale transactions for people who live in areas with adequate financial resources. In addition, they will also be able to use Hydro for micro-transactions at a scalable level for individuals living in unbanked areas for day-to-day payments. These individuals will be able to have complete control over their funds and can create interdependent economies. Due to the nature of the blockchain, which is the technology underlying this digital token, it allows for transactions to be completely transparent and can be sent to anyone in the world- the ultimate form of interdependency! The P2P (Person to Person) network keeps everything decentralized and doesn’t allow for it to be manipulated, which is what is occurring in the countries such as Sudan and Venezuela.
Conclusion
I think the most interesting topic is how technology will continue to develop to allow for higher levels of interdependency, and the bigger question, whether they’ll be adopted. When looking at massive governments like the United States’, it will be important to try to limit the amount of money that companies put into lobbying as this has created unlawful practices within Congress because it continues to bring in money for their political careers. It’s created a bad reputation, but it needs to be addressed so the laws that are passed are putting the American citizens as a higher priority rather than the massive corporations lobbying to pass laws for their own benefit.
References
Amadeo, K. (2018, August 13). Market Economy, Its Characteristics, Pros, and Cons, with Examples. Retrieved from the balance website: https://www.thebalance.com/market-economy-characteristics-examples-pros-cons-3305586
Hodgson, C. (2017, August 30). The world's 2 billion unbanked, in 6 charts. Retrieved from Business Insider website: https://www.businessinsider.com/the-worlds-unbanked-population-in-6-charts-2017-8?r=UK&IR=T
Hydro API Reference. (n.d.). Retrieved from Hydrogen Platform website: https://www.hydrogenplatform.com/docs/hydro/v1/#Tide
Jose I. dos R. Furtado, Tamara Belt, & Ramachandra Jammi (Eds.). (2000, February). Economic Development and Environmental Sustainability. Retrieved from World Bank Institute website: http://documents.worldbank.org/curated/en/880311468739765984/pdf/multi-page.pdf
Kiprop, V. (Ed.). (2017, August 1). Countries With The Highest GDP. Retrieved from World Atlas website: https://www.worldatlas.com/articles/countries-with-the-highest-gdp.html
Korten, D. (2016, August 10). The New Economy: A Living Earth System Model. Retrieved from The Next System Project website: https://thenextsystem.org/the-new-economy-a-living-earth-system-model
Malinen, T. (2015, December 17). The Economic Consequences of Income Inequality. Retrieved from Huffington Post website: https://www.huffingtonpost.com/tuomas-malinen/the-economic-consequences_b_8827634.html
N/A. (n.d.). Retrieved from Dictionary website: https://www.dictionary.com/browse/mixed-economy
Project Hydro Features — In Depth Look. (2018, May 20). Retrieved from https://medium.com/hydrogen-api/project-hydro-features-in-depth-look-39faa29f0d61
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