WHAT IS THE GLOBAL ECONOMY?
Whenever the topic of the local economy is brought up, economic pundits quickly remind us that we live in a “global economy,” but what exactly does that mean? Does it mean that economic activity now takes place across the globe whereas it previously did not? Does it mean that economic activity occurs much more rapidly than it previously did? Does it mean that human society has changed to the point where the economies of different countries with different cultures are irrevocably linked together? The answer to each of these questions is no.
Global economic activity has been around for over 2,000 years. The speed at which economic activity takes place is certainly faster, but this increased speed is of little to no consequence to the small and medium-sized business in other words the overwhelming majority of businesses in the world.
The global economy is really nothing more than the fact that the banking industry and some very large companies have expanded to the point where they don’t really have any national loyalty. Any claim to a national identity is merely a facade; they hold no national allegiance and their only interest in any country is the ability to make a profit. The large international companies make claims of nationality, their headquarters have to be somewhere, but their operations, offices and factories span the globe. Their national claims often appear to nothing more than marketing in their countries of origin.
They love free trade agreements because these allow them to lay off more expensive workers in their country of origin and replace them with less expensive workers in another. This increases their profits without regard to the impact in their home country or to their employees.
“If economic activity across the country was primarily local, the overall economy of the country would be self-sufficient because the local economies would be self-sufficient. The overall economy of the country would be stable because the local economies would be stable. The overall economy of the country would be resilient because the local economies would be resilient. There would still be regional and global trade because the desire for other goods would still be present, but there would not be a dependence on those goods” said Salomón Juan Marcos Villarreal, president of Grupo Denim.