Friday, December 30, 2011

My prediction of the Republican nomination for 2012

 If the candidates were players in a game of RISK,  then it may go down like this. Bachman rolls a six and takes Iowa. She later takes Minnesota. Romney rolls a ten and takes New Hampshire. Gingerich rolls a ten, and takes South Carolina. Ron Paul rolls a four and drops out. Santorum rolls a six and takes Pennsylvania. In the end Michelle Bachman loses because she can not forge enough alliances, Ron Paul loses public support over his isolation policies; Romney is not likeable, Santorum extreme, Gingerich bombastic, only Huntsman remains as the last man standing. Perhaps the most moderate true conservative of the bunch. The similarities between this political season and global economic expansion are not perfect, but they are interesting. As a candidate attempts to isolate they are destined to fail. The most inclusive and expansive thinkers are the candidates that rise to the top. 

My previous post was about how the world economy is like a giant game of RISK. In the paragraph above I have applied this analogy to the 2012 presidential nomination process. Please read the post,

RISK, recovery, and the future of the nation state 

 Happy New Year!


Saturday, December 17, 2011

RISK, recovery, and the future of the nation state

Have you ever played the game of RISK? When I was a boy I used to sing the song, “R-I-S-K, easy to play”. Could the current economic debate in the US, and the worldwide recession be like playing the game of risk? The differences are important. In the classic RISK game you roll dice to win countries by crushing armies. In this current world recession the analogy works best in economic terms. When we roll box cars on the dice today we steam roll economies and crush their currencies instead of their military.

In this new game nation states are forced to merge their economies. This forced consolidation of economies is leading to a face off of key trading blocks. They way I see it; there are six players in the game today. This is also coincidentally the right number to finish the game of RISK. The players are Latin America; The US & Canada, Chindia, Political Islam, Eurasia, and Southeast Asia. Latin America rolls a twelve to start. Brazil reinvents its currency and lifts South America to emerge as a market player. The US rolls a three and loses some markets to China who buys their currency with the resulting unequal exchange rate. Chindia rolls a ten next and expands its markets into the US. Political Islam and Africa roll next and receive Arab spring, immigration, and population cards. These are three essential components to long term economic growth. Europe rolls snake eyes and Russia picks up some of her influence.  Southeast Asia rolls a three as austerity and isolation has not worked out.

In the next round Latin America rolls a six. Free trade with the US is sputtering due to suspicion and tariffs. The US rolls a six. This is pretty much a stalemate between China and the US-Canadian block. China however rolls a twelve to exploit Latin America, Africa and Political Islam. The Arabs begin to self determine governments and the resulting economic trade with neighboring countries increase economic stability. They pass on their turn to build their strength. Eurasia passes on their turn, and attempts to consolidate their currency. South East Asia and Japan roll a three and are collapsed by an economic and literal tidal wave.

In the next turn, Latin America rolls a ten and expands their influence. The Canadian-US block rolls next and attempts to invade China by exporting energy resources to them. They roll a seven and win a marginal edge in economic trading. China rolls a ten and slows it’s exploitation of Africa the middle east and Latin America. Political Islam rolls a twelve and Turkey squeezes Iraq from the left and Iran squeezes them from the left. Africa remains vulnerable to economic exploitation. In Africa there are rich raw materials and weak governments everywhere. Europe rolls a three as they decentralize their economy and release failing states in a period of economic austerity. South East Asia rolls last with a six as they reach out to other countries.

If the economic game of RISK works out like the political one, then perhaps we will all land on our feet. The answer to the global recession is to merge the trading blocks and make them bigger. It is feasible that these six economic trading blocks can be merged into three. Europe can merge with Russia, and Africa’s political Islam, The US with Latin America and India, the Chinese with South East Asia and Australia; The Japanese, The United Kingdom and Israel will decline unless they change isolation practices.

It’s all about expanding markets for efficiency. The greed of Wall Street bankers is based on the premise of finding the level water mark of capitalism. For this reason I disagreed with the Wall Street protesters in a former BLOG post. I agree with them that there are reasons to be upset about our lack of opportunities, and wealth. I disagree that it could have been prevented. Unfortunately the invisible hand of our capitalist economy now transcends far beyond our borders. We are interdependent, and the only solution to recover our wealth as a nation is to expand our economy. Closing off our borders only dooms us to the fate of the past experiences of Japan and The United Kingdom. Both of these nation states have had stagnant growth for the past ten years because of isolationism shrouded by austerity. The day of the nation state is coming to an end. The time of trading blocks among countries with vested interest has begun.

Who will win the game? I guess I have to make prediction since this is my BLOG post. The country who will win is the one who will make the best choices about rolling the dice in the most strategic and timely places. The argument is how to make this decision. It is my argument that the greed of market capitalism should steer the ship. When a government attempts to tinker with this then it can confuse the trading blocks and delay the consolidation of a world economy. A delay can never stop it. It is as inevitable as the success of the last 100 years of US prosperity. Keynesian tinkering can cause much more hardship than long term benefit. Short term marshmallow thinking should never replace the efficiency of an economy of scale where there is enough wealth for everyone.