Wednesday, January 28, 2009

Poltics controls all life

A while back, our Dear Bawa came up with the concept that all life essentially boils down to Politics. Whatever is taking place it all somehow comes back to politics. I always disagreed and he promised to prove it, but he never did. So instead I'm going to tell you what I believe dictates everything in life; Economics.

What's that Economics? That boring stuff about graphs and supply and demand? How is that relevant to all of life? Well let me tell you Dear Reader.

A good portion of our lives involves corporations, businesses or firms. There is no escaping this unless you're living in some ancient civilization (which would still not allow you to escape economics) as we all consume products from these companies and many of us also work for companies as well. You could almost say business is the lifeblood of the world.

With business being the heart of life today, the moment the economic situation takes a dive, immediately there are life changing repercussions. Thousands or Millions lose their jobs, a situation taking place today. Why does this happen? I'm not really qualified to answer but consumer spending falls which causes corporations to cut down their excess production as no one is buying.

This changes everything. People become more miserable because job security is lower, they are unable or unwilling to buy and various other reasons. Essentially the bad times roll on. Leaders during these times face hard times, and have a high likelihood of being unpopular.

Getting straight to the point, politics too is controlled by economics. Regardless of which man became the President of the United States, the economic policies that would be enacted would more than likely be exactly the same despite all the talk.

Politics is purely smoke and mirrors that paints a nice pretty picture for the masses who are quite frankly clueless about what's really going on. A clear example of this is once again Herr Hitler. Hailed as being the saviour of Germany's economic problems when he came to power, people loved the man.

Little did they actually know that the economy had already largely bounced back under his extremely unpopular predecessor Bruning. This man had actually done the right thing to save the economy by cutting down public spending and increasing taxes to reduce the budget deficit. Obviously this wasn't popular with anyone, rich or poor.

Empires were built purely on economic reasons. Did the British ever want to go on a 'Civilizing Mission'? I think not. The small island prospered with the newfound resources of its Empire's member nations. The central nation always prospers at the expense of member states. Another example? The Roman Empire. Rome always prospered due to its never ending taxes of 'member' states.

If economic resources and the wealth that they bring were infinite, would anyone ever bother to get leverage over anyone else? Would one nation bother attacking another? What for? What would be the GAIN? Nothing. If everyone was rich and had everything they wanted would we ever fight?


  1. If everyone was rich and had everything they wanted would we ever fight?

    Would we even work? Economics is the foundation of all human activity, because money makes the world go around. Just blogged about it recently myself :) Get Zeitgeist addendum from RSZ man. thats an eyeopener alright! ado we should meet up. cheers!

  2. What's happening today is, roughly, this:

    In the US, people were so sure of the success of the "american Dream', that they lent huge sums of money to people to buy houses and cars without first checking if they could pay it back. Also, they are fighting several wars, and the price of oil was rising every day, all these factors, along with some others, lead to the 'sub prime crisis'. Many big investment firms and investment banks collapsed, as I'm sure you've read, and many other were teetering on the brink of collapse.

    The mood in the US, already grim due to the wars and other factors reached a crescendo of crisis when ppl saw their life's savings go down the drain in front of their eyes, but, fortunately, the policy holders were mostly safe. Also, there is something called an institutional investor- when companies invest in other companies. Many other firms had invested in the firms that went down, so that was a problem.

    The dollar was affected, which affected many other countries and currencies.

    Also, many of the firms big in the US are also involved heavily in other western economies, especially that of Britain, and such huge losses in the US lead to a crisis in all such economies as well. Also, now the companies did not want to lend, and you must know that all the big companies finance their activities through a percentage of loan- which was not forthcoming. This is especially true in the manufacturing secter because the companies need money for machines and stuff, which they can often not finance all on their own. EG.: Automobile industry. So, the production slowed down, leading to job cuts, which obviously escalated the crisis.

    See, if people don't have jobs, they don't have money to spend, and so they cut down on spending, and buy only what they need most- and many ppl do it, so it in turn cuts down on the market demand for many goods and services in the market. Since there is no demand for these products anymore, there are even more job cuts, and so it's a vicious cycle.

    So anyway, many firms from around the world had opened offices in other parts of the world- especially the US, and this is turn also affected these non- US firms, in turn transfering this effect into their home economies- it almost like a viral- it spread through contact: These non- US firms came into contact with the desease through their US (and western) offices, and in turn passed the desease on to their own countries- which spread through there. Since all our economies are inter connected in todays world, almost all economies were affected by it.

    Even the economies that are mostly closed were affected, because a lot of the financial aid to them was cut off, so they were in trouble too.

    Also, there was already a prevailing food crisis before all this came into the light, and it escalated the inflation in many countries, leading to even more trouble. In all this, the price of oil remained very high- again adding to the inflation.

    So, I hope that was a little bit understandable, and not like a lecture on world- economics...

  3. About your point that it's economics that really makes the world go around, I agree 100%

    In 1776, the economist Adam Smith gave two salient principles in his famous book, An Enquiry into the Nature and Causes of Wealth of Nations:

    1. The principle of Lassaez faire: that the government's activities should be restricted to governance and administration alone, and that it should not venture into economic activities.

    2. The principle of self interest: That ppl do what is in their self interest, and in doing so, fulfil the needs of the economy.

    EG.: If I want to make shoes, I'll do that for a living, and the economy will get a shoe- maker in return.

    So, every thing that happens in the world, can be in some way described by this principle of self interest.

    So when our cricket teams want to win matches, they realise that if they don't win, they'll get chucked out, and that will lead to a pay- cut for them- so they play well, and all... it's all gibberish about the country and all, though, no doubt it does come into play to get the sponsors, and the crowds et.: again, good for the money.

    According to Karl Marx, history is economics in action- all competition is rooted in economic realities, and nothing else- the industrial revolution, he said gave us several 'effects' to the one cause of economics: democracy, socialism, feminism, etc. These are today some of the most important concepts... did you know that the War of Troy, often described to be a War for Helen, was actually a war to gain control of the port Dardanelles? It was a place much like Mumbai, or Colombo- important because it was an access point, and because whoever controlled Dardanelles go paid huge amounts in taxes, etc. The Trojans had control of it, but the Spartans (Greeks) wanted it, but they could not think of a plausible reason to attack and capture, or gain control of it in any other manner. When Paris whisked Helen away, it just gave the Spartans a reason to attack.

    Too muxh eco for today, I think. Good night :)

  4. the death of laissez faire is being proclaimed all through the world. What, if not uncontrolled self interest and deregulation drove the economy down? Friedman, another free market strongman, was firm on one thing, a highly regulated financial industry. but even that was deregulated, and that helped to push us further into trouble

  5. Have you heard about the Satyam scam? It's a big thing in India right now, because the scam was worth 7800 mil, or something close... it keeps escalating as the days progress. The auditors were PriceWaterhouseCoopers, one of the Big 4... you'd think someone part of that elite club would know their job, wouldn't you?

    Satyam is an IT related firm, and was paying double the amount to PWC as compared to other big IT firms like Infosys and Wiipro- imagine, a 100% premium, and for what?

    I just want to say, that the checks and balances are still in place- and they are very good- it's just that at the end, it's the people that have to implement them, and that's the weakest link.

    Oh, yes, are you familiar with the preparation of a balance sheet? Well, in India, the balance sheets have to be published in newspapers- like declared... and obviously, Satyam did that. To prepare a BS, many, many documents have to be prepared before hand, and a record of several others must be mmaintained... when both the PWC and Satyam premices were raided, non of these documents were found... so, ultimately, it's just that the regulations are good, but people are not trustworthy.

  6. what u have pointed out is soo true..what ever the checks and balances you have there can be a weak point and thats human nature....If you have watched the ENRON Documentary you ll get the idea not only analyzes how they went bankrupt from a such a brilliant position but also tries to investigate the human nature and greed involved in the system...

    Nice Post...

  7. Hi. Concerning your comment: 'If everyone was rich and had everything they wanted would we ever fight?' Probably not. Look at western Europe: the germans and the french were at each other for centuries; now they're the center of a United Europe, an integrated economy that is spreading the wealth. And, if you haven't been to either of these countries, or to Spain and Italy, yes in comparison to the rest of the world, they are rich.

    Still, economics isn't everything. If there aren't resources to kill each other over, there will be religion...

    Sorry for the pessimism, but conflict seems inbred into the human race.

  8. If there aren't resources to kill each other over, there will be religion... (annonymous)

    oh but capitalism has solved all that, now you dont have to really kill people to get resources, the market does the job fine :D