Contributing writer Dickson Igwe
A snapshot of the thinking of a veteran economist, and chairman of the US Federal Reserve for two decades: Alan Greenspan’s ideas are valuable for thinkers on Virgin Island’s development
Alan Greenspan, in his rendition on globalism and free trade, ‘’ THE AGE OF TURBULENCE: ADVENTURES IN A NEW WORLD,’’ believed the free market was supreme in determining the trajectory of the global economy. Regulation and protectionism only kept inefficient organizations afloat, and overburdened the businessman unnecessarily; stifling creativity and innovation. Big government and interference in the marketplace was anathema to prosperity. Closed markets would only delay the inevitable, but in the meanwhile, promote mediocrity and low standards in home markets.
And the same was true for the nation state. Countries that failed to adopt a realistic posture in regard to the new laissez faire global environment would suffer. The free flow of financial capital and technology meant that there were new opportunities for the more free market oriented economies. Foreign capital would flow to those countries where optimal returns would be realized; and that also meant countries well governed, politically, socially and economically.
Investment friendly societies were those that understood that there was no stopping the new global dynamic of borderless commerce. Those would be the countries that prosper in this new age. Conversely, countries that were protectionist and xenophobic would wake up one day to realize that others were more than happy to do business with the international investor. Financial capital is a scarce resource: it is not unlimited as some would believe, and countries compete to attract foreign investment by opening up their economies to international trade and offering various incentives to foreign investors.
There is also a mothball effect. Investment in a country can improve the economy and infrastructure, thereby creating even greater opportunities for the further inflow of foreign capital. This was the case with China and the Asian Tiger economies in the 1970s; foreign investment in the Pacific began as a trickle, ending in a waterfall when investors saw optimal returns from Asian efficiency, and in time, these countries would overtake the West in terms of economic growth.
One more thinker, veteran economist, and writer on the subject of globalization is Martin Wolf, resident economist at the Financial Times. The Financial Times is a business and economics newspaper of global pedigree. In his book, ‘’ WHY GLOBALIZATION WORKS,’’ Wolf stated that the market economy was necessary for stable and enduring democracy. He correctly asserted that markets allowed consumers to, ‘’express their personal choices,’’ and then went even further declaring that underlying free markets was the, ‘’ supreme value of personal freedom.’’ Wolf stated that, ‘’ the market is the most powerful institution for raising living standards ever invented.’’
Martin Wolf. Photo courtesy britannica.com
Greenspan concurred with that assertion of the critical importance of personal freedom in his own book. He determined that the greatest driver of free markets and globalization was the free individual: the human personality and his or her beliefs, choices, freedoms, and hopes.
Free, confident, and cultured peoples, want what is best for themselves and their families. Naturally, they migrate, both in a physical and mental sense, to what is wholesome, secure, and safe. Even animals display this trait, migrating to warmer climes in the harsh winters of Northern America and Europe, or hibernating deep underground until the warmth of spring can be felt. Self preservation and self improvement are as natural as breathing.
In the past, persons had to migrate from developing to developed countries to obtain the benefits of an advanced economy. Globalization is now enabling people living in developing countries, giving them access to lifestyles and opportunities once available only in the rich West. Another thing is this: no power on earth will stop the individual determined to seek quality and value in his or her own life.
Look at the Cold War: before the collapse of the Iron Curtain in 1989, totalitarianism and communism were driven by violence, tyranny, fear and deception, and eventually these clear evils crushed any hope of prosperity in Eastern Europe and the Soviet Union. For decades, the Soviet Union and its Satellites worshipped at the throne of central planning and control of the means of production and distribution; eventually however, communism began to come apart at the seams.
In the West on the other hand, the pursuit of an aggressive free market model by Ronald Reagan in the 1980s not only created a far more dynamic economy, Reagan’s brand of free market economics showed up communism as a bankrupt system, propped up by men with guns. Eventually communism collapsed.
Fast Forward to 2007 and Greenspan believed that post the Great Recession of 2007, the planet would face turbulence and uncertainty. He further asserted that humanity must face, ‘’ the increasing integration of the global economy.’’ The choice before the modern consumer is to either, ‘’ embrace the worldwide benefits of open markets and open societies that pull people out of poverty and up the ladder of skills to better more meaningful lives, or reject that opportunity and embrace nativism, tribalism and populism.’’
According to Greenspan, the market would always undermine any attempt at control. In today’s digitally and scientifically driven economy, the market is supreme, and those who recognize that reality and work with it to better their lives and communities, are truly in the driver’s seat. Wolf put it this way: the only alternatives to open markets and a connected world are marginalization and poverty. Yes, xenophobia and fear are no longer options for the Virgin Islands.
To be continued
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