Oneweb.world is working to create a constellation of 648 satellites to boost global internet connectivity for education, creativity, emergency relief and equality. ‘Google station’, Facebook, smart gizmos, cloud computing, MOOC, social media etc have immense potential of mutual communication and exchange around the globe. And broadband internet is touching new heights of data transmission speeds like the lab test of Nokia Bell Labs that is expected to be 1000 times faster than Google fibre.
All this and digital technologies in general are destined to transform the world into a real global space. However, leaders of the developed world and the champions of unfettered globalisation for the last 200 years are struggling to shield themselves from the ‘negative’ influences of this exponentially increasing globalisation.
Why? Why are policymakers and central bank managers of the US, EU and Japan suffering from an all-time high spasm of confusion regarding globalisation of trade and free movement of labour and capital? And why are they practising as well as plausibly advocating anti-globalisation?
Haruhiko Kuroda, the former president of the Asian Development Bank, resigned and joined as the governor of the Bank of Japan on the request of Japanese Prime Minister Shinzo Abe in the expectation that they would salvage the sinking ship of Japanese economy; yet both are still floating freely in troubling waters.
When Kuroda ascended as the governor of the BoJ on March 20, 2013, he was highly hopeful that ‘there was plenty of room for monetary easing’ to defeat deflation, achieve inflation targets and invigorate the economy of Japan. However, these dreams did not come true and the BoJ was obliged to announce its shocking decision on January 29, 2016 to launch negative real rates — a nightmare for savers, depositors, bankers and economic actors alike.
Japan is not the only sinner in this; the EU is also suffering from the same viral disease of the developed world. The US and UK are also trying to enjoy the ‘fringe’ benefits of extremely low rates in their countries without an iota of success. What does this mean for the central banks of advanced economies? They are not only toothless but also in the most miserable situation since their birth in the 17th century.
Central banks have played a key role in the promotion of capitalism after the first Industrial Revolution. Their primary function has always revolved around managing money supply and interest (discount) rates through monetary policy. However, for the first time, central banks stand robbed of almost all of their effective weapons and ammunitions. What must a central bank do when real interest rates are already negative? Or when people are not spending money even though prices are suffering from deflation. What can they do?
Leaders, policymakers and economists of advanced countries are not ready to divorce their dogmatic religious perceptions of the past. Here lies the main problem. They still theoretically cherish the conviction in small government, market economy and free trade but for all practical purposes they, in general, are working very hard to defeat the spectre of globalisation which is at present haunting them the most.
It would be absolutely incorrect to say that there is no solution to their ills. A ‘shining path’ already exists, which can guide them out of the crises but it can only be visible to those who have are rid of moribund and obsolete economic ideas and are able to cut their greed of ‘maximising profit’ by all means to a manageable size.
It must be understood that living standards and the environment of supersized prosperity on the basis of the inequality model and lopsided global economics are now not sustainable in these advanced countries. The inequality they cultivated globally is hitting them hard in their own home ground. Increasing inequality and dwindling living standards are signature signs of their new crisis.
Here is a most important lesson for them to learn: science, technology and the exponentially increasing human power are actively working for the globalisation of knowledge, research, innovation and development and are working conclusively against the philosophies and practices of the antediluvian forces. Can they defeat or overcome the power of sci-tech-human power complex? No. That is absolutely impossible and unthinkable for a rational person.
So, what is the solution to this? The solution lies, on the one hand, in accepting the realities and opening up economies and societies in a calculated manner to the people of the developing and poor world so that they can contribute to the host economies. They can then also add to the growth of global human resource, to the exponentiation of science and technology and to their own economics back home.
On the other hand, as all these economies have abundant cash surplus and less opportunities of investment in domestic markets, for their own benefit and for the benefit of global economy they must invest extremely generously at the lowest rates of profit-making in infrastructure including energy, technology, education, health and employment of developing and poor countries. Just imagine: if such investment is made at the rate of $500-600 billion per year in developing countries, what would be the rate of global growth?
The inequality model so far has defeated the prospects for growth, development and prosperity for all. Let us instead opt for inclusive economics, inclusive growth and an egalitarian economic system in the world.