Global Playing Field

The stock market has been on a wild roller coaster ride in recent months with wide swings in value often from one day to the next. Most of the explanation lies in one word – “Greece.” Is it just me or is anyone else amazed that such a small country can have such a dramatic effect on U.S. and world markets? The population of Greece is about 11 million and its GDP is about $300 billion. 

The effect of Greece is just further proof that we are now in a global community where we are all interconnected  and what happens anywhere on the planet tends to reach us all eventually, whether it is business/economics, an outbreak of influenza or environmental factors. And the global community is changing. The U.S. and Europe used to be the “top dogs” in the global community, but now we are being challenged by some new up and comers in the likes of Brazil, Russia, India and China, commonly referred to as the BRIC countries. In 2000, the GDP of the BRIC countries was $2.7 trillion. In 2010, it had grown to $18.17 trillion. And future projections have the BRICs outpacing the GDP of the G-7 countries in about 20 years. So the playing field and playing conditions have changed drastically from what they used to be. As Dorothy said, “we are not in Kansas anymore” and we are not likely to go back.

That’s why I am amused when I hear people talking about how we need to go back to what it was like in the 1950s when the U.S. ruled the world in manufacturing and there were lots of great jobs for working-class people to earn a decent wage. While that all sounds good, we aren’t in the 1950s anymore. In the 1950s, the world had recently come out of World War II. Most of the developed world – Europe and Japan especially – had been devastated by the war. They had to rebuild their entire infrastructures, and they did so thanks to billions of dollars from the U.S. under the Marshall Plan and thanks to lots of “stuff” that we sold to them. During this time, we really didn’t have any competitors in building and manufacturing things. We dominated the world markets. Most of the BRIC countries were “third world” or close to it.

No matter how much we long for the 1950s – they aren’t coming back. We have to compete in the world in which we now live, and it includes other major players, including our new BRIC competitors. We are living and competing in a global economy with global markets, driven to a large extent by new technologies that did not exist 50 years ago. That doesn’t mean we can’t be competitive, just that the world is different and it will require new ways of effectively competing. The first step is acknowledging that fact and then setting out to do the hard work to be successful in that new environment.

 

Comments

[biffula]

I think the Greece thing is overrated. The nation is the size of a large u.s. city. I think the media and the euros want everyone to believe it's a bigger deal than it is.