The Future

My last post was about outsourcing as we know it today, and why capitalism likes it.

Capitalism is an economic system based on exploiting resources for fun and profit. We have pretty much tapped the natural resources to the point where further tapping is no longer cheap - so third world labor is the final frontier. It is still cheap.

But what happens when this cheap labor is used up? What happens when the third world reaches the point where it is industrialized, and workers demand more? What happens when they form unions?

At that point, the party as we know it today is over. The world's economic systems will have to evolve. What they will evolve into I can not say (my crystal ball is getting fixed).

I do not think this is a bad thing. The world's economic system has evolved many times in the past. The first evolution was going from a barter system to a system of money. In American history, the system has evolved three times. The first change was going from a colonial system (we could only trade with England) to being a nation. The second change was when America industrialized and Adam Smith's classical view went out the window (Smith put farmers at the base of the economy, industry changed that). The third and most recent change was when Keynes came up with his formula GDP=G+I+C+(exports-imports). We are using the Keynes system today.

Keynes formula is so important to us because when he came up with it, most economic cone heads were still stuck in the world of classical economics. Under Keynes, the government can pump up the economy by deficit spending when the other variables drop. In the classical world, the economy is directly tied into how well farmers do. The Lazy Iguana thinks that the most important variable in Keynes's formula is C or consumer spending. In the classical world, most consumer spending was on farm tools as there was no industry to mass produce anything. But today we can buy all sorts of crap.

Anyway, once the third world gets to where America was in the early 1900s, labor costs will start to increase. At some point, it will not be as cost effective to move factories overseas.

This is when things get interesting. The Lazy Iguana does not think that the current system of American over consumption is sustainable. We do not need new cell phones every year, and vehicles that get 12 mpg in the city. In the next economic step, I do not think that all this will be here. The world will HAVE TO be more efficient in its consumption of energy. We will run out of oil and gas. Coal will get more and more expensive to mine. This is just a cold hard fact.

All this leads back to another dead white guy, Karl Marx. He said that industry leads to revolution. I think he might ultimately be correct. I do not think that "revolution" has to mean a civil war, it can simply mean change. I think that Marx was too much of an idealist; his system can not happen as long as humans are greedy (and we are greedy bastards!!). But at the same time, our system is not sustainable, once again because humans are greedy.

So what will the next step be? Only time will tell.