Monday, 2 January 2012

The rational living perspective: Why I am optimistic about the future of the world economy


At the time of this writing, newspaper headlines are all tremendously negative. However, if you look beyond the obvious, you will be able to see the seeds of the accelerated economic growth that will take place in the next years.

Indeed, in some areas of the world, the economy is stagnating, inflation is rising and unemployment remains high. As a result, millions of people are seeing their lives disrupted. Those who have recently lost their jobs may have the feeling that finding a new position is going to take extensive efforts and a very long time.

The stock markets are showing daily fluctuations over 3%, an enormous range by historical standards. Some investors have liquidated their holdings in despair and incurred a substantial loss. The current levels of market volatility are testing the faith of the most devoted believers in a better economic future.

The psychological pressures that accompany these events are considerable. The gloom-and-doom atmosphere that dominates conversations inevitably influences people's decisions. Purchases are delayed and changes are feared. When the future looks dark, hesitation seems safer than action.

Nevertheless, despite all these threats and uncertainties, I remain massively optimistic about the future of the world economy. I am convinced that growth will soon resume strongly and take us to higher levels of prosperity. On which facts do I base my optimistic conviction? Are my positive expectations justified by statistical trends?

Yes, in fact there are lots of positive economic data out there if you care to look for them, and not only in China, India and Singapore. Freight volumes are growing and the same can be said of the number of new vehicles sold. More car sales means more steel production and more jobs. For every negative newspaper headline, you can find plenty of data that predict an upwards trend.

Even so, my purpose today is not to engage a statistical discussion. Facts can be measured, but opportunities need to be discovered. Improvements are what you get when you apply creativity to problems.

For predicting the future, structural factors are more reliable than isolated details. If you know a man's character, you will be able to foretell his destiny with greater accuracy than if you know everything he did during the last two days.

Human creativity, or rather, the increased opportunity to exercise it, provides us a solid ground for forecasting a bright economic future. Like a man's character, the level of personal initiative and inventiveness in the world changes only slowly, but one it gets as good as it is now, chances are that it will stay this way for many years.

My overall optimism is based on the following factors, that you will find no difficulty in observing yourself:

[1] Emigration has become easier than at any previous time in history: Millions of people are moving every year from one place to another to take advantage of the expanded opportunities to exercise their talents.

Sometimes, emigration takes place within the same country (between two cities), but very often, it involves crossing the border between countries. As travel costs continue to decrease and regulations become more flexible, companies benefit from the influx of new talent and workers can find jobs that offer improved economic prospects. In addition to the economic advantage, the contact with other cultures also tends to make people more tolerant and open.

[2] Artists can now offer their creations directly to millions of consumers. The tide has turned for creative individuals. If you are a musician, you can now develop your career without having to wait for a record company to give you a break. The same goes for writers, painters, illustrators, composers, and photographers.

Even new film-makers can now make their movies at a fraction of what it used to cost a few years ago. With the help of low-cost digital cameras, free editing software, and internet distribution, many wonderful films are getting made nowadays, films that would have never seen the daylight in previous decades.

[3] The cost of starting a new business has never been so low in history. In some cases, all you need is an innovative idea and the determination to build something from scratch. We live in a world where vision and commitment are more important that the size of your bank account. Money and other resources can always be borrowed if you know how to apply them productively.

The endless possibilities offered by the internet have unleashed human creativity to levels unknown before. You no longer need to relocate in order to have your products designed, manufactured, and sold in other countries. Video-conferences with clients and suppliers all over the world have become virtually free-of-charge. The cost of market intelligence has also been drastically reduced.

What is even better, the time-line for starting a new business has been compressed and shifted. Low-cost software applications will routinely spare new entrepreneurs hundreds of hours of work, and the work that still needs to be done, they can do it during the evenings and weekends.

Never before in history have millions of people enjoyed the opportunity of starting their own business while they can still keep their day job. A lower risk for starting new companies means that more companies will be started, making overall economic growth almost inevitable.

For the three reasons above, I believe that the world economy will continue to grow strongly in the next decade. Of course, the situation will not be equally positive in all countries and in all currencies, but so what? Creativity will always flow to places where opportunities exist and this is the way it should be. Stop listening to negative reports and learn to look beyond the headlines. Things will continue to get better overall as entrepreneurs seize the immense economic possibilities of the 21st century.

[Text: http://johnvespasian.blogspot.com]

[Image by Noël Zia Lee under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]

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