In advance to the introduction of a recent article that I wrote for Business Insider regarding my new concept called Globalnomics, a good friend applauded me for laying out the fundamentals behind this new discipline, but questioned me as to my argument that Business exceeded Economics, telling me that he thought they both should be on the same plain. Here is my response to my friend.
I have been wrestling with that myself; and it might just be temporary, but based upon what supposedly the best economists in the world did these last 20-five years, they have to pay a penalty.
I am sure there are recent examples of large, major Business errors or mistakes (take BP for example); however, Greenspan and Bernanke’s mistakes almost caused a “world wide depression” and a world wide depression is something we can never afford to have happen again. A Great Recession is bad enough as it is.
Economists should feel lucky that Business has bailed them out these last couple of years. The trouble is: the supposed leading economists of the world have yet to recognise this, but instead, all they have done is beat on Wall Street and ignore their own terrible mistakes.
For that, Economists have to pay the price.
Economists may some day recover; however, to do so they need to start learning more about Globalnomics. American Business people have been dealing with Globalization for nearly 30 years now (e.g., the terminology to Think Globally, Act Locally), and I think its way past time for the Economists to catch up and start looking at things in this way, too. In fact, if the revered economists at our Federal Reserve had done so earlier, they would have understood more about one of the most important indicators that they like to track–inflation.
Inflation works differently under Globalnomics than it does under the more “nationalistic” view that current economics works under. And it is time the economists start adjusting for that fact.
In Business school, students take economics, but they do not major in it, like they do in Finance, Accounting, General Management, Marketing, Quantitative Analytics, etc., and I believe there is a good reason for this. Business people have to live in the real world. They cannot afford to live in the ethereal, esoteric world the economists live, where four different answers come three different sources.
If the truth were told, the biggest mistake that Business has made in the past is putting too much reliance on Economists to do their job properly. When the Economists fail in their effort, which is half the time—like the flip of a coin, Business suffers and there is no alternative left other than to have Business step in and take charge. And going forward, I recomment that Economists (if they are going to offer any assistance at all in the globalnomic future) be required to take a good fundamental course in Business Finance as part of their curriculum.
Question my logic? Then consider this. Who has been more responsible for the development of most of the world’s products (e.g., aeroplane, automobile, television, telephone, medical cures, computers, internet options, etc.)—business-minded people or economists? In my view it has been business-minded people.
Who has been more responsible for keeping at least the majority of American employed through this Great Recession and keeping us from the Second Great Depression? Business people or our economists? Again, my vote goes to Business.
Need I say more or should I talk about our founding fathers? Take Ben Franklin, Paul Revere, Thomas Jefferson, and George Washington for example. These men were more business-oriented individuals than economically-oriented individuals and they designed our country with freedom and business in mind. In fact, the Federal Reserve was not even a line item in the Constitution or the Bill of Rights.
It’s really rather funny when you think about it. The Federal Reserve was created not quite a century ago because of an earlier financial panic. Today, the Federal Reserve has been more responsible for causing a financial panic than they have for helping avoid one.
Regardless, as you know, Globalnomics is new and we are just now putting its framework together. As we do that, I continue to expect your valued input (until, of course, you start quoting people like Greenspan, Bernanke, Geithner, Krugman, Roubini, etc.)
Instead of those economic elite, I think we should start listening more to the likes of Buffet, Gates, and Welch, and hear what they have to say about the role the United States should play in the new, more integrated world of globalnomics.
But that is just my opinion, which you know is a business-biased one.