Recently a friend asked me to explain the difference between Finance, Economics, and my new discipline, Globalnomics.
Here is my response:
“It might help you to look at each of the three disciplines as interrelated and interdependent blocks in a pyramid. To keep the pyramid strong all three blocks and their adjuncts need to operate fully and transparently. The Globalnomics-block mediates the other two blocks of Finance and Economics. As such, Globalnomics is the eye of the pyramid (similar to the symbol of the eye in the pyramid on the one dollar bill note) that equilibrates the other blocks for fairness and optimum efficiency. Whereas, Finance and Economics serve Globalnomics, Globalnomics cannot exist in its ultimate form without good Finance and good Economics.
“I equate Finance with Business, and Economics with Economists. Financiers tend to talk in terms of NPV, IRR, cash flows, amortization, net income, discount rates, assets, liabilities, equity, etc. Economists, on the other hand, tend to talk in terms of inflation, GNP, unemployment rates, interest rates (long and short), econometric models, Keynesian versus Austrian theory, etc.
“And regardless of how much time I spend learning and trying to decipher the two different languages, based upon my own experience, I have come to view people involved in the science of Finance and Business as having typically a more Optimistic perspective than do those involved in Economics. And for that reason I consider the Finance and Business-block to be senior to the Economics and Economists-block on the pyramid. As such, I feel it is only appropriate now in this time of “economic crisis” for Business and Finance to rise up, take control from the economists, and guide ours and the world’s Economy into this new millennium.
“In line with that, and on a more practical level, this means that one of the first steps that Business and Finance must do now, as mediated by the Globalnomic-block, is to see that long term interest rates are lowered (and fixed) in order to Stimulate Business and to Lower Debt, as I have described in earlier articles written for Business Insider.”
When my friend asked me how I felt Globalnomics differed from Economics, here is what I said:
“Those who listen to the “Economists” see the United States as one of many countries struggling (or fighting) for the same piece of pie. Those who listen to the “Globalnominalists” see the United States as the leading country in a host of countries that are creating a bigger pie.”
When my friend asked how Globalnomics and Finance differed, I said:
“Finance is primarily a “mathematical” science, whereas Globalnomics is predominantly a “moral or ethical” science with a strong “mathematical” foundation. Although the inward analysis of Globalnomics can be viewed as being “mathematical” in concept, the outward analysis of Globalnomics is more “philosophical” in nature. And it is this outward nature of Globalnomics that makes it senior to the Finance-block or the Economic block. This is why I call Globalnomics the “Eye” of the Pyramid.
“Globalnomics reaffirms (possibly expands) upon the founding principals of the founding fathers of the United States in that Globalnomics claims that “All Human Beings are Created Equal and thus are endowed by the Creator with certain unalienable rights, among which include Life, Liberty, and the Pursuit of Happiness.
“Globalnomics’ fully integrated philosophical and scientific discipline is based on global rather than nationalistic perspectives. At the same time, the foundation of Globalnomics is based upon a clearly defined, commonly accepted, core set of world principals, the building blocks that shape the discipline come from the latest concepts and theories from the science of Economics.
Among the economic building blocks that shape Globalnomics are:
• Global Pareto Optimums;
• Friendly Competition;
– Perfect Competition over Monopolistic Control;
• Investment Strategy Over
– Debt Strategy Over
– Rape/Pillage Strategy;
• Increasing Gross Global Product per Capita Through Productivity Enhancements
– While Narrowing Gap Between Highs and Lows;
• Rewarding Positive Creativity; and
• A Single Monetary Unit of Currency.
“The core philosophical foundation of Globalnomics is based upon the following principles:
• Do No Harm;
• The Ethic of Reciprocity;
• All Human Beings Are Created Equal;
• Freedom Is Preferable over Subjugation;
• An Individual’s Right to Pursue Happiness; and
• The Protection and Wise Use of Global Resources.
“Military war between national entities does not fit within the framework of Globalnomics. Instead Globanomic Wars are fought on the following fronts:
• War on Hunger;
• War on Poverty;
• War on Disease Control;
• War on Prejudicial Hatred; and
• War on the Misuse of Global Resources.”
And that is how I explained the difference between Finance, Economics, and Globalnomics to my friend.
Jim Boswell (MBA, MPA, BA) is the Executive Director and CEO of Quanta Analytics. His recently published book, Crush Depth Alert, Fourth Lloyd Productions, explains in detail with supporting exhibits, graphs, and tables the factors that led up to the financial crisis while offering solutions on how to move forward. This is a follow-up to three earlier Business Insider articles called “Fannie and Freddie Need to Go—Now”; How 20-five Years of Mismanagement at Fannie and Freddie Created the Financial Crisis”; and “Why 4.0% Bond Rates Could Solve the Financial Crisis.”