Double Entry Journal #9

1.  Why is inflation less of a concern in the new world economy?

One cause for the demise of inflation is better monetary policy across the globe. But the main factor, and perhaps the main reason for the very success of inflation targeting, may be a less inflation-prone environment created across the globe by the very fluid new world economy with its twin economic and technological revolutions.  In the new world economy, price increases don’t easily stick, as business has become hypercompetitive. Prices can be compared instantaneously across an increasingly transparent world. What’s more, goods production and even services can relocate easily from one spot to another cheaper one. And financial markets are now able to monitor and sanction the economic policies of each country in real time (Rischard).

2.     What is the difference between a “negative-feedback economy” and “positive feedback economy?”

A “negative-feedback economy” can simply be defined as being limited by short-term supply-and-demand constraints. In the old economy, things start out rare and expensive before they become widespread and cheaper. By contrast, the new information economy will increasingly be a “positive-feedback economy.” In the new world economy, additional capacity becomes available so quickly and inexpensively that traditional supply constraints become almost unimportant (Rischard).  

3.     Give an example of how technologies can provide developing countries with an opportunity to catch-up with modern economies?

Many developing countries could benefit disproportionately from the opportunities brought by new technologies and new ways of doing things. An appropriate example in the realm of education would be in Mexico. The Monterrey Tech University has in a few years become one of the world’s foremost distance learning systems, with some thirty connected campuses across Latin America offering each student access to the same star professor. In many developing countries, teacher networking over the Internet is leading to better curriculum developing and rapid exchanges of better practices (Rischard).

4.     What is one prediction the author made concerning the new world economy that appears to be true?

The author so boldly deduced from his research four rules or features if you will that establish the forefront of his “adapting to the new rules of the game.” All of these rules seem to be true in regards to the new world economy. The rules are as follows.

-      It is bent on speed-so you have to be agile.

-       It flows across national boundaries-so you must be plugged in and good at networking internationally.

-       It is highly knowledge-intensive-so you must be good at constantly learning. If you stand still, you fall back.

-       It is hypercompetitive-so you must be 100-percent reliable, of business will shift to someone else.

(Rischard)

5.     Why is excessive trust in free-market economies promoted by free-market fundamentalists a cause for concern?

With the central planning model gone for good, more politicians and other players see the market as the solution to all problems. There are two serious dangers in this complacency. First, if we leave all problem-solving to the market, emerging social problems will be left unattended. And second, the market’s own mindless expansion, effective as it is in the short term, inevitably brings its own long-term problems as it further taxes the planet’s carrying capacity beyond the already bad overload coming from the population increase (Rischard).

6.     Read and Link to a Website that provides information about regulation and markets. Based on the information provided in the websites, what is your position on markets and regulations? Then list two questions you have about markets and regulation.

Financial Market Regulation

I feel regulation is much needed in today’s modern markets, I do agree with the non-partisan aspect of it, however I feel perhaps in vain (simply because I don’t know much about the subject at hand) that the regulators of the market are a bit removed from society. I think societal influences expressed by the modern consumer could benefit the regulation of markets. Something like this may already be in place as a part of regulation research, and if it is I think it should play a bigger role. I feel if people feel they can influence regulation, than people will be more knowledgeable on the subject.

1.)   What measures are taken in market regulation research?

2.)   What effects can the modern consumer have on market regulation?

7.     What is the cause of the crisis of complexity in the new world economy?

The two forces of population increase and the new world economy spew unprecedented complexity in economic, social, political, and environmental matters. Human problems are more pressing, more global, and more difficult to solve-technically and politically. The rate of change produced by the two forces contrasts starkly with the slow evolution of human institutions. By contrast, the two forces of change are markedly exponential. The demographic force brings an exponentiality of scarcity, and propelling the economy force is exponentiality of plentitude (Rischard).

Works Cited

Rischard, J.F. "High Noon". New York: Basic Books, 2002.