What comes to mind when you see a headline that reads as
follows: “Iran ,
Get Ready for the Battle Rial”? Lots of things, right? Well, that's the title
of an article that was written by Mark Dubowitz and Richard Goldberg of the
Foundation for Defense of Democracies. The article also came under the
subtitle: “The Trump administration has declared financial war on the regime.
It's a good bet America
will win.” It was published on May 21, 2018 in the Wall Street Journal.
To most people, here is what will come to mind: When it
became obvious during the decade of the 1960s that the global economic system,
as it was structured at the time, was unsustainable, people began to debate
what might replace it. When the various suggestions were tabled and taken into
account, there emerged a consensus around the idea that manufacturing will have
to figure as the key component in the transformation of the old system into the
new.
The structure of the old system came to be what it was
because two related movements happened almost simultaneously. They were the
Industrial Revolution and Colonialism. Even though gun powder was invented in China and used
to make celebratory fireworks; and even though artillery was invented by the
Arabs who would not use it in war because their dominant religion forbade
killing someone at a distance, it was the Europeans that manufactured the guns
and used them to conquer the world. They plundered the nations they subjugated,
of their natural resources, and fed their growing industrial base back home.
By the time the wars of liberation were starting to make it
costly for the colonial powers to continue plundering their “possessions,” the
world population was growing exponentially, and the production machines were
becoming so sophisticated in terms of automation and efficiency, they required
a great deal of knowledge to design and produce. These developments made it
necessary for the colonial powers – now called the developed West – to think in
terms of becoming the knowledge economies that make production machines and
sell them to their former colonies – now called developing economies. As to the
latter, they were to produce consumer goods and sell them to pay for the
machines they were buying from the West.
This is how the new Global Economy began to take shape. For
political and practical reasons, China whose population amounts to a
fifth that of the World became the biggest beneficiary of the new system.
Keeping its population growth under control and implementing policies that
encouraged saving, China
was able to achieve high rates of growth and sustain them for decades. These
policies allowed China
to achieve by horizontal growth, in a generation or two, what took the
developed West almost ten generations to achieve while relying on both the
horizontal and vertical growths. This meant that in a short period of time, China became
not only a manufacturer of consumer goods but also a manufacturer of
knowledge-intensive production machines.
Up to the time that China began to add a knowledge
based component to its labor intensive economy, it had the ability to pay its
workers very little, thus shut out most other emerging economies by selling its
products cheaply. This started a race to the bottom that other emerging nations
found it hard to sustain, lacking the discipline that the Cultural Revolution
of the 60s had forced on the Chinese population. When a number of smaller
economies got into trouble and turned to the IMF for help, the latter forced
them to adopt the unpopular policies of devaluing their currencies and
“tightening their belts” come what may.
Now that China is living with a knowledge based economy
while having an aging population that's not renewing itself adequately, it is
taking advantage of the cheap labor and low value currencies in Africa and Asia
to start manufacturing cheap goods in those places while raising the standard
of living of its own people by doubling the salaries of its workers in some
cases. Faced with a similar sort of dilemma, Russia ,
South Korea
and a number of other countries are setting up industrial zones in the cheap
labor economies.
But China
and those other countries are not moving in that direction alone. The European
countries and the United
States had been doing it for a while, thus
made substantial investments in the developing economies. This is why it is
ironic that the United States
should start threatening countries like Iran ,
North Korea and Russia with
economic sanctions. As if this were not ironic enough, the United States
is even threatening the European companies that reject the sanctions it is
imposing on other countries.
There is no doubt that the European sovereigns will ignore America 's demand because they can stand up to America . As to
the individual European companies that have investments in America and would like to do business with say, Iran ; they'll
do what they always do to get around the American blackmail. They'll create a
new company and put into it the business of Iran , thus protect the parent company.
America
can sanction the new company all it wants and nothing will change. As to the
parent company, it will go on doing business in America as usual.
This sort of structure is created all the time in America and
elsewhere to get around one regulation or another, and no one knows it better
than the Jews whose holding companies often look like a multi-layered labyrinth
with connecting tunnels going in every direction.